Tuesday, June 5, 2012

Legal Priority

“How do I determine which rules control my home, and what takes priority?” This is a question that frequently comes up as being confusing for homeowners. Below, in descending order of importance, are various legal documents you may come across when investigating this issue:

  • Georgia Condominium Act / Property Owners’ Association Act.  These statutes establish the legal authority for the existence of housing corporations, and define and control their operation.  These default rules may in some instances be modified by any of the following documents.
  • Articles of Incorporation.  This creates the official entity of your Association and sets restrictions as to its nature.  Associations must abide by the Nonprofit Code Statute – this is a good place to look for ideas of how the Board is to conduct itself.
  • Survey.   This lays out the exact boundaries of the development, and may have restrictions on property usage listed.  There are usually so many restrictions that these have been relocated into another document - the Declaration.
  • Declaration.  This is considered the controlling document for defining details of the Association, and laying out restrictions on usage and interaction.  It is recorded at the Courthouse (just like the two documents above).  If you are purchasing a home, the law assumes that you have gone down to the courthouse and obtained a copy of the Declaration and made yourself aware of its restrictions.  Ignorance is no excuse.
  • By-Laws.  This springs from the Declaration, and details the method and actions of governance, such as how votes are conducted and qualifications to be a Director.
  • Rules & Regulations.  These flow from both the Declaration and By-Laws, and give very specific rules, such as the type of pets you may have, or the hours in which you may use a hammer to do work in your home.  Typically these are easily changed by the Board, without prior approval from the Community, unlike the other items above, which require formal votes of the Association in order to alter.
  • Resolutions.  These memorialize decisions on specific topics and may be changed as often as the Board desires.  The four types are Policy (architectural control or enforcement), Administrative (collections, meeting times), Special (authorizing a lawsuit, addressing individual situation), and General (budget adoption or contract approval).     
Case law resides above all of these documents:  The courts’ interpretation on the interplay of these regulations with other state and federal laws and specific situations, which may not have been contemplated by the creators of the various documents. 
 Each court jurisdiction (magistrate, state, superior, federal) may have some overlap on resolving disputes, and each resolution is both costly and time-consuming:  It is always best if Associations can resolve differences without resorting to the legal system.

While individual disputes may be addressed at the trial level, what matters most are determinations made on appeal, since these will be referred to when addressing similar disputes in the future.  As in other areas of law, the State Supreme Court trumps lower levels of appeals, and Federal appeals, if granted, are above those of the state level.  While one state is not bound to the decisions in other states, judges do frequently refer to out-of-state decisions to clarify a line of thinking.  Federal appeals cover multiple states, and one federal jurisdiction may look to others when reaching a determination. 

As consensus on a particular issue forms across the country via the judicial system, wise Boards of Directors keep track of such developments to avoid pitfalls made by others.  While a Director should avoid practicing law on behalf of his or her Association, there is a responsibility to self-educate so potential problems can be recognized in advance and experts consulted for the good of the community.

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