It has often been said that homeowners associations have their own version of the “Three R’s”: Rules, Regulations, and Resolutions. More often than not, the policies of a particular HOA lie at the heart of conflicts and contention experienced by homeowners, Boards, and managers alike. Resolutions are the most formal way, aside from modifying the recorded documents, that an association can enact procedures for governance.
According to the Community Associations Institute (CAI), a resolution is a formalization of a Board decision. It follows a set format and is formally adopted by the Board. While there are several types of resolutions, including general resolutions, administrative resolutions, and special resolutions, policy resolutions have the most potential to impact homeowners. Policy resolutions directly affect the rights and responsibilities of each homeowner within the HOA. Some examples include the following:
- Resolutions regarding the use of individual lots. Restricting the right of an owner to run a business out of the home, for example.
- Resolutions regarding the appearance of individual lots. Architectural guidelines or standards of appearance.
- Resolutions setting forth rule enforcement procedures. For example, the number of warnings owners receive, or when a fine is to be assessed.
Anyone who has read through the governing documents of an HOA (Articles, Covenants, and Bylaws) will probably note that they are fairly general in nature. Although the covenants lay out the obligations of the HOA and the homeowner, and the bylaws lay out regulations for administration, specific policies and procedures would not normally be found in either one. This is not an oversight. Governing documents are designed so that the HOA can create customized policies that meet the needs of that community at any given time. The covenants usually give the Board of Directors the right to create rules and regulations, including policy resolutions, and to revisit these rules if they find that they no longer fit the community’s needs. A resolution is needed when the governing documents are unclear on a specific issue.
Why a resolution, and not just another rule? Boards may find it easier to simply adopt rules via a motion at a meeting, but there are several benefits of using the formal resolution process. The process is systematic and thorough. It requires that the governing documents be reviewed, and it can protect homeowners and the association from rules that are seen as arbitrary and may be difficult or impossible to enforce. Policy resolutions are carefully crafted and well thought out, and Boards are encouraged to seek homeowner input prior to enacting a policy resolution. Formal resolutions are consistent in format and wording, and provide an official, documented record of the rules.
Resolutions follow a standardized format and use specific wording. According to CAI resolutions should include each of the following four sections:
- Authority. This section details the Board’s authority to enact the resolution. Most often this authority comes directly from the covenants or bylaws. For example, “WHEREAS, Article X of the covenants gives the Board of Directors the power to adopt rules and regulations…” The complete authority would be quoted directly from the documents.
- Purpose. This section expresses the reason for adopting the policy. For example, “WHEREAS, there is a need adopt a specific pet policy…”
- Scope and Intent. This section details who the rule will apply to, for what period of time the rule will remain, the extent of the rule, what the penalties are, and other specific ramifications. There may be several paragraphs in the resolution that address the scope and intent, each beginning with “WHEREAS…”
- Specifications. The first three sections of the resolution provide a basis for the specifications. The specifications tell those affected by the rule what they are to do. Put simply, specifications are the rules themselves. This section states something similar to “NOW, THEREFORE, BE IT RESOLVED THAT the Board of Directors hereby adopts the following pet policy…” It will go on to state all of the specific rules.
Resolutions can usually be adopted by a vote of the Board of Directors without homeowner consent. However, a conscientious Board would be well advised to seek the opinion of homeowners through open meetings or surveys, and perhaps create an ad hoc committee to provide recommendations. Some governing documents may provide that a certain percentage of the homeowners must vote to adopt the resolution, so Boards should check their community’s individual documents carefully before seeking to adopt any resolution. After a resolution is adopted, each member of the community should be made aware (most often thorough a mailing), and a copy of the policy should be placed in the community’s book of resolutions. If any exist, handbooks or welcome packages should be updated to reflect the new policy.
Resolutions may be viewed as an alternative to amending the governing documents, but only in a certain sense. It is important to note that a resolution cannot conflict with the governing documents. For example, if the covenants state that each household may have no more than two domestic animals, the Board could not enact a pet policy that allows more than that. Additionally, under no circumstances can a resolution violate a civil statute or law. For example, a policy resolution could not be at odds with the federal Fair Housing Act, and in North Carolina could not contradict the Planned Community Act (for communities developed after 1999). If a Board is seeking to adopt a rule that is in conflict with the governing documents, then those documents must be amended. This is often a difficult, and possibly expensive, process. An overwhelmingly large percentage of the community must usually approve such changes, and an attorney’s expertise is necessary.
The success and usefulness of any policy depends greatly upon its need, its acceptance by homeowners, and its enforceability. By using the resolution process, Boards can maintain an air of transparency, fairness, and consistency in their rule-making procedures. By identifying the need for a rule, seeking homeowner input, and using the specific resolution format, the Board can maintain its level of trust and its viability in the eyes of homeowners.