Handbook vs. Declarations - Enforcing Rules

We currently have an issue in my community where in 2006 the Board of Directors decided to update our handbook to add some new rules to the association. In this process they did not get a vote by the community to update the declarations of the community.

Now the current BOD is trying to enforce rules that are in the handbook, however they are not outlined in the declarations of our community.

My question is does the HOA have the authority to institute new rules in a handbook, and than fine its members without getting a vote from the community?

It depends on what your covenants require for passing a rule, if they are silent on the issue then NC Code allows the Board to pass rules but keep in mind a rule cannot contradict a covenant. (#1)

47F‑3‑102. Powers of owners' association.

Unless the articles of incorporation or the declaration expressly provides to the contrary, the association may:

(1) Adopt and amend bylaws and rules and regulations;

(2) Adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from lot owners;

(3) Hire and discharge managing agents and other employees, agents, and independent contractors;

(4) Institute, defend, or intervene in litigation or administrative proceedings on matters affecting the planned community;

(5) Make contracts and incur liabilities;

(6) Regulate the use, maintenance, repair, replacement, and modification of common elements;

(7) Cause additional improvements to be made as a part of the common elements;

(8) Acquire, hold, encumber, and convey in its own name any right, title, or interest to real or personal property, provided that common elements may be conveyed or subjected to a security interest only pursuant to G.S. 47F‑3‑112;

(9) Grant easements, leases, licenses, and concessions through or over the common elements;

(10) Impose and receive any payments, fees, or charges for the use, rental, or operation of the common elements other than the limited common elements and for services provided to lot owners;

(11) Impose reasonable charges for late payment of assessments, not to exceed the greater of twenty dollars ($20.00) per month or ten percent (10%) of any assessment installment unpaid and, after notice and an opportunity to be heard, suspend privileges or services provided by the association (except rights of access to lots) during any period that assessments or other amounts due and owing to the association remain unpaid for a period of 30 days or longer;

(12) After notice and an opportunity to be heard, impose reasonable fines or suspend privileges or services provided by the association (except rights of access to lots) for reasonable periods for violations of the declaration, bylaws, and rules and regulations of the association;

(13) Impose reasonable charges in connection with the preparation and recordation of documents, including, without limitation, amendments to the declaration or statements of unpaid assessments;

(14) Provide for the indemnification of and maintain liability insurance for its officers, executive board, directors, employees, and agents;

(15) Assign its right to future income, including the right to receive common expense assessments;

(16) Exercise all other powers that may be exercised in this State by legal entities of the same type as the association; and

(17) Exercise any other powers necessary and proper for the governance and operation of the association. (1998‑199, s. 1; 2004‑109, s. 4; 2005‑422, s. 1.)

I disagree. It's going to depend on what the rules are. Typically rules are adopted by the Board as a resolution and the Board uses a "handbook" to inform the membership of the rule.

Resolutions can not conflict with the CC&Rs, the Articles of Incorporation, the Bylaws or any Federal/State law. Typically resolutions are used to clarify an interpretation within the governing documents, establish architectural guidelines and activity/use of the common area.

The authority to adopt rules are typically contained within your governing documents. Some States even give this authority within their COA/HOA laws [for example: VA § 55-513. Adoption and enforcement of rules].

Tim

According to the Maryland Condominium Act a board can pass rules and regulations but the draft rules must be sent to all unit owners ahead of time and a general meeting called to discuss the proposed rules. If the board then passes the rules the unit owners have 15 days to challenge the rules. A petition with 15% of the unit owners requesting a special meeting at which 30% of the unit owners can negate the rule.

The Maryland Homeowners Association Act has no such provision but legislation has been proposed to add the condo requirement to the HOA Act.

Why Maryland doesn't just write an Omnibus Act like CA has is beyond me.
Jeanne

This is a NC association, and to be more specific in the past the board decided that they did not like commercial vehicles in the community, so they added a section in our handbook banning any commercial vehicle from parking in the community at any time.

There is no reference in the bylaws, or covenants in regard to banning commercial vehicles in the community. It has come to a point where someone with a white van, with no signage, or commercial plates is being questioned because it is old, and they do not like the look of the van.

There were also several other sections added to the handbook, this is just one example. Can the board fine an owner for parking a commercial vehicle in the neighborhood even though it is not in the bylaws or declarations?

What if the board decides they do not like red cars, and put that in the handbook?

From my own experiences and from what I have read here it appears that generally speaking,and short of blatently violating State Law, Boards can do about whatever they want to. If your Members really wanted commercial vehicles allowed they can recall the Board or vote them out.

Paul T

A similar question recently came up with our NC Board.

We too have a "handbook" of rules, which the CCR's say we are allowed to have.

The question is, and I can't answer it, is how does anyone know that the rules in the handbook were in fact voted on by a board?

If we want to enforce a rule that is currently in the handbook, how do we prove that it is rightfully there?

Yes, I would assume - so is that the way to prove it?

How would the current board know where to look? That rule may have been created 10 years ago, or maybe 5 years ago, or maybe it was never voted on and was just put in the handbook by some overzealous board member?

As others have said they will be in old minutes, if they were smart they would have when they created the rules and regulations footnoted it with the date of the meeting and board vote. IF you can't find it in the minutes then technically it doesn't exist and would have to be revoted on.

Carol,

Right, "member comment". We use a 45 day notification period. Depending on Board meeting dates and Newsletter publication dates it can be up to about 90 days from the initial proposal to the final approval. IIRC, in the 16 years of going through this process we have never had one dis-approved after the Board approval of the notification process, a painful, massively slow and cumbersome process. Also, the new rule or revision must be closely based on the existing C&R's. The Boards always had massive heartburn when we presented a new or revised rule, bunch of wimps whose major objective was to:
MAKE NO WAVES.

Paul T