Is Your Community Built on a Solid Foundation?
The basic foundation of a Colorado Community Association is its governing documents. Each association is created and governed by several documents: the Covenants, Conditions and Restrictions, the Bylaws, and the Articles of Incorporation.
Whether during the construction of your new home or just prior to closing, you should have received a copy of your Association's Covenants, Conditions and Restrictions ("Declaration"). The Declaration is a document that creates covenants and restrictions against all of the property described in that Declaration. The covenants are recorded in the real property records of the county in which the Association is located and contain much important information with regard to restrictions and obligations concerning the property therein. The Declaration normally contains the maintenance obligations of the owners and the Association as well as a provision requiring owners to pay common expense assessments for the upkeep, insurance and other expenses attributable to the community. Many declarations provide for a Design Review or Architectural Control Committee, restrictions on use of the property, insurance requirements, and a provision on how to amend the Declaration should that be deemed necessary.
The Declaration is an important document as it contains many of the guidelines by which the property owners are to conduct themselves as well as guidelines to assist the Board of Directors in managing the Association. While many home buyers give little attention to these documents before closing, these are almost as critical as the loan documents because they are a legal contract binding on the owner and the owner's prescribed land use as a member of the Association.
The governing documents of an Association consist of more than the Declaration. In addition to the Declaration, the Association is governed by Articles of Incorporation ("Articles") and the Bylaws. The Articles are filed with the Secretary of State and incorporate the Association as a non-profit corporation. The Articles include the official name of the entity, the address of the principal office of the Association, and the name and address of the registered agent of the Association. The Articles also contain broad purposes and powers of the Association. The Articles bring the corporation into existence, define the fundamental purpose and powers of the Association, and may identify the initial Board of Directors.
The Bylaws are a formal rule book for the administration of the Association and its day-to-day management of procedures. The Bylaws contain information with regard to meetings of members as well as meetings of the Board, Board member qualifications, and member voting rights, quorum requirements, and procedures for the election or removal of Board members.
Usually, among these governing documents, the Declaration is the most difficult document to amend and takes a high percentage of the votes of members in order to change any provisions. In some cases, the consent of a percentage of the mortgagees is also required. Bylaws, dependent upon their amendment provision, may be amended by the Board of Directors or by the members. The Articles are amended by a vote of the members. The vote requirement is dependent upon the amendment provision found in the document. In the event of a conflict between the provisions of the Declaration and the Bylaws, the Declaration prevails.