Florida Community Association Board Basics: A Practical Guide for New Directors, Part II

Part I of this ongoing series provided information that a newly elected or appointed director for a managed community should know about what their association does, and what each new director should know about their new job. This Part II will introduce the “governing documents” of a Florida managed community, and provide a general description of each. The goal is to help new directors understand what each document does, its place in the association's hierarchy, and other information that may help them understand the differences and importance of each. Without further ado:

What are an association’s governing documents?

An association’s governing documents establish the framework for how the corporation and community operate. They create the corporate structure, assign authority, and describe how decisions are made. In Florida, those documents follow a legal hierarchy: if a lower-level document conflicts with a higher-level document, the higher-level document controls. Each document and its place in this hierarchy are:

1. State and federal law. While not technically a “governing document,” laws certainly play a vital role in association structure and management to the point where they need to be identified and discussed. State and federal laws sit above the governing documents for an association in terms of priority. Where not preempted by federal law, Florida law is typically the law of the land in terms of HOA/condominium operations. Florida law is very particular about the operation of condominiums, and can frequently supersede other, lower-priority documents. On the other hand, Florida statutes for HOAs, while still supreme, often defer to an HOA’s governing documents by choice, providing that a certain law applies, “unless stated otherwise” in the governing documents. While certain federal laws, like the Civil Rights Act of 1964 and the Federal Fair Housing Act, can impact the day-to-day operations of an association, new directors should spend more time focusing on Florida Statutes Chapter 718 (for condominium directors) or Chapter 720 (for HOAs). Determining whether any law supersedes an association’s governing document(s) should be discussed with counsel, as that can be a very tricky issue.
2. Declaration. The association’s declaration is its “Constitution.” It is a written contract between the association and each member. It defines the metes and bounds of the property, describes what maintenance responsibilities belong to the owners and to the association, dictates budget policies and concerns, and establishes restrictions on what the association and its membership can and cannot do, amongst many, many other things. On a day-to-day basis, the declaration is probably the most important document for any given association. In one sense, the declaration dictates how the board interacts with the membership; this is the foundational document that establishes what your association does. As a result, the declaration is only subordinate to state and federal law in terms of priority. The membership must approve changes to the declaration because it is a contract, and a contract cannot simply be amended by either party alone. 
3. The articles of incorporation. The articles of incorporation establish the corporate identity of the association. They outline the corporate structure and purpose of the association and are filed with the State of Florida to legally establish that the corporation exists. For example, they typically define how many directors an association can have, the powers that the association has, and identify the association’s registered agent and board of directors. The information contained in the articles may not be something a director has to consult on a daily basis, but when it comes to the corporate structure of a community, they may be the most important document. The requirements for amending the articles can vary from association to association. Sometimes it requires membership approval, but often the articles can be amended by a majority of the board of directors without membership approval. Because the articles are more about corporate identity and structure and have less of a day-to-day impact on the membership, the articles fall third in this hierarchical structure.
4. Bylaws. Bylaws are the association’s operational handbook and are especially important for directors. They address board structure, director obligations, officer roles, voting procedures, meeting and notice requirements, and quorum rules. Since bylaws are more about how a director does their job, and less about an owner’s individual rights, bylaws are lower in priority and usually easier to amend. Bylaws are usually amended by a simple majority of the board of directors, though the amendment standard can vary by association. Unlike the declaration, which is a contract between the board and the membership, bylaws are more internal to the corporation and are considered a corporate document. Accordingly, since bylaws are limited to board operations and are often required to conform to specific statutory provisions, they come fourth on this list in terms of priority.
5. Rules and regulations. Rules are administrative policies created by the board and have the limited purpose of filling in the gaps left in the other documents. For example, most declarations provide that the association has the duty to review an owner’s proposed architectural changes, and usually add that the association has the ability to adopt architectural standards, rules, or guidelines. That is a broad right of the association to approve changes, but there is no specific guidance about what changes are acceptable. That’s where the architectural standards (rules) come in. They are created by the board to establish the details that are lacking in the declaration; what changes are allowed. Rules cannot create new rights not otherwise found in superior governing documents either; they can only provide details on existing restrictions. Commonly adopted rules include rules regarding meeting conduct, an owner’s right to speak, records requests, pool or clubhouse hours, pool or clubhouse conduct, etc. Rules are incredibly useful for day-to-day operations, but are purely procedural in nature, easily amended, and by law may not conflict with the other governing documents, so they are also the lowest in priority of all the governing documents.

Each document is responsible for various aspects of a managed community’s structure and operation. Knowing what each document does makes it easier to know where to look to solve problems. If the board has a question about meeting notice requirements, a savvy director will know to start with the bylaws to find that information. If an owner challenges an architectural review guideline, the director knows to look at the rules and the declaration to ensure the rules are valid and do not conflict. If the board is unsure of how many days’ notice a membership meeting needs, the bylaws are stop number one. Understanding the difference between each also allows for a consistent vocabulary, which can make communication with your association’s managers and lawyers that much easier. An association asking its counsel to help amend its bylaws, when it instead wants to amend the declaration, can result in delays and confusion. Ease of reference and consistency are valuable for any association.

This concludes Part II of this series. Part III, coming soon, will help directors, new, old, and prospective, understand Florida’s new statutory education requirements. Not only must a director serve without pay, but they must also be certified and take annual continuing education classes.