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HOA Bylaws: Why are they important?

It happens fairly often in life, business and government: employees learn the rules of a new job, and very shortly thereafter, learn shortcuts to circumvent them. This tactic is often a function of convenience, as employees can benefit from solving the problem as quickly as possible.

The same can happen with co-op and condo boards, which may stray from the letter of the law which governs their condo association.

In these instances, lapsing from the rules often comes from new members who have not yet familiarized themselves with all the regulations. In these cases, ignorance rarely leads their community to bliss. Boards that stray from a condo or homeowner association’s governing documents will find themselves in a bind – the kind that may end up involving litigation.

“A board must conduct the business of its association in accordance with the governing documents of that association—the declaration, amendments, bylaws, article, rules & regulations—in addition to Florida statute,” says Candice Gundel, a senior associate attorney with the Business Law Group, P.A. in Tampa. “In addition, a board should consider Robert’s Rules of Order when conducting meetings, as well as any relevant case law and arbitration decisions.”

Florida law specifically states: “Within 90 days after being elected or appointed to the board, each newly elected or appointed director shall certify in writing to the secretary of the association that he or she has read the association’s declaration of condominium, articles of incorporation, bylaws, and current written policies; that he or she will work to uphold such documents and policies to the best of his or her ability; and that he or she will faithfully discharge his or her fiduciary responsibility to the association’s members.”

“We always tell our boards to be very familiar with their collection practices, so they can make sure that the business of their association can continue because, even though they are typically not-for-profits, boards do need to bring in revenue to administer and operate their communities,” says  Jacqueline Marzan, a senior attorney with Levine Law Group. “It’s also important that boards understand use restrictions. All communities have them, and they’re primarily embedded in an association’s restrictive covenants—or the bylaws/rules for cooperatives—and they are rules and regulations that address behavior—essentially what one can and cannot do. Knowing those will allow a board to understand whether or not something happening in the community is appropriate, or if they’re following proper collection practices.”

According to Gundel, the short-term risks of informality, corner-cutting and the like tend to be more geared toward inefficiencies in the day-to-day operation of the association, which can include the allocation of funds. “Inefficiencies can snowball and cause significant additional work and money to an association over the years,” she says.

“In addition, an association that does not follow correct protocol is exposing itself to the risk of litigation. An extreme example can be found in HOAs. The Marketable Record Title Act requires that an HOA renew its governing documents within 30 years. If this renewal goes ignored or is done improperly, the association’s declaration will no longer be enforceable, virtually extinguishing the association. The process to renew the governing documents is relatively simple and inexpensive on its face, but were the document to expire, the cost and process to reform would increase ten-fold in both difficulty and expense—should it even be a possibility at all to do so.”

 

 

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