HOA Resolution vs. Amendment
As a homeowner or Board Member living in an HOA, you may have heard the terms Resolutions and Amendments but may not fully understand the differences between the two. These terms refer to how homeowner associations document decisions made by the Board of Directors, and it is essential to understand the nuances of each to navigate the complexities of community association management with ease.
HOA Resolutions vs. Amendments: Defining the Term
HOA Resolutions memorialize decisions made by the Board of Directors to address specific issues or clarify the Governing Documents and are an essential tool used in managing any community association. They provide additional guidelines, procedures, or rules and regulations to help the community's day-to-day operations. These resolutions are typically passed by a majority vote of the Board and are used to deal with matters such as approving a budget, establishing rules for common areas, or addressing violations of HOA rules.
In summary, a Resolution is a document created for the Board of Directors memorializing policy decisions of the Board. It contains information on the purpose of the Resolution, what action follows, and where the Board's authority to make that decision comes from (e.g., a specific section of the CC&Rs). Resolutions validate and support the Board's policies.
HOA Amendments are changes made directly to the Governing Documents, such as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, or Articles of Incorporation. These changes require a more formal and rigorous process than resolutions, often involving a majority vote from the community membership or the Board of Directors.
To approve an Amendment, the HOA must follow a strict process as provided for in the applicable Governing Document that typically involves a period of notice and an opportunity for members to comment on the proposed changes. This formal process ensures that all members have a say in the changes being made to the documents, and it helps to promote transparency and fairness in the decision-making process.
When to Use HOA Resolutions vs. Amendments
Resolutions do not need to be used for every decision the Board makes. Instead, they help formalize and clarify community procedures, internal workings and provide transparency in the Board of Directors' decisions.
At AAM, our focus is on customer-centric efficiencies. Clarity and ease of access to information are essential for effective community management. Maintaining a comprehensive and organized record of Resolutions ensures that the Board and management team can quickly locate approvals when needed rather than having to sift through extensive meeting minutes. This approach saves time and promotes transparency and accountability, reinforcing the trust our communities place in us.
Opt for Resolutions When:
- Clarifying ambiguous language in policy documents.
- Establishing new rules or procedures not explicitly mentioned in the Governing Documents but that are not in conflict with the Governing Documents.
- Addressing specific issues or concerns raised by Members.
- Memorializing approvals regarding assessment increases, annual budgets, and procedural changes as may be allowed in the Governing Documents, such as increasing the number of Board members.
Choose Amendments When:
Making changes to the CC&Rs, Bylaws, or Articles of Incorporation.
Updating the Governing Documents to comply with new laws or regulations.
Outdated restrictions the Board may seek to amend covenants or change rules would be a desire to modernize existing rules and covenants.
Altering existing rules or restrictions that impact property rights.
Types of Resolutions
- Administrative Resolutions, also referred to as Procedural Resolutions, pertain to internal processes and procedures. These encompass guidelines for Board meetings, elections, and applications for architectural changes. It is crucial for both the Board and community members to adhere to these procedures consistently.
- Policy Resolutions have a direct impact on the rights and responsibilities of property owners. Boards typically use Policy Resolutions to clarify vague provisions within the Governing Documents or to approve the creation of policies allowed by the Governing Documents, such as a Fine Policy or Collection Policy. Many times, the CC&Rs only give a limited amount of information — not enough to support or help the Board make a decision. This is where a Policy Resolution can be helpful and effective. Policy Resolutions can take various forms, including resolutions pertaining to the visual aesthetics of homes within the community, how common facilities must be used, pet restrictions, and more.
- Special Resolutions deal with an individual situation. Boards have the option to utilize this tool in order to introduce a new regulation that is not currently covered by the Association's operating guidelines or to address a specific situation on an individual basis. For instance, a Board might adopt a special resolution related to a decision concerning a violation or behavior of individuals at meetings (e.g., Code of Conduct) or common areas. Guidance from the HOA attorney is recommended for these types of Special Resolutions.
The Process: How to Implement HOA Resolutions and Amendments
The Road to Resolutions
- Identify the policy or change that requires a resolution.
- Discuss the proposed policy or change during an Open Board meeting.
- Vote on the policy or change and document it in the meeting minutes, ensuring it passes by the required majority.
- Draft and sign the Resolution memorializing the Board action and notify the community members.
The Path to Amendments
- Determine if the proposed change requires an amendment to the Governing Documents.
- Seek legal counsel to ensure compliance with laws and regulations.
- Present the proposed Amendment to the community members for discussion.
- Hold a vote or written consent process (check the Governing Documents for language that may allow the Association to utilize the written consent process or voting by absentee ballot or in person) and ensure the Amendment passes by the required majority, stated in the Association's Governing Documents.
- Record the Amendment or file it with the appropriate governmental agency if applicable.
- Publish the Amendment on the community's website, app, and/or shared portal.
What should be included in each?
What should be included in Resolutions:
An HOA Resolution is a formal decision made by the HOA Board to address specific topics or to clarify the Governing Documents. It provides additional guidelines, rules and regulations, or procedures that help in the community's day-to-day operations.
As such, it requires a less formal process and should include the following elements:
- A clear statement of the policy or decision that the Resolution is addressing.
- The specific action that the Board is taking to address the issue or concern.
- The effective date of the Resolution.
- A record of the vote by the HOA Board of Directors (i.e., a majority of the Board during a duly called Board meeting).
- Information on the purpose of the Resolution.
- Where does the Board's authority to make that decision comes from?
What should be included in an Amendment:
An HOA Amendment is a formal change made directly to the Governing Documents, such as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, or Articles of Incorporation.
As such, it requires a more formal process and should include the following elements:
- A clear statement of the proposed change.
- The rationale for the change.
- The specific section or sections of the documents that will be affected.
- The specific language of the proposed Amendment.
- A description of the voting process and the required majority for approval.
- The effective date of the Amendment.
Examples of HOA Resolutions and Amendments
HOA Resolutions and Amendments can cover a wide range of topics, depending on the community's specific needs. Here are some examples of HOA Resolutions and Amendments:
Examples of HOA Resolutions:
Approving the annual budget and setting the monthly assessments for homeowners.
Establishing rules for using common areas, such as swimming pools, clubhouses, or parks.
Addressing violations of HOA rules or Bylaws.
Designating the responsibilities of the Board members and officers of the HOA.
Creating policies such as a Fine Policy related to compliance issues or a Collection Policy to give guidance on steps to take if an owner becomes delinquent in paying assessments.
Examples of HOA Amendments:
Changing the restrictions on the use of property, such as adding or removing restrictions on the leasing restrictions and short-term rentals.
Modifying the terms for Board members and Officers of the Board.
Adding a resale reserve fund fee or working capital fee.
Updating the CC&Rs to reflect changes in state or federal laws.
Annexing additional property into the Association.
HOA Resolutions and Amendments: FAQs
What is the main difference between HOA Resolutions and Amendments?
HOA Resolutions provide additional guidelines or rules, while Amendments directly change the Governing Documents.
Do both Resolutions and Amendments require a vote from the community?
Resolutions generally require a vote from the HOA Board of Directors, while Amendments typically require a majority or some super-majority vote from the community members.
Can an HOA Resolution override an existing Amendment?
No, Resolutions cannot override Amendments since Amendments are changes to the Governing Documents themselves.
How often should an HOA update its Governing Documents?
There is no fixed timeline or requirement for updating Governing Documents.
HOA Resolutions and Amendments play a critical role in maintaining harmony within a residential community. Understanding the differences between the two can help you quickly navigate their complexities and ensure the documents remain up-to-date and relevant to the community's needs and concerns. Whether you're clarifying ambiguous language or making significant changes, HOA Resolutions and Amendments provide a framework for community management that benefits everyone involved.
If you're a homeowner who is part of an HOA, it's important to familiarize yourself with your HOA's Governing Documents, including the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, and Articles of Incorporation. If you need help determining which method of change, Resolution or Amendment is appropriate for your situation, please do not hesitate to contact AAM. As an expert HOA Management company, we are here to provide guidance and address your questions or concerns. Being informed and actively participating in your community can ensure it remains sustainable and a great place to call home.