When you are elected to serve on the Board of Directors for your Homeowners Association, one of the first things you should do is familiarize yourself with the Association’s governing documents. These documents essentially provide the rules for how HOA life is to function. Additionally, these documents will enumerate your responsibilities as a member of the Board.
The typical HOA has three basic governing documents: Bylaws; rules and regulations; and CC&Rs. It’s important to know your way around each of these documents, and also to understand the differences between them. In this article, we will focus on defining the role of the CC&Rs.
What are CC&Rs?
CC&Rs is a shorthand for covenants, conditions, and restrictions. Your HOA’s CC&Rs represent a legally binding document that is filed and maintained by the county recorder.
What is the purpose of this document? For one, the CC&Rs detail the duties and obligations the HOA owes to its members. On the flip side, CC&Rs should also outline the duties and obligations that members owe to the HOA.
Much of the time, CC&Rs focus on legal issues. The specifics may vary from one Association to the next, but usually the CC&Rs will cover topics such as the following:
- Property-use restrictions
- Maintenance obligations for the HOA, and for individual members
- Mechanisms for enforcing the rules of the HOA
- Mechanisms for resolving any disputes that arise within the HOA
- Lender protection provisions
- Obligations for HOA insurance
- Obligations for dues/assessments
Keep in mind that, because this document is filed with the civil magistrate, it can be difficult to amend or update it. Making any kind of change to the CC&Rs requires not only a Board vote, but a vote of the full HOA membership. So, while it is a fluid and malleable document, the reality is that CC&Rs are typically not changed very often.
CC&Rs vs. Bylaws
It is helpful to understand how the CC&Rs differ from, and ultimately augment, the other governing documents of the HOA. To begin with, how are the CC&Rs distinguished from the bylaws?
One way to think about it: The CC&Rs define what needs to be done within the HOA, both by the Association and by the members. The bylaws define how. In other words, the bylaws establish some of the issues and structures pertaining to day-to-day administration, management, and governance of the Association.
A few examples of topics covered in the bylaws include:
- How frequently your HOA needs to hold elections for new Board members
- The process by which Board members are nominated and elected to office
- The number of members required to serve at any one time
- The length of time each Board member must serve
- The frequency with which the Board must meet
- The number of Board members needed to establish a quorum
- The basic duties and responsibilities of the Board members
One more note: Like CC&Rs, bylaws are fairly difficult to change. Amending the bylaws will require a vote from the entire HOA membership. So, while the bylaws can certainly be modified, this isn’t something that happens too terribly often.
CC&Rs vs. Rules and Regulations
The third and final HOA governing document is what’s known as the rules and regulations. This document is not quite as well-defined as the CC&Rs or the bylaws. In fact, the rules and regulations essentially provide a catch-all for anything that isn’t covered in those other two documents.
The rules and regulations are usually more minor restrictions that are passed to address issues in the community; for instance, to ensure safety, the HOA Board may decide to make a rule stating that nobody under 15 may be at the community pool without an adult, or that the pool cannot be used before the hour of 11 AM.
By their very nature, rules and regulations change and evolve over time. Most HOAs require that, before any changes to the rules or regulations, community members have 30 days to review the proposed changes.
What Else is Included in the CC&Rs?
We have already outlined some of the basic topics that might be covered in the CC&Rs. Now, let’s take a closer look at some of the core elements included in the standard CC&R document.
Use Restrictions and Maintenance Requirements
First, CC&Rs typically define how properties may be used within the HOA. For example, can a homeowner rent out their property? Can they list their spare room on Airbnb? Can they park large recreational vehicles in their yard? Questions like these should be clearly resolved within the CC&Rs, leaving little gray area or room for dispute.
The CC&Rs may also denote the obligations homeowners have to maintain their properties. These obligations may include things like keeping the lawn at a certain level, minimizing weeds, and ensuring that trash cans are kept out of sight except for on garbage collection day.
Construction and Design Issues
The CC&Rs may also be used to enumerate construction and design restrictions.
The CC&Rs should outline specifications for any new constructions on HOA property, including square footage and set back requirements.
Additionally, CC&Rs may establish processes and committees by which any new construction plans must be approved before building can start.
Note that the goal of these restrictions is not simply to be onerous, but rather to maintain uniform standards throughout the community. This helps the HOA fulfill its basic mission of upholding property values.
Under the CC&Rs, the Board may charge the members of the HOA maintenance fees, typically on a monthly basis but sometimes on an annual basis.
The maintenance fees may cover the expenses of landscaping, legal fees, trash pickup, snow removal, and more.
The HOA will typically run smoothly so long as all homeowners pay their fees in a timely manner. When there are delinquent homeowners, however, the CC&Rs should also outline a process by which the Board can take action.
Expiration of Covenants
In some states, the law requires that any restrictive covenant be reviewed and then either re-ratified or amended on a regular basis. For instance, the law might state that your CC&Rs expire every 15 or 20 years, unless the membership has a chance to approve renewing them.
Naturally, the Board should keep tabs on the expiration of the covenants so that this information is in the public record and that homeowners have ample notice about their obligation to review and re-approve these governing documents.
How Can a Management Company Help with CC&Rs?
Needless to say, these essential governing documents can have a major impact on the way your community is governed. As such, the CC&Rs are nothing to take lightly. As a Board member, you may benefit from asking your management company how they can help with CC&Rs. Some examples include:
- Advising on the development of CC&Rs
- Guidance about amending CC&Rs
- Counsel about how to rightly interpret and enforce CC&Rs
- Counsel about legal issues, including how to file and maintain the CC&Rs with the county or state
As you seek to make the most of your governing documents, don’t hesitate to contact a professional management team. If you need HOA management in the Carolinas, including in Charlotte or Myrtle Beach, be sure you reach out to the team at Kuester Management Group at your convenience.