By Randy Snyder
As a preface to this informative article regarding the subject, my question is how many of those of you living in a planned community read the bylaws prior to making a residential or land purchase, or read them at all for that matter?
All Americans are aware that we are governed by federal, state and local laws and the governing documents of each of those branches that codify the laws to abide by and possible penalization for infractions of those laws. The surprising thing about those of us that live in a planned community, some are not aware of the extended and lawful governance of those communities and have never read or been exposed to the governing documents of the communities. As a preface to the text presented hereafter, the following are the documents that are necessary to develop and govern a planned community and the hierarchy of same:
- Federal laws, state and local laws, Articles of Incorporation, filed with the state, non profit corporation laws filed with the state, Declaration of Covenants and Restrictions filed with the County, bylaws filed internally, management policies filed internally, advisory and or adjudicatory committees consisting of fellow community residents, appointed internally and are highly recommended. As it relates to the Articles of Incorporation and the Declaration, amendments and reiterations must be approved by a majority of the membership of the planned community. Bylaws can be altered only with a majority approval of the board, and the same applies to management policies.
The most prominent state law as it relates to planned communities is the North Carolina Planned Community Act. This is found in Chapter 47F of the North Carolina General Statutes and is available publicly and supersedes the Declaration unless otherwise specified. It is interesting to note that according to the Homeowners Association of North Carolina, presently there are over 18,000 homeowners associations accounting for roughly 53% of households. It is also worth noting that many “Mountain Breeze” readers including those in Rumbling Bald, Laurel Lakes, Riverbend , Bills Vista and too many others to mention are included and affected by the previously mentioned governance process and documents.
The most prominent document that cannot or will not be superseded or have conflicting language in governance matters in the bylaws or policies is the Declaration of the Planned Community. The declaration contains detailed definitions and explanations of the covenants, conditions and restrictions. They are “limitations and rules” placed on a group of homes by a builder, developer, neighborhood association and/or homeowners association and sometimes referred to as Property Owners Associations. All condos and townhomes have CC & R’s; however, so do most planned unit developments and established neighborhoods.
Planned community bylaws are governing guides. Bylaws are supposed to be about the government of the corporation. They should cover things like how often you have meetings, how many people are on the board, how often you have to have membership meetings, voting rights and what constitutes a quorum. Within the bylaws it is also clearly defined the judicatory powers of the board and the hierarchy in terms of the board, management committees and residents.
Also most, if not all planned communities, are filed as “501C” nonprofit corporations. This subjects those communities to NC 501A of the non profit corporation law established in 1993.
When an entity gets ready to form a corporation or an LLC, it is necessary to file the Articles of Incorporation. Essentially, it’s a legal document that turns a business into a legal entity.
The Articles of Incorporation lay out the groundwork and structure for your LLC or corporation in its most basic form. Different states may add to these requirements, but generally you will have to provide the founder’s names, business name, business address, the plan to file taxes etc.
In most, but not a requirement, planned communities may have committees of various types and sundry objectives. These committees operate under the auspices of the Board of Directors. In general they do not have adjudicatory powers that vests decision making powers as it relates to matters in their purview.
Last, but not least are policies filed internally at the discretion and majority approval of the board. Management policies deal with issues needing special attention and rules addressing those matters.
In closing, many of you live in planned communities. The comprehension and understanding of the documents that affect the community you choose to reside in is important regarding your lifestyle or lifestyle in the future if you are considering a move to one of those communities. Currently Rumbling Bald Property Owners Associationas a governance committee appointed and under the auspices of the Board of Directors, researching their documents with any updates subject to board approval and residential input. In this case, and all cases, input and comprehension is of paramount importance. The fact of the matter is, if you have not reviewed your community’s long standing documents or impending important changes, take this opportunity to do so. Due to an estimated 20 or more planned communities within reach of the Mountain Breeze, many of you may have questions about the governance of your community. Currently serving on the Rumbling Bald Resort Governance Committee, I would happy to answer any questions you may have or find you the answer. Contact me at firstname.lastname@example.org .
References: Community Association Institute brochure – Wikipedia – Neighborhood Link newsletter – RBR Governance Committee – NC statute 47F.