Understanding the Communities Governing Documents for Approval to Take Out a Loan
HOA management requires a particular set of rules and regulations that need to be followed and are used as a way to govern the community. These rules involve clarification around decision-making and can include conditions and restrictions, the master deed, rules, bylaws, and many other details. Understanding these documents can be challenging without the proper knowledge, so HOA Capital is here with a helpful guide on HOA governing documents.
What do the Documents Include?
The governing documents are traditionally divided into different groups and have a hierarchy and importance over specific forms. The standard order is:
- Local, State, and Federal LawsThe HOA Plat/Map
- The Declaration of CC&R's
- Articles of Incorporation
- HOA Bylaws
- Rules and Regulations
Each one offers a full outlook of what processes and actions will be required by the HOA and the law and almost any event. Each category has its purpose and theme, and while some might be directly related to the residence, others may be to outline any regulations around the board members.
Why are they Important?
These documents are a vital part of the process because they are HOA management solutions that offer clarification and make individuals accountable for every function and role within the community. And even though not every conflict can be solved by using the documents, they can at least prepare individuals for what to expect by living in the HOA. The documents essentially offer a way to keep the HOA organized and function as a failsafe within the community.
What is the Hierarchy?
Local, State, and Federal Laws
These documents are at the top of the list because they preside over the rest of the governing documents. This means that regardless of the condition the community was founded in, these laws will dictate:
- How it can be established
- What is required by law to be in the documents
- What other documents would violate the laws if they were altered
The HOA Plat/Map
The plat is a map of the property where the HOA is located. It helps establish the area's physical characteristics and is used by real estate developers and residents to define property aspects like the boundaries, housing lots, and streets.
The Declaration of CC&R's
The Covenants, Conditions, & Regulations documentation help residents understand everything that isn't or is allowed in the association. It also outlines what parts are under the board's control and has guidelines on how the board members must abide by these rules.
Articles of Incorporation
These documents are the ones used that helped establish the association, but they generally have very little documentation that can assist in conflicts.
The bylaws are fundamental because they make the CC&R legitimate and any other regulations or rules within the community. They also establish how the board members must conduct themselves and how the board will function. These bylaws will dictate what the board can and can't do and how and when the members are elected into their positions.
Rules and Regulations
The rules and regulations established in the documents will also include information ranging from where homeowners can park to what's allowed in their yards. It helps define what is permitted on the resident's property and in the community.
HOA Capital, Streamlining Our Resources to Fit Our Clients Needs
Part of running a successful association requires understanding the governing documents and how they affect everyone involved. Keeping an effective system in place can help the association function more effectively, so if you are looking for funding for a capital improvement, HOA Capital Is your trusted source. We specialize in HOA loans and streamline our services to meet our client's needs in Minnesota.
Let us help you enhance your HOA property today; message us online or call us at 952-836-9593 to schedule an appointment.