California HOA Escrow Services
Adopting and Amending Operating Rules
Before adopting Rules and Regulations, associations must have rulemaking authority based on statute or through its governing documents.
Operating Rules are defined as any rule or regulation that applies to the management and operation of a common interest development or the conduct of its business and affairs. (Civ.Code Section 4340). As provided for in Civil Code Section 4355(a), Operating Rules are specifically defined as a rule or regulation that applies to:
- Use of the common area or of an exclusive use common area;
- Use of a separate interest, including any aesthetic or architectural standards that govern alteration of a separate interest;
- Member discipline, including any schedule of monetary penalties for violation of the governing documents and any procedure for the imposition of penalties;
- Delinquent assessment payment plans;
- Resolution of assessment disputes;
- Reviewing and approving or disapproving a proposed physical change to a member’s separate interest or to the common area; and
- Election rules.
Per California Civil Code Section 4355(b), the following do not fall under the definition of an Operating Rule and are therefore free of the requirements of California Civil Code Sections 4360 and 4365:
- Decisions regarding maintenance of the common area.
- Decisions on a specific matter that is not intended to apply generally.
- Decisions establishing the amount of regular and special assessments;
- Issuance of a document that merely repeats existing law or the governing documents.
Before adopting or amending an Operating Rule or changing a Schedule of Fines, the Board must provide notice of a proposed rule change at least 30 days before making the rule change. The notice must include the text of the proposed rule change and a description of its purpose and effect. Notice is not required if the board determines that an immediate threat to health of safety exists or there is an imminent risk of substantial economic loss to the association.
If the board is doing nothing more than correcting grammar or renumbering provisions, the 30-day notice period is not required since the rules are not being materially changed. Notwithstanding, the board must distribute a copy of the revised rules along with an explanation of what was done and state that no change were made to the rules.
Within 15 days of making or changing a rule, the board must deliver general notice the rule change.
The membership has a limited right to veto new rules and rule changes.
If the Board determines that an immediate rule change is required to address an imminent threat to health or safety, or an imminent risk of substantial economic loss to the association, it may make an emergency rule change; and no 30-day noticed waiting period is required. An emergency rule change is effective for 120 days, unless the rule change provides for a shorter effective period.
To be enforceable, Operating Rules must meet certain criteria. They may not be inconsistent with the Bylaws or CC&Rs and must be legal and not discriminatory.
Coast Management of California