Operating Rules, often are referred to as rules and regulations, are defined as any rule or regulation that applies to the management and operation of common interest developments or the conduct of their business. Operating Rules are defined as a rule or regulation that applies to the following:

• Use of the common area or an exclusive use common area.

• Use of a separate interest, including any aesthetic or architectural standards that govern the alteration of a separate interest.

• Member discipline, including any schedule of monetary penalties for violating the governing documents and any procedure for imposing penalties.

• Resolution of assessment disputes.

• Reviewing and approving or disapproving a proposed physical change to a member's separate interest or to the common area.

• Election rules.

• Delinquent assessment payment plans.

The following do not fall under the definition of an Operating Rule:

• Issuance of a document that repeats existing law or the governing documents.

• A decision regarding maintenance of the common area.

• A decision on a specific matter that is not intended to apply generally.

• A decision setting the amount of a regular or special assessment.

• A rule change required by law, if the board has no discretion as to the substantive effect of the rule change.

Before enacting Operating Rules, associations must have rulemaking authority either statutorily or through its governing documents. Many older documents are silent on rulemaking authority. Governing documents in newer developments, all have rulemaking authority since the Department of Real Estate requires it. Boards can adopt rules after rulemaking authority has been established. Absent rulemaking authority in the governing documents, associations still have statutory authority to adopt rules for specific matters, including:

• Election Rules,

• Collection Policies,

• Architectural Rules,

• lDR Policies

Before adopting or amending an operating rule or changing the fine schedule, the board must provide general notice of a proposed rule or rule change at least 30 days before adopting it. The notice must include the text of the proposed rule or rule change and a description of its purpose and effect. Notice is not required if the board determines that an immediate rule or rule change is necessary to address an imminent threat to public health or safety or an imminent risk of substantial economic loss to the association.

A decision on a proposed rule or rule change must be made at a board meeting after consideration of any comments made by association members. The board must consider comments by members but is not required to adopt them.

Only CC&Rs are recorded, not Operating Rules, bylaws, or articles of incorporation. The board must deliver notice to the membership within 15 days of adopting or changing a rule. Rules become effective upon written notice to the membership.

Rules and regulations are not given the same presumption of reasonableness as are CC&Rs. Whether a rule is reasonable is to be determined not by reference to facts specific to the objecting homeowner but by reference to the common interest development as a whole. The same test of reasonableness used for CC&Rs is used for rules. Rules can be enforced unless they are arbitrary, violate a fundamental public policy, or impose a burden on the use of affected land that far outweighs any benefit. To be enforceable, operating rules must meet the following criteria:

• The rule is in writing;

• The rule is within the board's authority conferred by law or by the declaration, articles of incorporation or association, or bylaws of the association;

• The rule does not conflict with governing law, the declaration, articles of incorporation, or bylaws.

• The rule is adopted, amended, or repealed in good faith and in substantial compliance with the requirements of this of the law; and

• The rule is reasonable.

The membership has a limited right to veto rules or rule changes. Members owning 5% or more of the separate interests may call a special meeting of the members to reverse a rule or rule change. The written request may not be delivered more than 30 days after the association members are notified of the rule or rule change. The rule or rule change may be reversed by the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a quorum is present. The board must give notice of a special meeting and send out ballots in accordance with the Procom established by law The results of the membership vote must be provided to the membership within 15 days of the vote. If an operating rule is reversed, it cannot be re-adopted by the board for at least one year. However, the board may vote on other operating rules covering the same subject.

If the board determines an immediate rule or rule change is required to address an imminent threat to public health or safety or an imminent risk of substantial economic loss to the association, it can make an emergency rule or rule change without a 30-day waiting period. Once adopted, emergency rules take effect upon notice to the membership. An emergency rule or rule change is effective for up to 120 days.

If the board is doing nothing more than correcting grammar or renumbering provisions, the 30-day notice period is not triggered since the rules are not being changed. The board must still distribute a copy of the revised document along with an explanation of what was done and that no changes were made to the rule.

Once rules have been adopted and distributed to the membership, they do not need to be distributed annually. New members of the association must receive a copy of the rules and fine policy and normally do so through escrow. Rule changes need only be distributed once when they are adopted. Disciplinary policies, however, must be distributed annually.

 

 

Bylaws of Homeowner Associations

Declaration of Covenants. Conditions. and Restrictions (CC&Rs)

Suspension of Common Area Privileges