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By: Helsing Admin

Your HOA – not your country. Actually, that is not correct on two counts. Your country IS a republic, and your HOA is actually a corporation – but the analogy of your association being a republic and not a democracy is a good one. We often see upset homeowners because they somehow feel that the way HOA governance functions is “majority rule”. They feel that if the majority of the membership feels strongly about something, then that is what should happen.

Explaining that the HOA governance is not a democracy, but rather a corporation does not help much because far too many homeowners have no idea how corporations function. They know that General Motors does not call a membership meeting and let the shareholders decide what plants should stay open, or what the newest car model will look like, or who gets hired as CEO. However, they don’t accept that model for their HOA even though it is the model they live with. Somehow in their minds, the membership dictates HOA governance issues such as who is hired, what rules are adopted, and what the new landscaping will look like. They get it for General Motors, but they don’t get it for their HOA.

The other day I was discussing with the association’s attorney a group of homeowners that want to sue over collection fees because they think their neighbors should pay for their lack of responsibility. He commented “They think it’s a democracy – not a republic”. That thought has been spinning in my head for a week now. It occurred to me that that may be a better way to explain HOA governance to those who don’t quite understand the corporate model, as in many ways they are quite similar.

Our country is not a democracy. In spite of the fact that the news would like us to think it is a democracy, the government does not do what it does because a majority of the people want it to happen. While that concept sounds good on the surface, it is a really bad idea. It is only a good idea if you are part of the majority – but if we followed that thought over history we might still have slavery in some form, right to life vs. right to choose would be bouncing all over the place, and we would not have faith in a system of checks and balances. Rather, as a country we are a Constitutional Republic working through a representative government that is based upon a constitution and a rule of law. That constitution can be amended over time with difficulty, and laws are eventually reviewed in light of that constitution.

HOA governance is similar. There is a set of Covenants, Conditions, and Restrictions (CC&R’s), a set of bylaws and a few other documents – collectively called the “governing documents”. There is a body of law (the corporations code, the civil code, and a bunch of case law) that upholds the sanctity of those governing documents, and the covenant that comes with membership is binding on all members, just like complying with the nation’s laws based on the constitution are binding on citizenship.

This is a good system. The membership elects a Board of Directors and they are charged with carrying out the HOA governance of the association. The governing documents, just like the constitution, cannot be changed except by the membership through a difficult process, and even then must comply with law. The Board of Directors, like the Executive Branch of government, has a duty to comply with the governing documents. The Board is ultimately responsible to the membership, which can always choose not to re-elect them; and in fact, with some difficulty Board members can be recalled. However, just like the executive, while the Board needs to be responsive to the general wishes of the membership it must also uphold the governing documents or face legal sanctions. The majority rarely, for example, wants increased assessments, but the law (and the governing documents) require the Board to raise enough money to operate the association.

In like manner, the membership must also follow the governing documents. They may not like the rules, but they have agreed to abide by them and to suffer sanctions if they do not. They can, with difficulty on some rules and with reasonable ease with others, cause the rules to be changed in most cases. In short, however, it is a two-way street. Majority rule does not apply, but the Board is controlled and does not get to rule like kings over serfs.

In all, it’s a pretty good system of HOA governance – if the Board remembers it has a duty beyond getting re-elected, and the membership understands they don’t get to call every action. When either of those items is missing, then the system starts to fail (just like what happens nationally from time to time). However, as frustrating as it can be on occasion, in both systems the fact that there is a fundamental set of governing documents backed up by law allows for self-correction and keeps extremism in check.

Articles are for advertising and general information by The Helsing Group, Inc. They are not intended to provide legal advice, but rather reflect our opinions as Community Association managers and Consultants. Readers should not act on issues raised in our newsletters or websites without consulting legal counsel.

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The Helsing Group, Inc.

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