Resolutions are one of my favorite tools for boards to use to address routine, common problems and procedures. CAI describes a resolution as “...a motion that follows a set format and is formally adopted by the board...(they) may enact rules and regulations or formalize other types of board decisions.” Simply put, resolutions are decisions by the board on topics that are commonly encountered in the day to day business affairs of the association. Resolutions cannot contradict the rules and restrictions in the governing documents (or state or federal laws) but are instead considered an extension of them.
Resolutions must follow a set format: citation of authority to adopt the resolution, which may include sections of state or federal statutes or of the governing documents; purpose, which explains why the board is adopting this resolution; scope and intent, which is who this resolution affects and for how long; and finally the specifications, which explains what those affected by the rule are expected to do.*
There are four resolutions that I think all boards should adopt: payment resolution, insurance and maintenance resolution, architectural review resolution and rules enforcement resolution. It can also be prudent to have a resolution to explain how resolutions are made and adopted, but it is unclear if that is truly necessary or not. So what do these resolutions do? Let’s take each of them in turn.
Payment Resolution. The payment resolution, which may have several different names, is all about monies due to the association. This resolution details the frequency of regular assessments, the due date, the grace period (how many days after the due date the payment is still considered not late), the late fee (which may be a dollar figure or a percentage of the assessment), as well as any other fees or penalties for failure to pay. This resolution also details what actions are taken and in what time frame when an assessment is not received by the end of the grace period. Typical steps you’ll see in this resolution is notice to the owner at 30 and 60 days, with a demand letter being sent around 90 days (provided this conforms with the governing documents). It should also detail when an owner’s account will be turned over to a collections attorney (usually an amount or a minimum number of days without payment). Things like NSF charges, attorneys' fees, etc., are generally also mentioned in this document, so that there’s no question the HOA has the right to recover these costs.
Insurance and Maintenance Resolution. This resolution is especially critical for condominiums and those planned unit developments where the HOA and the owners share maintenance responsibility for the homes/units. This two-fold resolution helps owners, the board, and the insurance agent to clarify the items that are the responsibility of the association (versus what each owner is responsible for) in accordance with the governing documents. In addition to giving an overview of owner versus HOA maintenance responsibilities, it also explains insurance coverages, deductibles, and the procedures for filing an insurance claim. When the association has its first insurance claim, the board will be glad to have this resolution in place.
Architectural Review Resolution. Most governing documents give the board the authority to set up an architectural review committee (commonly called ARC or ACC) to help review and approve potential changes to the community. Developers like to put this clause in their documents (and many owners like to see it in them) because an ARC can help ensure that the standards of the development are upheld and potential neighbor concerns are considered. This resolution is generally a formalization of the procedures mentioned in the governing documents but may also include specific restrictions (such as no fences may be more than 6’ in height or all homes must use cedar shake or tile roofing). It also usually includes a form that details the process and information to be provided for consideration.
Rules Enforcement Resolution. The governing documents for your community most likely include some restrictions on use that may address such issues as rentals, trash cans and recycling bins, recreational vehicles, etc. This resolution expands on those restrictions by putting into place the procedure to follow when a violation occurs. Without such a resolution, and the accompanying fine schedule, a board may not be able to enforce the restrictions in its documents. This resolution usually also includes a recap of the rules for quick reference. Any board that wants to enforce its rules should adopt this resolution.
One important thing to note about all of these resolutions: they cannot be contrary to your governing documents nor to state or federal laws. So if your documents say that a boat cannot be in sight in the community, the board should not adopt a resolution that states that an owner can keep a boat in his/her driveway overnight. The resolution should match the governing documents. Likewise, if the governing documents allow owners a 30 day grace period to submit their dues payments, the board cannot opt to reduce that to 10 days in its resolution.
It is also a good idea to have any resolution being considered for adoption by the board be reviewed by legal counsel to ensure there are no invalid clauses nor anything imprudent contained with them, especially if the person drafting them does not have experience doing so. Even though I’ve written countless resolutions (maybe 75 or so over the years), I still encourage my boards to run them past their legal counsel if they want to do so.
Finally, resolutions must not only be adopted by the board but must also be provided to all owners before they go into effect. It is not sufficient to post them on the HOA's website; all owners must be notified and receive a copy of the resolutions (electronic or physical) before the board undertakes any enforcement of them.
Resolutions are incredibly powerful and somewhat underutilized tools of the board. If your community does not have these resolutions in place, please consider which may be appropriate for you.
* This section is based entirely on the text on pages 52-53 of the M-100: The Essentials of Community Association Management from CAI.