Good community rules and regulations (“operating rules,” per Civil Code Section 4340) protect the community and encourage neighborly conduct.
However, good rule ideas are not enforceable unless the HOA follows a prescribed rule amendment process. Because only boards have the power to create or amend rules, the law requires special procedures to alert members in advance about impending proposed rule changes.
Civil Code 4360 establishes the following two-step meeting process:
Meeting #1
Announcement #1: In an open meeting the board approves a draft proposed rule change, and approves publishing to members the verbatim proposed change language along with a statement as to the change’s purpose and effect. The announcement also must announce a second open board meeting at least 28 days later when members can comment on the proposed change.
Meeting #2: At the next open meeting, the board must allow member comments before voting on proposed rule changes.
Announcement #2: If the rule change is adopted it must be announced in writing within 15 days after the meeting.
If a rule change is very controversial, 5% or more of the membership may within 30 days of announcement of the rule change demand a membership meeting to vote upon its reversal. If a majority of a quorum of members votes to overturn the rule change, the board cannot reinstate the overturned rule change for one year.
Civil Code 4360(d) allows emergency rules to be immediately adopted if immediate action is necessary to avoid imminent threat to health or safety or to avoid substantial economic loss. Emergency rules may last for up to 120 days but cannot be renewed.
Before changing association rules, consider these tips:
1. Don’t rush a rule. A rule change too complicated to draft during the board meeting should be delegated to someone (HOA’s attorney?) to draft language for consideration, to be picked up again at a later open meeting. Good rules adopted slowly are better than poor rules quickly approved.
2. Once the motion to adopt the rule change is made in the second board meeting, suspend deliberations and reopen members’ open forum on the rule change. Comments will typically be minimal unless the rule change is controversial.
3. Listen to your neighbors. The open forum element is important. Listen. If significant opposition to the rule arises, more consideration should be given. Can the proposed change perhaps be improved? Is the board unexpectedly upsetting so many homeowners that an overturn vote becomes likely? Such rule changes might be divisive to the community, even if they might originally have seemed like good ideas.
4. Don’t rush past member objections. After further study, discussion, and perhaps revisions, the improved proposed change can be republished to members.
5. Promptly announce approved rule changes. Don’t wait to send it with the draft meeting minutes — draft minutes are not due until 30 days after the meeting, while this announcement must be made within 15 days.
6. Have legal counsel review proposed rule changes.
Perfection is not required. Per Civil Code 4350(d), when boards act in good faith and substantially comply with the procedures, the rule should be valid.
The law, while potentially frustrating, adds transparency and deliberation to the rule-making process. The hoped-for results are better and less divisive rules — and more harmonious communities.
Kelly G. Richardson, Esq. is a Fellow of the College of Community Association Lawyers and Partner of Richardson Ober LLP, a California law firm known for community association advice. Submit questions to Kelly@roattorneys.com.