Rules of the Road for HOAs
We frequently are asked by our HOA (homeowners’ association) clients to review their rules and regulations. Boards are often granted the authority to adopt rules by the HOA’s governing docum`ents, and even if not, North Carolina statutes authorize boards to enact rules and regulations.
Within HOAs there exists a hierarchy of governing documents. At the top is the Declaration of Covenants, Conditions and Restrictions (the Declaration), followed by the Bylaws, and at the bottom of the hierarchy are rules and regulations. The Declaration can be likened to the yellow lines along the sides of the road, and rules and regulations must stay within those yellow lines. Stray too far in either direction, and the HOA winds up in a ditch with an unenforceable (and possibly liability-inducing) rule or regulation.
In some HOAs, the rules and regulations are referred to as standards, policies, or ubiquitously, as guidelines. This latter term is often a misnomer, since rules and regulations are oftentimes more than just a guide, and so long as they stay within the yellow lines, rules and regulations are enforceable.
Generally, the board can enact rules and regulations at any time, provided that the board meets a modicum of corporate formalities.
Rules and regulations serve any number of purposes, such as: regulating the use of common areas (e.g., pool and clubhouse rules); describing how to submit an architectural modification request; clarifying the meaning of terms (e.g., the meaning of the term “screen,” as in “all recreational vehicles must be screened from view”); and myriad other purposes. The cardinal rule is that rules and regulations must be consistent with the Declaration and the authority granted within it.
Certain provisions lend themselves to rules and regulations. For example, a Declaration requiring that owners “regularly mow their lawns” could support a rule informing owners how frequently they must mow to meet this otherwise subjective standard. Certain unclear terms, like “screen,” can become clear by the adoption of a rule. Rules and regulations fill these gaps within the Declaration.
One area where many communities struggle is when their rules and regulations go beyond the authority granted in the Declaration. A Declaration prohibiting chain-link fences does not support a rule requiring all fences to be made of wood. A requirement in the Declaration that no commercial vehicles may be parked on the street does not, to the chagrin of many HOAs, give the authority to regulate all parking, even within lots. My personal favorite is the board that wants to provide for the safety of its residents by enacting a rule to fine or “ticket” owners for speeding. When a Declaration informs us that it is intended to protect the neighborhood, that does not mean that boards can “protect and serve” and issue tickets.
An HOA can generally regulate a person’s conduct while on the common areas, but for an HOA to exercise authority over an owner’s use of or conduct upon his or her property, the authority to do so must be set forth in the Declaration. For example, many Declarations contain a “nuisance” clause, prohibiting activities which constitutes an annoyance or nuisance. Sometimes boards will rely upon these nuisance clauses to regulate various types of conduct, such as implementing a rule prohibiting loud activities (such as parties) after 10:00 p.m. While late-night parties may be an annoyance, unless the Declaration explicitly grants the authority to regulate an owner’s noise, an HOA-proscribed “noise ordinance” exceeds the HOA’s authority.
Occasionally we see HOAs enact rules to “un-enforce” the Declaration, which has its own problems. The converse of my example above is when the Declaration requires all fences to be wood, but the board enacts a rule that other fencing types are permissible. These types of rules are often couched in the “changed tastes” argument: a board or committee will conduct an informal poll where members (or more typically, members of the architectural review committee) opine that wooden fences are no longer as desirable as they once were, and therefore, we can improve property values if we allow other types of fences. If tastes have changed so much, then the proper solution is to amend the Declaration, not to enact a rule to circumvent it.
When confined to the yellow lines of the Declaration roadway, rules and regulations are a powerful and enforceable means to assist and steer HOAs and their members. Boards should regularly review their rules and regulations, so that when the rubber hits the road, they avoid ending up in a ditch.
This column was originally published in the Charlotte Observer and the Raleigh News and Observer in April and May of 2019. © All rights reserved.