Creating Policies

Can someone explain the procedure of creating Board policies and if they must be voted upon by unit owners before implementation? Are such policies an extension of the Rules and Regulations?

Our condo association occasionally passes "policies." We have a remodeling policy that was recommended by the manager and passed by the board. I recently learned from board meeting minutes that our association has a rental policy, but I have never heard of it or received a copy. I have requested a copy of the policy and the meeting minutes where it was introduced, discussed, and passed. I think a rental policy would need to be voted on by the owners and, if passed, become an amendment to the declaration. Comments regarding this would also be appreciated.

Normally, a condo or homeowner’s Board of Directors has the ultimate decision-making authority and, in general, is empowered to set the association’s policy, objectives, and overall direction, in accordance with its governing documents. However, the word “policy” is not a tightly defined concept but a highly flexible one, used in different ways on different occasions. It would be very easy to get bogged down in mere semantics unless a common working definition is established. Here is my stab at it. A "policy" is very much like a decision and we "make", "implement" or "carry out" a policy just as we do with decisions. Usually, an association’s policies are a documented set of broad guidelines, formulated by its Board of Directors that guide and in many cases, determine present and future decisions. Policies can also include a specific decision designed to carry out the course of action.

So, the answer to your question is, “It depends.” Most certainly, an association’s by-laws, CC&R’s, and other rules and regulations could be considered policies. Governing documents will identify the decision making and approval requirements for any changes. On the other hand, many other BoD “policies” do not require the same level of approval and may be established solely by BoD members, within the authority framework given to them as a Board of Directors. An example was sited earlier for the start time of a BoD meeting. Shown below are some other examples of policies (in this case, financial related) that may or may not have to receive association member approval, again, depending on governing documents.

- Budget Policy
- Investment Policy
- Insurance and Claims Submission Policy
- Signature Policy
- Competitive Bids Policy
- Internal Financial Controls Policy
- Code of Ethics Policy
- Document Security Policy
- Reserve Transactions Policy
- Conflict of Interest Policy

As a broad statement and not meant to give any legal or financial advice, I would argue that most of these would not have to require a vote of the membership. On the other hand, I would definitely communicate to all association members any policies, such as these, that may be adopted by the BoD. It should all be above board and there should be nothing to hide. It is an excellent opportunity for a BoD to build confidence and trust with the association members to demonstrate how effective the BoD has been in efficiently running an association and its ability to lead.

Good Luck
JoeK

Thank you all for you comments.

I did find a reference book that contained some good HOA information. I had just purchased and received copies for each board member through Amazon. It is the "Homeowners Association Manual, Fifth Edition" by Peter M. Dunbar, Esq. and Marc W. Dunbar, Esq. Regarding Policy Statements and Resolutions the book states: "Statements of policy and resolutions of procedure outline and clarify existing standards of conduct for association members, property owners and their guests. They also establish standard forms for providing warning notices for violation of covenants or rules as well as for sending reminder correspondence to members who are late or delinquent in paying assessments or management charges. Every community has some established policies and standard procedures for carrying out the regulatory functions of the homeowners association."