My Association Doesn't Have an Enforcement Policy ... Can It Still Take Enforcement Actions?
We have been hearing from worried homeowners, as well as board members, saying that due to all types of reasons, their associations have not yet adopted the responsible governance policies and procedures required by CCIOA. (Section 38-33.3-209.5 requires associations to adopt policies and procedures addressing: 1) collections; 2) handling board member conflicts of interest; 3) conduct of meetings; 4) enforcement of covenants and rules; 5) owner inspection and copying of records; 6) investment of reserve funds; 7) the adoption and amendment of policies, procedures, and rules; and 8) handling of disputes between association and owners [Note: associations have until January 1, 2007, to adopt this last policy.])
These concerned individuals want to know the consequences of not having these policies and procedures. Their questions fall along the lines of, 'if my association doesn't have a collection policy, does it still have the authority to collect unpaid assessments?' Or, 'if my association doesn't have an enforcement policy, may it still take enforcement actions?'
The answer to this line of questioning is yes, the association retains the authority to govern itself even in the absence of the required policies and procedures. However, although an association without these policies and procedures does not lose its authority to take enforcement actions, collect unpaid assessments, or conduct meetings, etc., an association without these policies and procedures face other types of troubles.
First, these policies and procedures are required by CCIOA, which means that failure to comply exposes the association to potential lawsuits. (Click here to read a post on the enforcement of CCIOA.) Second, these policies and procedures are designed to spell out to both homeowners and board members the particulars of their association's operation and governance. Without policies and procedures, boards may fail to act in a consistent and uniform manner. For example, if a board handles enforcement actions differently from case to case, it opens itself up to accusations of selective enforcement. (Click here for an article addressing the top 10 covenant enforcement mistakes.)
Failure to adopt the conduct of meetings policy and procedure provides another example of the potentially negative consequences of failing to adopt the required policies and procedures. Without a written policy spelling out the reasonable regulations for owner participation at board meetings, boards may find themselves struggling with how many owners should be allowed to speak and for how long. Or, boards without the guidance of the policy may unintentionally neglect to give owners the speaking opportunity required by law altogether, exposing the association to litigation once again.
Lastly, the purpose behind requiring these policies and procedures is to inform owners how their associations operate, as well as the potential consequences of their actions. Associations that don't take the time to adopt the policies and procedures might, in the end, just be missing out on a great opportunity to educate their residents and, by doing so, to reduce conflict within their communities.