Part 3 – Bylaws – Understanding Governing Documents for HOAs
Living in a homeowners association, you’ve likely heard people use terms such as “Bylaws,” “Rules” or “CC&Rs.” What do they mean? An Association is actually a registered non-profit corporation in the state of Minnesota – and to be so, they have an important set of legal governing documents. Much like our country has a Declaration of Independence, Constitution, Bill of Rights, etc to function as a nation, an association has a similar document framework to act as a common interest community. The purpose of this article is to give you, as a member of a homeowner association, a basic understanding of this set of documents. Although all HOAs are slightly different, their governing documents will typically all contain the following: * Articles of Incorporation * Declaration of Covenants, Conditions and Restrictions *CC&Rs) * Bylaws * Rules and Regulations Bylaws Once an association has been formed and the Declarations laid out, it then adopts a set of bylaws. Bylaws are important for owners. The primary function of the Bylaws is to give direction on how the Association will be governed. Here are some examples of critical components of the Bylaws: * Board of Directors structure (term length, number, qualifications, etc.) * Responsibilities of the Board (policy creation and enforcement, budget setting, etc.) * Officer positions and responsibilities (President, Treasurer, Secretary, etc.) * Voting procedures and rights * Board and owner meeting requirements * Meeting notice procedures Each governing document serves a specific purpose, yet they all interact with one another to create and maintain a community homeowner association. By purchasing in an association, you created a legally binding contract between yourself and the association. That “contract” is the important documents listed above. Hopefully this breakdown is helpful. You can access these documents on your association’s website through www.sharpermanagement.com
Part 2 – CC&Rs – Understanding Governing Documents for HOAs
Living in a homeowners association, you’ve likely heard people use terms such as “Bylaws,” “Rules” or “CC&Rs.” What do they mean? An Association is actually a registered non-profit corporation in the state of Minnesota – and to be so, they have an important set of legal governing documents. Much like our country has a Declaration of Independence, Constitution, Bill of Rights, etc to function as a nation, an association has a similar document framework to act as a common interest community. The purpose of this article is to give you, as a member of a homeowner association, a basic understanding of this set of documents. Although all HOAs are slightly different, their governing documents will typically all contain the following: * Articles of Incorporation * Declaration of Covenants, Conditions and Restrictions *CC&Rs) * Bylaws * Rules and Regulations The Declaration of Covenants, Conditions and Restrictions (CC&Rs) After a developer has established an association and incorporates it, then they must file an important document with the County that lays out the rights and responsibilities of the association and the people within it. It is truly the “meat” of the association’s set of governing documents – and it sets the framework for every other document after it. Some of the common components of the Declarations include: * Definition of Unit boundaries * Identifying “common areas” and components * Listing of maintenance responsibilities (ex: owners maintain inside of “unit” and association “common areas”) * Overall rights of owners (ex: unit leasing or pet) * Owner restrictions (ex: residential use only and not business) * Overall rights of association (ex: rule creation) * Insurance requirements * Assessment procedures and requirements (special assessments, monthly assessments/”dues”) * Association’s powers to collect dues The Declaration of Covenants is, in essence, the contract between owners and the Association. It is an incredibly important and powerful legal document. Each governing document serves a specific purpose, yet they all interact with one another to create and maintain a community homeowner association. By purchasing in an association, you created a legally binding contract between yourself and the association. That “contract” is the important documents listed above. Hopefully this breakdown is helpful. You can access these documents on your association’s website through www.sharpermanagement.com
Limited Common Elements vs Common Elements
It is important to understand the difference between Limited Common Elements vs Common Elements. And please note that these will vary significantly by association and how the Governing Documents define and treat them. A Common Element is typically a space or component that is “shared” by all. Popular examples include roadways, parking lots, condo building hallways and lobby areas, roofs, siding, grass/trees/landscaping, etc. Typically the association is responsible for maintaining these areas and components with funds collected from regular dues/assessments. Cutting the grass, plowing roads, repairing roof leaks, etc. Additionally, the association may be responsible for replacing some of these components with funds set aside via the Replacement Reserve. Common Elements are things that are equally shared. Limited Common Elements, however, are a bit trickier to understand. These are typically areas or components that are exclusively used by a particular homeowner or shared owners; or they may be components located outside of the “unit boundaries.” Examples include doors, windows, decks, patios, etc. Another example might be components that not all units have – such as balconies, skylights and chimneys. Limited Common Elements are exclusively used and NOT equally shared. The important thing to realize about Limited Common Elements is that while the responsibility for maintenance and replacement MAY (and not always) be the association’s, the cost could be entirely the homeowner’s. Governing Documents will read differently, but the common theme and practice for an association is that maintenance/replacement of Limited Common Elements may be assessed to the benefiting unit owner, unless said maintenance/replacement is provided to ALL owners. For more information on the topic, and particularly if your association is governed by the Minnesota Common Interest Ownership Act (MCIOA), see the full statutory description of Common and Limited Common Elements at https://www.revisor.mn.gov/statutes/?id=515b.2-109