HOW A CALIFORNIA HOMEOWNERS ASSOCIATION MAY ADOPT

NEW RULES AND REGULATIONS AND AMEND EXISTING RULES

The following article was assisted by content found in an article by the Educational Community of Homeowners.

From time to time Homeowner Association's encounters circumstances and situations that necessitate new rules or regulations. When these circumstances occur the Board or the Homeowners will often search their Governing Documents and the State Codes found in the Davis Stirling Act and may conclude that the requisite language they need is not to be found in the Documents (CC&Rs, Bylaws or existing Rules and Regulations). The Board may conclude that a new rule is needed; this article is intended to assist in the creation or amending of the required document.

The Davis-Stirling Act contains a number of sections regarding the Operating Rules of common interest development associations. These sections, contained in California Civil Code Sections 4340-4370 define how Rules may be adopted or amended,

What Are "Operating Rules" and "Rule Changes"?

Operating Rules are different than the Association's CC&Rs. Generally, the Board has the authority to adopt new Rules and Regulations or amend existing Rules and Regulations; see Civil Code §4340.

The authority to create rules is not without limits. California law (in Civil Code §4350) defines what makes a rule "valid and enforceable." For example, the New Rule must be in writing, it can't contradict the governing documents or the law, it must be reasonable and adopted by the Board using the formality found in the California Civil Code.

The two basic Rule Change procedures are found in Civil Code Sections 4360 and 4365. Civil Code §4360 provides specific procedures for the board of directors to follow when proposing and adopting rule changes. Civil Code §4365 provides a process where members of the association may call a special meeting to reverse a rule change made by the board of directors of the association.

The process for making rule changes, as set forth in Civil Code §4360, is as follows:

• The board shall provide general notice pursuant to Section 4045 of a proposed rule change at least 30 days before making the rule change. The notice shall include the text of the proposed rule change and a description of the purpose and effect of the proposed rule change. Notice is not required under this subdivision if the board determines that an immediate rule change is necessary to address an imminent threat to public health or safety or imminent risk of substantial economic loss to the association.
• A decision on a proposed rule change shall be made at a board meeting, after consideration of any comments made by association members.
• As soon as possible after making a rule change, but not more than 15 days after making the rule change, the board shall deliver general notice pursuant to Section 4045 of the rule change. If the rule change was an emergency rule change made under subdivision (d), the notice shall include the text of the rule change, a description of the purpose and effect of the rule change, and the date that the rule change expires.
• If the board determines that an immediate rule change is required to address an imminent threat to public health or safety, or an imminent risk of substantial economic loss to the association, it may make an emergency rule change, and no notice is required, as specified in subdivision (a). An emergency rule change is effective for 120 days, unless the rule change provides for a shorter effective period. A rule change made under this subdivision may not be readopted under this subdivision.

Reversing or Repealing a Rule

Because members do not "vote" on rule changes, there is no mechanism to stop a rule change before it takes effect. However, the law allows members to reverse a recent rule change. As long as members act promptly - within 30 days of the association's delivery of the new rule for review - members may use a process for calling a special meeting to reverse a rule change. If the members are successful, the board cannot introduce the rule again for one year.

The reversal process is set forth in Civil Code §4365

Members of an association owning five (5) percent or more of the separate interests may call a special vote of the members to reverse a rule change.

A special vote of the members may be called by delivering a written request to the association. No less than 35 days nor more than 90 days after receipt of a proper request, the association shall hold a vote of the members on whether to reverse the rule change, pursuant to Article 4 (commencing with Section 5100) of Chapter 6. The written request may not be delivered more than 30 days after the association gives general notice of the rule change, pursuant to Section 4045.