Board Operating Rules

“Operating Rules” are regulations adopted by the Board that apply “generally to the management and operation of the common interest development or the conduct of the business and affairs of the association” (per Civ. Code § 4340(a)).   Civil Code Section 4355 identifies specific subject areas where a rule adopted by the Board would constitute an Operating Rule. Those subject areas include:

• Use of the common area or of an exclusive use common area (i.e, clubhouse rules, parking rules, etc.).
• Use of a separate interest, including any aesthetic or architectural standards that govern alteration of a separate interest.
• Member discipline, including any schedule of monetary penalties (fines) for violations of the governing documents and any procedure for the imposition of monetary penalties.
• Any standards for delinquent assessment payment plans.
• Any procedures adopted by the association for resolution of disputes.
• Any procedures for reviewing and approving a proposed physical change to a member’s separate interest or to the common area (i.e., an architectural application and approval process).
• Procedures for elections.

 

Board Actions which do not Constitute “Operating Rules”

Civil Code Section 4355(b) exempts the following board actions from the procedural requirements applicable to adopting, amending, or repealing “operating rules.” As such, the following actions/items do not constitute “operating rules” as contemplated by Civil Code Section 4340(a):

• A decision regarding the maintenance of the common area;
• A decision on a specific matter that is not intended to apply generally;
• A decision setting the amount of a regular or special assessment;
• A rule change that is required by law, if the board has no discretion as to the substantive effect of the rule change; or
• Issuance of a document that merely repeats existing law or the governing documents.

 

Operating Rules vs CC&Rs

Unlike the Association’s Declaration of Restrictions (aka “CC&Rs”), Operating Rules are not contained in a recorded document and generally do not require membership approval for their adoption, amendment or repeal.  Instead, they are approved and repealed by Board action. 

Requirements to be Valid and Enforceable

Civil Code Section 4350 contains five (5) requirements that must all be satisfied before an operating rule becomes “valid and enforceable.” Those requirements include:

1.      The rule is in writing;

2.      The rule is within the authority of the board conferred by law or by the CC&Rs, articles or incorporation or association, or bylaws of the association;

3.      The rule is not in conflict with governing law and CC&Rs, articles of incorporation or association, or bylaws of the association; (See also Ekstrom v. Marquesa at Monarch Beach HOA (2008) 168 Cal.App.4th 1111.)

4.      The rule is adopted, amended, or repealed in good faith and in substantial compliance with the Civil Code’s procedural requirements governing the adoption, amendment, and repeal of operating rules; and

5.   The rule is reasonable.

Procedure for Adopting or Amending Operating Rules

Civil Code Section 4360 sets forth a specific procedure that a board must follow when seeking to adopt or amend an association’s operating rules (to perform a “rule change”). That procedure includes the following primary requirements:

1.  Notice of Proposed Rule Change – the board must provide general notice pursuant to Civil Code Section 4045 of a proposed rule change at least thirty (30) days before making the rule change. The notice must include (1) the text of the proposed rule change, and (2) a description of the purpose and effect of the proposed rule change. This notice is not required where “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.” (Civ. Code § 4360(a).)

2.  Decision Made at Board Meeting – the board’s decision on whether to adopt or amend an operating rule must be made at a board meeting “after consideration of any comments made by association members.” (Civ. Code § 4360(b).) The proposed rule adoption or amendment must have been listed as an agenda item for that meeting  in order for the board to discuss or vote on it at the meeting. (Civ. Code § 4930(a); See also “Board Meeting Agenda Requirements.”)

3.  Notice After Making Rule Change – after the board makes a decision to adopt or amend an operating rule, the board must, “as soon as possible…but not more than 15 days after making the rule change,” deliver general notice pursuant to Civil Code Section 4045 of the rule change. (Civ. Code § 4360(b).) 

 

Operating Rules Adopted by the California Pines POA 

 All Operating Rules adopted by the California Pines POA Board are shown below.

Rule #1 - Schedule of Fines/Penalties for Violations of Homeowners' Association Governing Documents and Operating Rules.  Adopted January 24, 2011.