Operating Rules Defined
Operating Rules
"Operating Rules" are defined as any rule or regulation that applies to the management and operation of a common interest development or the conduct of its business and affairs. (Civ. Code § 4340) As provided for in Civil Code § 4355(a), "Operating Rules" are specifically defined as a rule or regulation that applies to:
Operating Rule Exceptions
Per Civil Code § 4355(b), the following do not fall under the definition of an "Operating Rule" and are free of the requirements of Civil Code sections 4360 and 4365:
- 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 required by law, if the board has no discretion as to the substantive effect of the rule change.
- Issuance of a document that merely repeats existing law or the governing documents.
Rulemaking Authority
Before enacting rules and regulations, associations must have rulemaking authority either statutorily or through their governing documents. (Civ. Code § 4350(b).) Some older documents are silent on rulemaking authority. Fortunately, governing documents in newer developments all have rulemaking authority since the Department of Real Estate requires it. (Cal. Code Regs, tit. 10, § 2792.21(a)(7).) Boards can adopt rules after rulemaking authority has been established. Absent rulemaking authority in the governing documents, associations still have statutory authority to adopt rules for specific matters, such as
AMENDING RULES
Emergency Rule Change
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 can make an emergency rule change without a 28-day waiting period. Once adopted, emergency rules take effect upon notice to the membership. An emergency rule change is effective for up to 120 days. (Civ. Code § 4360(d))
Emergency Rules
28-Day Notice of Proposed Change
Nonsubstantive Changes. If the board is merely correcting grammar or renumbering provisions, the 28-day notice period is not triggered, as the rules are not being changed. Even so, the board must distribute a copy of the clean set along with an explanation of what was done and that no changes were made to the rules.
Substantive Changes. Before adopting or amending an operating rule or changing the fine schedule, the board must provide general notice of a proposed rule change at least 28 days before making the rule change. (Civ. Code § 4360(a)) The notice must include the text of the proposed rule change and a description of its purpose and effect. Notice is not required if the board determines that an immediate rule change is necessary to address an imminent threat to public health or safety or an imminent risk of substantial economic loss to the association.
Comments by Members. A decision on a proposed rule change must be made at a board meeting after considering any comments submitted by association members. (Civ. Code § 4360(b)) The board must consider members' comments, but is not required to adopt them.
Notice of Rule Adoption
Only CC&Rs are recorded, not rules, bylaws, or articles of incorporation. The board must deliver notice to the membership within 15 days of adopting or changing a rule. (Civ. Code § 4360(c)) Rules become effective upon written notice to the membership.
Disciplinary Policies. Once rules have been adopted and distributed to the membership, they do not need to be distributed annually. New members of the association must receive a copy of the rules and fine policy, and normally do so through escrow. Rule changes need to be distributed only once — when they are adopted. Disciplinary policies, however, must be distributed annually.
Membership Veto
The membership has a limited right to veto rule changes. Members owning 5% or more of the separate interests may call a special meeting of the members to reverse a rule change. (Civ. Code § 4365) The written request may not be delivered more than 30 days after the association members are notified of the rule change. (Civ. Code § 4365(b)) The rule change may be reversed by the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a quorum is present. (Civ. Code § 4365(d)) The board must give notice of a special meeting and send out ballots. The results of the membership vote must be provided to the membership within 15 days of the vote. (Civ. Code § 4365(g)) If an operating rule is reversed, it cannot be re-adopted by the board for at least one year. However, the board may vote on other operating rules covering the same subject. (Civ. Code § 4365(f))
Miscellaneous
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with community association issues, subscribe to the Davis-Stirling Newsletter.