We always advise Associations to look to their governing documents for operational guidance. However, it is extremely important that the Association’s governing documents are consistent with one another and most importantly, with the Declaration.
The Declaration is the controlling document, so Associations should first make sure their Policies and Rules and Regulations are consistent with the Declaration. This can be important in the day to day activities of the Association as well as in litigation. A court will look first to the Association’s Declaration for authority, and if anything in the Policies or Rules and Regulations conflicts with the Declaration, the Declaration’s terms will control. That is not to say that Policies or Rules and Regulations cannot add to or elaborate specifics about the Association’s Policies and Rules; they simply cannot contradict the terms of the Declaration. Below are some examples.
A hypothetical Association’s Collection Policy could state the Association is entitled to charge late fees of $25.00 per month on a delinquent account as well as interest of 12% per annum. However, the Declaration may only allow for interest at 8% per annum and late fees of no more than $10.00 per month. If the Association has only looked to its Collection Policy and has been charging the late fees and interest set forth in the Collection Policy, a court could strike the entire late fees and interest charged, or reduce the late fees and interest to comply with the terms of the Declaration.
Another hypothetical Declaration could require all notices, other than routine notices, to be sent to a homeowner via certified or registered mail, but the attendant Collection Policy might state that notices are only required to be sent via regular mail. As this provision is in direct conflict with the Declaration, the Association should be sure to send the notices via certified or registered mail. The Association should also amend its Collection Policy to be consistent with the Declaration. Conversely, if the Declaration states that notices are to be sent via regular mail and the Collection Policy states that notices are to be sent via registered or certified mail, the Collection Policy terms will control as it is not in conflict, it just adds another condition to the rule.
The same could be true with an Association’s Rules and Regulations. Some Declarations have Rules and Regulations set forth within the Declaration so if there is also a separate document providing for Rules and Regulations, an Association should be sure that the separate document does not conflict with the terms of the Declaration.
Next time you look to the Association’s governing documents for guidance, make sure they are all consistent with the terms of the Declaration. Should you have any questions regarding your documents, please feel free to contact us.