The language of the governing documents of an association provides what an association’s board and owners are allowed and required to do. However, the governing documents often use words that at first blush seem to mean the same thing, such as “power” versus “duty,“ “can” versus “will,” and “may” versus “shall.” Some of these words indicate a requirement, while the other words merely provide authority to do something at the party’s discretion. Knowing the difference between these words can be key to understanding what the governing documents require of an association’s board or owner versus what the governing documents allow an association’s board or owners to do.
Words Indicating Requirement
Ultimately, the governing documents tend to outline a board’s powers and duties and may even present a list of a board’s powers and duties without differentiating between the two, but powers and duties are not the same thing. If the board has a duty, the board is required to act on that duty, as duties are mandatory. The board cannot refuse to do something that is indicated as being a board duty without violating the governing documents. However, it is not always specified that an item is a “duty,” but other words are used which indicate that the action is required to be pursued. The most common word indicating a requirement is “shall,” although occasionally, the word “will” may also be seen. If the governing documents indicate that the association or owner “shall” or “will” do something, this means that it must be done.
Common requirements that can be found in an association’s governing documents include the board’s and owners’ responsibilities or board procedural requirements. For example, a statement that “the association shall maintain and keep in good repair all common elements” means that the association is required to maintain the common elements in the association. Another example of a requirement is a statement that “any assessment which is not fully paid within 10 days after the due date will bear interest from the due date…” This statement means that the association is required to apply interest on delinquent assessments (although boards also have the discretion to waive such interest after such application).
Words Indicating Discretionary Authority
When a board has the authority to do something that is not actively required, this describes a “power” of the board. The board is usually provided many powers in the association’s governing documents, but the board is not actively required to use all such powers, unlike a duty. Powers are discretionary in that they provide the board authority to pursue an action without such action being mandatory. But again, instead of referring to such actions as being a “power,” governing documents more often use the terms “may” or “can” to indicate that something is allowed, but not mandatory.
Discretionary language can be found in many portions of the Association’s governing documents. For example, most association declarations address special assessments as being a discretionary power, using such language as, “the board may levy a special assessment applicable to that year only.” The “may” indicates that this is discretionary, and the board is not actually required to levy a special assessment at any time. Another example of discretionary language is a statement that “amendments can be executed in counterparts.” This indicates that it is allowed for amendments to be executed in counterparts but does not require that amendments be executed in counterparts. It is important to note that if the language is permissive, but not required, that a board is not violating the governing documents if it chooses not to pursue such action.
In sum, when navigating an association’s governing documents, some actions are required to comply with the governing documents and others are discretionary. Differentiating between what is mandatory versus discretionary can be as simple as knowing that the words “shall,” “will,” and “duty” indicate a requirement whereas the words “may,” “can” and “power” indicate a discretionary option. Knowing the difference is important, as not pursuing a required action would be a violation of the governing documents, whereas if an action is discretionary, not pursuing such action is acceptable and within the board’s discretion.
Should you have any additional questions about whether an action is discretionary versus required, please contact an Altitude attorney at (303) 432-9999 or at [email protected].