When you plan to form a new homeowners’ association (HOA) for your condo building or planned development, you must draft a number of legal documents, including bylaws. HOAs are responsible for managing a wide range of issues that impact the community, including maintenance, security, various services, and restrictions on property use. You must define the HOA’s operational procedures in the bylaws, which need to be drafted in accordance with current HOA laws and in such a way that makes them legally binding for those involved. Due to the potential complexities of setting up a new HOA, you and your partners would benefit from working with an experienced attorney on the matter.
What are bylaws?
The bylaws of an HOA are important. The HOA is run as a business, and the bylaws govern how that business is managed by the officers and board of directors. They outline how the HOA will run, including provisions regarding:
- the size of the board of directors
- when and how board members are elected
- length of board members’ terms
- how board members may be removed or leave
- how often the board meets
- other procedures for the board, including quorum requirements
- when community meetings need to be held
- how members can call meetings
- homeowners’ rights and responsibilities
- the HOA’s rights and responsibilities
- how voting occurs
- how the HOA creates the annual budget
- how and when assessments are performed
Bylaws ensure that the creation of an HOA leads to a fully functioning association with a governing body and member participation. Without them, the HOA would be powerless, and it would be difficult to get anything done in regard to the property.
Bylaws are also essential for potential new owners. A buyer can review the bylaws to determine if they would be happy with how your particular building or property development functions compared to others.
Bylaws differ from CC&Rs
HOAs require the creation of several legal documents. The bylaws are essential to determine how the association is run as a business. You also need to outline the rules and restrictions of the community in the covenants, conditions, and restrictions (CC&Rs). Bylaws differ from CC&Rs, which define how the building or neighborhood will function. CC&Rs focus on homeowners’ responsibilities, restrictions on how they can use their property, maintenance requirements, and other obligations. CC&R provisions can vary greatly, from property insurance requirements down to the types of plants and lawn ornaments owners can use.
CC&Rs are publicly recorded in the county records office. This makes them legally binding and difficult to change. Bylaws are not publicly recorded, and they do not need to be in order to be legally binding.
The importance of having a lawyer draft HOA bylaws
There are many reasons why it is more efficient and less risky to have an attorney draft your bylaws than to do so yourself as a founding member. A lawyer who practices in residential property law will be well-versed in what needs to go into HOA documents. They can advise you on necessary provisions as well as discretionary provisions you may benefit from adding. If you have no experience with drafting HOA bylaws, you may not consider all of the necessary elements or how certain provisions may impact a future board of directors.
“The legal ramifications of establishing a common interest community, particularly in the bylaws which could lead to litigation, are best left to those who have had lots of experience,” according to Benjamin Weinstock, Partner at Ruskin Moscou Faltischek P.C. “If you’re a member of the co-op board or the HOA board and attempt to do it yourself, you’ll probably run afoul of something because it’s a complicated area of law and lawyers who have experience doing this will produce a better product in less time and with less exposure to adverse consequences of litigation.”
Your attorney will know your state and the federal HOA laws. Many states regulate HOAs and some require them to register. For example, Colorado requires annual registration with the Colorado Division of Real Estate.
Even if registration with the state is not mandatory, there may be statutes and case law that dictate what you can and cannot do in your bylaws. If you decide not to work with a lawyer and your bylaws violate state law, the community may face legal issues in the future.
In addition to an attorney’s legal knowledge, they also can offer you a wealth of experience in regard to what past HOAs have done and how well it has worked. A lawyer’s insight can be invaluable in helping you create comprehensive and enforceable bylaws and in building a community in which the founding members (and hopefully new homeowners) will be safe and content.