Rules to Assist in Interpreting Confusing HOA Governing Documents
People who live in common interest communities that are governed by a homeowners association and those who are responsible for managing the association such as directors, officers, committee members, and management personnel, frequently deal with issues that require them to review and interpret the association’s governing documents such as articles of incorporation, bylaws, covenants, conditions and restrictions (CC&Rs), policies and rules. Reviewing and understanding the content of an association’s governing documents is not an easy task as they are complex legal instruments that have been drafted by lawyers and professionals who possess specialized knowledge about the topics that is well beyond the expertise of the average homeowner, director, officer or management person of the association.
Aside from the inherent challenges associated with the interpretation of complicated legal instruments, the documents themselves sometimes contain conflicting provisions that appear to contradict one another, and/or there are conflicts in the provisions contained in different documents (i.e. the bylaws say one thing and the CC&Rs say something else that conflicts with what was in the bylaws). There are also instances where the provisions contained in an association’s governing documents conflict with provisions contained in federal or state laws that must be complied with. When confronted with issues concerning conflicting provisions in an association’s governing documents and/or provisions contained in statutes, there are some basic rules of interpretation that should be considered to assist in understanding the topic of concern. The basic rules of interpretation include:
1. If provisions contained in a statute conflict with provisions in governing documents.
a. When there is language contained in the statute such as “notwithstanding any provision of the governing documents to the contrary,” or “no governing documents shall,” the language in the statute overrides the language contained in the governing documents.
Example: HOA governing documents prohibit homeowners from having dogs, but there is a state statute that states that “No governing documents shall prohibit the owner of a separate interest within a common interest development from keeping at least one pet..”
b. When there is language contained in the statute such as “unless the declaration otherwise provides,” the language in the declaration (CC&Rs) will prevail over the language in the statute.
2. If provisions contained in the association’s governing documents conflict with each other, the following rules of priority or hierarchy of governing documents should be applied:
a. Declaration (CC&Rs)
b. Articles of Incorporation
c. Bylaws
d. Policies and Rules
3. Some additional general rules of interpretation rules established by statutes and/or case decisions in various jurisdictions:
a. A written instrument should be interpreted in a manner that recognizes the purpose of the instrument.
b. Instruments should be interpreted in a manner that is consistent with the reasonable intent of the parties and the object of the deed or restriction.
c. Words should be interpreted in their ordinary and popular sense unless a contrary intent is shown.
d. Governing documents are for the benefit of all association members and should be interpreted in a manner that recognizes their main purpose and avoids an interpretation that makes the provisions extraordinary, harsh, unjust or inequitable.
Having an understanding of the above basic rules of interpretation will help to resolve confusion and conflicts that appear in connection with issues involving a homeowners association’s governing documents. Notwithstanding, it is important to remember that the subject matter can be very complex and confusing and beyond the expertise of the typical homeowner, volunteer officer / director, or management person. As such, when there is uncertainty about the interpretation of provisions contained in an association’s governing documents, it is always a good practice to spend a few minutes consulting with experienced legal counsel to achieve clarity on the issue.