The primary “governing documents” of an association are the declaration, articles of incorporation, and bylaws. When properly drafted, all three governing documents work together and have separate roles addressing different aspects of associations’ governances. Unfortunately, all too often documents are not drafted correctly, which results in overlapping and contrary provisions between documents and provisions written into documents where they do not statutorily belong. To assist you with weeding through your community’s documents, below are the general descriptions of each of the three governing documents and the proper role of each one.
Declaration: The declaration (a/k/a CC&R’s or Covenants) establishes, defines, and limits property rights of owners and is recorded in the office of the clerk and recorder of the county in which the community is located. The recording ensures the terms of the declaration bind all present and future owners. Ideally, a declaration should contain the following:
• Specification of ownership of community components between the individual owners and association;
• A funding mechanism (such as assessments) for the purposes of maintaining and governing the community;
• Protective standards, restrictions, and obligations in areas ranging from architectural control to prohibitions on various activities;
• A plan for transition of control of the association from the developer to the owners; and
• Definition of rights and a clear separation of responsibilities of owners and the association with respect to assessments, maintenance, insurance, common elements/common area, and modifications within the community.
Articles of Incorporation: The articles of incorporation establish an association’s corporate structure, and are filed with the Secretary of State’s office. The articles of incorporation do the following:
• Bring the corporation into existence;
• Define the corporation’s basic purposes and powers;
• Indicate there must be a board of directors and identify the initial board; and
• Limit the personal liability of directors and officers.
Bylaws: The bylaws establish governing regulations for the administration and management of a community association and provide an “operating manual” for corporate action. Bylaws are not generally recorded with the Clerk and Recorder or filed with the Secretary of State, but kept as corporate records at the association’s principal place of business. The bylaws set forth in detail processes for the association’s operations, such as:
• Requirements for membership in the community association;
• Requirements for membership of the board and board meetings;
• Voting rights of members;
• Procedures for electing the board of directors;
• Procedures for the board of directors to elect officers; and
• General powers and duties of the board.
By: Elina B. Gilbert, Esq.