North Ogden Cove Governing Documents
Whether you are on the board of your HOA or simply a member, it is important to understand the HOA governing document hierarchy of your association. This hierarchy includes HOA CC&R documents, HOA declaration, and other governing documents, rules, and regulations that we’ll cover here. The HOA governing document hierarchy is important to every HOA.
THE HIERARCHY OF HOA DOCUMENTS: WHICH TAKES PRECEDENCE?
HOAs are governed by many rules and regulations — to a point where it may get confusing for both board members and homeowners alike. To avoid any kind of misunderstanding, it’s important to have a clear understanding of homeowners’ association documents, as well as which HOA documents take precedence in your community.
THE HIERARCHY OF HOA DOCUMENTS EXPLAINED
As an HOA board member, you have a responsibility to uphold and follow the association’s governing documents. However, these documents were written by people, and people aren’t perfect. Conflicts in provisions happen all the time. It’s also possible that some board members may have different interpretations of the rules and regulations that govern the community. So, what do you do in these instances? How do you ensure that the proper course of action is followed? The answer is to simply look at the hierarchy of HOA governing documents within your association. Some HOA documents take precedence over others. If you don’t know which one supersedes the others, take a look at the list below:
FEDERAL AND STATE LAWS AND STATUTES
The laws of the land take precedence over all other HOA documents. State laws come before local laws, while federal laws outweigh everything else. Whether you’re drafting your governing documents or deciding which one to follow, it’s important to always check the law first. This way, you’re not acting against the laws of the land. So if your HOA CC&R documents have restrictions on things like sex and religion when it comes to potential homeowners, that would be in conflict with the Fair Housing Act. In this case, the related provisions in your CC&Rs violate federal law, which makes them unenforceable.
RECORDED MAP, PLAN, OR PLAT
Next up on the HOA documents hierarchy is the map or plat that your association recorded with the county office. It’s simply the recorded plan of your entire subdivision or community. This document establishes maintenance responsibility and property location. It also shows the exact dimensions of each unit, easements, and setback requirements. Other items of note include: Trash enclosures specifications, Restrictions on vehicular access, Handicapped parking spaces and parking restrictions Landscaping restrictions, Lighting requirements and prohibitions, Areas for future development, Lighting and other requirements/restrictions
CC&RS
The Declaration of Covenants, Conditions, and Restrictions (CC&Rs) take the third spot on the HOA documents hierarchy. This document details the rights of homeowners and the responsibilities of the HOA board members. Typically, the CC&Rs also contain stipulations associated with assessment obligations, maintenance responsibilities, and enforcement authority. This is also where you’ll find specific procedures on how to handle various issues such as disputes and violations.
Others know the CC&Rs as the rules of the community. This document guides homeowners on what they can and can’t do, particularly when it comes to property use and other aspects of HOA living. Before purchasing your home in an HOA community, you’ll be informed of the CC&Rs and asked to agree to them. You may even need to sign something as proof of agreement.
When a homeowner violates a covenant, certain consequences take place. Most associations send out a notice of warning on the first offense. Fines and the suspension of privileges are typical courses of action for future violations. Failure to settle these fines can eventually lead to legal action.
ARTICLES OF INCORPORATION
The Articles of Incorporation includes essential information such as the legal name of the HOA, address, and the association’s corporate status. Some articles also contain a few basic functions of the HOA. This document, while necessary, doesn’t consist of much. It’s filed with the state upon the formation of the association.
Coming in fourth on the HOA documents hierarchy means the Articles of Incorporation supersede the HOA bylaws and the operating rules. However, they don’t take seniority over the state laws or the CC&Rs. So, if something in your Articles of Incorporation comes into conflict with a provision in your CC&Rs, the latter takes precedence.
HOA BYLAWS
The HOA bylaws consist of important information related to how the association is run. Like a business, a board of directors oversees the workings of an HOA. The bylaws simply state the particulars of how to operate the HOA, such as how often to conduct meetings, the process of holding meetings, and voting rights. This document also includes how many board members there should be as well as the functions of each of those board members. As fifth on the list, the only document the HOA bylaws prevail over is the operating rules and regulations. So, if your bylaws clash with, say, your Articles of Incorporation, you must follow the latter document. If you wish to see your HOA bylaws or any other governing document, you can request a copy from your HOA board or with the county recorder’s office.
RULES, REGULATIONS, AND RESOLUTIONS
Whereas the CC&Rs and bylaws determine the procedures and responsibilities of the HOA board, the rules and regulations focus on the day-to-day aspect of operations. This can include rules regarding clubhouse use, pets, and even architectural or landscaping specifications. These rules can change from time to time, though the board must ensure that new rules or amendments don’t come into conflict with other governing documents. Moreover, it’s a good idea to have the association’s attorney look over these policy changes to make sure the board is acting within its scope. On the other hand, if you’re a homeowner who disagrees with one or some of the operating rules, you’re not entirely powerless. Make sure to let the board know why you (and/or others) oppose the rule. You can also check your local laws or reference other governing documents to see what else you can do. After all, every state and association is different, so what may work for one HOA might not work for another.
OTHER HOA DOCUMENTS
Apart from the governing documents, HOAs also have many other official documents. Though these documents do not have a direct bearing on how the association is run, they are nevertheless official records of the HOA. They can provide further insight into an HOA’s operations, which can be helpful if you are a current or potential member of the community. Here are other HOA documents you need to know:
Board Meeting Notices, Agendas, Minutes, and Committees
HOA Board Election Notices, Ballots, Minutes
HOA Membership List or Directory
Insurance Policies and Records
Vendor Bid Proposals, Contracts, Third-Party Agreements
Rental Documents — If your HOA is leasing property, rental documents will include tenant application forms, rental agreements, and rental restrictions.
Legal Documents — Includes judgments, liens, and other legal records that are not subject to confidentiality agreements
Financial Documents — Documents that establish the financial status of an HOA include account ledgers, balance sheets, annual budgets, financial statement reviews, annual audits, invoices, reserve studies, tax returns, and bank statements
Reserve Analysis Study
A reserve study is a long-range capital planning tool that helps boards anticipate and prepare for the repair and replacement of their community’s common assets. A reserve study includes both an in-depth analysis of the property’s physical condition and a thorough examination of current reserve funds. The resulting reserve study report presents a prioritized schedule of capital projects and a reserve funding plan to offset future costs associated with repairing and replacing the common assets over the next 30-years.
Utah State Code 57-8a-211. Requires that all community associations within the state must have a full reserve study performed by July 1, 2012 and then again every six years, with an update every three years. This requirement can be more frequent depending on your CC&Rs.
A reserve study is a vital capital planning tool for HOAs and condominium associations that provides directional guidance and an in-depth analysis of community assets. The initial reserve study requires an onsite inspection and thorough examination of the reserve fund status to establish a prioritized schedule of capital improvement projects and a reserve funding plan to pay for them over the next 30-years. Less rigorous or meticulous reserve study updates — conducted every 3-to-5-years — are also important for helping associations to maintain an accurate forecast of future expenditures and to ensure adequate reserve funds.
Without a reserve study on hand, an HOA is flying blind into its future. To set its course, the HOA has a fiduciary responsibility to hire an independent reserve study company to do this important work and to leave behind a well documented plan that benefits current and future boards. Property managers come and go; board members frequently change, and the existing reserve study is there to help new decision makers understand the logic or reasoning behind earlier choices. A professional reserve study company will be available to discuss its work, the methodology used, and considerations that went into the study years after it was conducted. Additionally, reserve study specialists can support HOA boards by providing periodic updates to the original reserve study, ensuring the association remains on track.
For an association, having a reserve study is like having an investment strategy: you set aside funds today to cover future expenses. Success is dependent on understanding long-term expenditures and your ability to fund them through reserves.