The ABCs of HOA Board Resolutions (Part Two)

There are typically four categories of resolutions for a homeowner association (HOA):

• Policy: Policy resolutions address member’s rights and duties. For example, rules for the use of common areas and amenities. Architectural guidelines and enforcement procedures would be another example. However, issues such as these in the majority of cases are best addressed with amendments to the declaration of covenants, bylaws, or the rules and regulations.
• Administrative: Administrative resolutions address the internal operations of the HOA. For example, operating procedures and collection procedures would far under this category. As with the policy resolution addressed directly above, these types of issues may be addressed better elsewhere in the governing documents, and the association’s attorney may need to be involved with certain resolutions of a legal nature or with legal ramifications.
• Special: Special resolutions document board of directors’ decisions that apply to a policy or rule.
• General: General resolutions encompass routine events, such as adopting the annual budget and approving a contract if a resolution is called for in these instances.

Notification of the HOA members of a resolution should be in accordance, if any, with what is prescribed within the HOA’s governing documents and/or any state statutes. Typically, with how the homeowner association dispenses the board of director meeting minutes should suffice. If this is via posting on the HOA’s website or via email blast, this should be sufficient as well. Resolutions, being a part of the homeowner association’s permanent records, no matter any filing requirements or not, like many of the homeowner association’s records, need to be reasonably available for inspection by the membership in the future. The actual physical resolution in a homeowner association’s records could be the only documentation as to why the resolution was adopted in the first place.

A common question is what is the difference between a resolution and normal board of directors meeting minutes where motions are noted? Meeting minutes simply document decisions and actions taken by the directors during the board of directors meeting. These minutes should also include the date of the meeting, meeting location, directors in attendance, time called to order, and time of adjournment. Meeting minutes typically highlight the major issues that were discussed, motions made, motions voted on, with how each director voted. The objective of meeting minutes is an accurate record of what transpired during the meeting. This is where the most significant difference is found with regard to why a separate formal resolution is sometimes necessary. The meeting minutes are more akin to an overview and may not allow for a detailed motion such as what can be put forth in a resolution.

The second most common question is why can’t noting the action in the board meeting minutes suffice in place of a formal resolution? In many instances, it is perfectly acceptable for an action to be noted in the meeting minutes. In addition, it is also acceptable to make a more detailed record of this motion in the meeting minutes, if necessary. Many times, the decision to note an action in the meeting minutes or draft a separate formal resolution is the prerogative of the board of directors.

As discussed above, resolutions can be for almost anything within the purview of the board of directors. However, a misconception is that a resolution can somehow supersede another of the homeowner association’s governing documents in the hierarchy of authority. A resolution cannot be used by a board in place of amending a governing document.

The Hierarchy of Authority for Homeowner Association Governance

1. Federal Statutory Laws
2. State Statutory Laws
3. County Ordinances
4. Municipality Ordinances
5. Declaration of Covenant, Conditions & Restrictions of the Association
6. Articles of Incorporation of the Association
7. Bylaws of the Association
8. Rules and Regulations of the Association
9. Procedural Resolutions & Guidelines
10. Other Resolutions
11. Actions and decisions by Board Officers and Directors in meeting minutes

The structure and content of a resolution could possibly vary depending on the individual governing documents and state statutes. Generally speaking, a resolution has three aspects or parts: authority, reason, and extent. “Whereas the HOA’s declaration of covenants, conditions, and restrictions grants the authority to the board of directors to borrow funds from financial institutions or other third parties from time to time to meet the operating needs of the association, (The Authority), now, therefore, be it resolved that a loan be obtained for repairing the HOA’s swimming pool for the enjoyment and benefit of the entire membership (The Reason). It is also resolved that the loan will not exceed $150,000, with no more than a 60-month repayment term (The Extent). If the resolution is adopted, it should state the date of adoption, the location it was adopted, and the signatures of all the board members.

If a matter arises that a board of directors believes warrants a formal resolution, they should consult the HOA’s attorney for specific guidance. This is especially the case on covenant and legal matters. An ill-conceived resolution could have long-ranging consequences.

The author of this blog is aware of a HOA that took poor counsel on a provision in the HOA’s declarations of covenants. The provision read: “There shall be no secondary structures of any kind constructed, erected, placed, installed, affixed, upon a lot within the association. This includes, but is not limited to, garages, carports, outbuildings, sheds, tents, utility buildings, barns, animal pens, dog houses.” The board of directors was advised this provision in the declaration of covenants could be properly circumvented by a resolution instead of amending their declarations of covenants. Amending their declarations of covenants is what should have been advised, instead of a resolution.

This homeowner association’s resolution in essence stated the membership could put one outbuilding on their lot if they paid a one-time fee of $150 to the homeowner association and another fee of $150 to their management company. Several years after this erroneous resolution had been adopted and after quite a few members had paid the one-time fees and erected secondary structures, a problem arose. One member who wished to erect an outbuilding felt the two $150 fees were excessive and refused to pay. This member erected an outbuilding anyway without paying the “required” fees. At this point, the HOA’s attorney, on behalf of the board of directors, became involved and began to institute litigation to resolve the matter. Nonetheless, the homeowner association’s attorney only found out about the erroneous resolution when the member’s attorney brought it to his attention. To sum this entire matter up, it would have been a thousand times easier and less expensive for the board of directors to have amended the declaration of covenants than what eventually happened. WDMC

© Copyright 2021 – William Douglas Property Management, Inc.

William Douglas Management offers management services:

HOA Property Management Charlotte NC
HOA Property Management Raleigh NC
HOA Property Management Greenville SC
HOA Property Management Greensboro NC
HOA Property Management Charleston SC
HOA Property Management Columbia SC
HOA Property Management Myrtle Beach SC
HOA Property Management Mooresville NC
HOA Property Management Fort Mill SC
HOA Property Management Asheville NC

Legal Disclaimer: This blog is presented solely for entertainment and educational purposes. The blog’s author is not an attorney, nor offering legal advice. The blog’s author and publisher are not offering or presenting this work as legal or any professional services advice or guidance. While best efforts have been used in researching and writing this blog, the blog’s author and publisher make no representations or warranties of any kind and assume no liabilities of any kind with respect to the accuracy or completeness of the contents of this blog and specifically disclaim any implied warranties of merchantability or fitness of use for a particular purpose. Neither the blog’s author nor the publisher shall be held liable or responsible to any person or entity concerning any loss or incidental or consequential damages caused, or alleged to have been caused, directly or indirectly, by the information or programs contained herein. State statutes regarding homeowner associations can vary from one state to another so state statutes will need to be reviewed and may conflict with the material found within this blog. Every homeowner association is different, and the advice and strategies contained herein may not be suitable for every situation. The reader should always seek the services of a competent and experienced homeowner association attorney who specializes in homeowner association law.