Many day to day questions facing board members, managers and homeowners are easily answered in the association’s governing documents. But understanding your governing documents can be a daunting task and may, at times, seem overwhelming. This article provides tips on how to help you understand your governing documents and what information is contained in each document.
Know the Hierarchy of the Documents
Generally, each of the governing documents for your community carries varying degrees of power and authority. They are not all of equal weight when it comes to providing the rules and restrictions for the association. That’s because the provisions in some documents hold sway over the provisions from other documents, creating a hierarchy of authority. That hierarchy is as follows:
- Recorded Map, Plat or Plan (a.k.a. “Condominium Map” or “Plat Map”) and Declaration (a.k.a.”Declaration of Covenants, Conditions and Restrictions” or “Covenants” or “CCRs”). The CCIOA defines these 2 documents as being part of one another.
- Articles of Incorporation
- Rules and Regulations, Governance Policies, Resolutions, Design Guidelines
The provisions in the documents that are higher on the hierarchy scale trump any inconsistent provisions of documents that are lower on the scale.
Finding What You Are Looking For
Just from the titles of the various documents, it is not always evident what is contained within. Here is a brief summary to assist you in finding what you may be searching for:
- Map or Plat
- A drawing of the footprint and layout of the community
- Shows location of lots or units and common areas
- May contain notes with regard to ownership and maintenance of certain elements
- Shows locations of easements
- Defines ownership of elements in the community (lots, common areas, limited common elements, etc.)
- Establishes maintenance and repair responsibilities as between owners and association
- Provides for the funding of the association (budgets, assessments)
- Sets forth proper purposes and goals of the association
- Contains protective standards and restrictions for community
- Provides some of the framework for the governance and management of the community
- Addresses the process of transition of the community from developer to owner control
- Articles of Incorporation
- Establishes the nonprofit corporation
- Sets forth general corporate (association) powers and authorities
- Provides for the composition of a board of directors
- Procedures and rules for the governance of the association
- Notice requirements
- Meeting procedures for both member and board meetings
- Election procedures for the board of directors
- Roles and authorities of directors
- Rules, Regulations and Policies
- More detailed explanations, clarifications and definitions of restrictions and authorities found in the Declaration, Bylaws and Articles of Incorporation
- Provides for the procedures to be used in putting restrictions into effect
- Sets forth procedures for anything from collection of delinquent assessments to conducting the association’s annual meetings
- May not contradict or conflict with anything found in the governing documents of superior authority (i.e. Declaration, etc.)
- Currently the following nine governance policies are required by Colorado law: Collection, Enforcement of Covenants, Conflict of Interest, Conduct of Meetings, Adoption of Policies, Investment of Reserves, Alternative Dispute Resolution, Inspection of Records, and Reserve Studies.
Get to Know Your Definitions
A key to understanding your governing documents is to always read the definitions section. Let’s say you need to know who is responsible for repairing a broken water line in your condo. Although you can read the maintenance and repair section in your condominium’s declaration, it won’t help you understand those responsibilities unless you also review the definition of a “Condominium Unit” and understand where the boundaries for a “Unit” really are.
Get in the habit of checking the definition section of your Declaration (usually found at or near the beginning) to decipher the true meaning of any provision. Insider’s tip: if you find capitalized words, they should be “specifically defined terms” included in the definitions section found near the beginning of most Declarations. Examples of typical specifically defined terms include “Common Area”, “Member” and “Unit”.
Beware the Disconnect Between Maintenance, Repair, Replacement and Insurance
A pitfall that often trips up even more adventurous reviewers of governing documents is the difference between requirements to maintain, to repair, to replace, and to insure something. Insider’s tip: don’t assume any of these responsibilities go hand-in-hand. Often, whoever is responsible for maintaining a certain element in the community is not the same party responsible for replacing that element when it reaches the end of its useful life, or insuring that element in the event of catastrophe.
A good example is a condominium balcony. Declarations differ, but often unit owners are responsible for cleaning and maintaining their balconies, while the association may be responsible for repairing, replacing and insuring them. To find the right answer for your association, you must carefully read the applicable maintenance and insurance provisions of your Declaration without preconceived ideas about seemingly natural connections between those duties.
Understand the Difference Between a Member and a Director
All owners have membership rights and responsibilities that come along with being an owner, which are specifically explained in the governing documents. But when an owner is elected to the board of directors, an entirely different set of rights and responsibilities for board directors now apply to that person at the same time. This somewhat confusing distinction often comes into play when board directors get cross-ways with each other and a campaign begins to remove a director from the board.
In that event, when reading your Bylaws you may find that removing a director from the board only can be done by a vote of the membership. Board members often don’t have the power to remove a director. What they may have is the power to remove a director from serving in a particular officer role on that board. For example, the director in question may be removed as treasurer by the remaining directors. The differences between the powers of members and those of board directors should be studied carefully.
If They Are Broken, They Can Be Fixed
OK, now that you’ve carefully read all your governing documents, what if some provisions are exceptionally confusing, obviously conflict with other governing documents, or do not accurately reflect the current state of the association?
Fortunately, most governing documents can be amended, in whole or in part, according to amending procedures in the document itself, or in the Colorado Common Interest Ownership Act (CCIOA). Unfortunately, the amendment process can be tricky. Your association must make sure that any new amended provisions are properly drafted, have the meaning that you intend, are properly approved, and are legally recorded.
When you need to amend your governing documents, we recommend consulting with an attorney who specializes in handling amendments.
Hopefully these tips have given you the confidence and some tools to better understand what’s in your association’s governing documents. Happy reading.