Rulemaking Authority
Adams Stirling PLC


Governing Documents. To enact rules and regulations, an association (acting through its board of directors) must have rulemaking authority in its CC&Rs, Articles of Incorporation or Bylaws. (Civ. Code §4350(b).) Absent authority in the governing documents, boards still have statutory authority for adopting rules for specific matters. Newer developments have rulemaking authority in their governing documents since the Bureau of Real Estate requires it. (Cal. Code Regs, tit. 10, §2792.21(a)(7).)

Statutory Authority. For example, election rules (Civ. Code §5105) and architectural rules when approval is required for architectural changes (Civ. Code §4765) are required by the Davis-Stirling Act. Other rules or policies are allowed by statute, but not required, such as an IDR policy. (Civ. Code §5905.) Because IDR and ADR (Civ. Code §5935) policies are allowed by statute, and must be disclosed (Civ. Code §5310(a)(9), §5920 and §5965.), they can be adopted by a rule, even absent express authority in the governing documents. A collection policy (Civ. Code §5730) must be disclosed and therefore must exist (Civ. Code §5310(a)(7)). While it could be (and often is) in the CC&Rs, because it is required by law, it is reasonable that it manifest in the form of a rule, even absent express authority. But a discipline/enforcement/fine policy must only be disclosed if it exists. (Civ. Code §5310(a)(8)).

Monetary Penalties. It is doubtful an association can impose fines without some authority. (Liebler v. Point Loma Tennis Club (1995) 40 Cal.App.4th 1600, 1612.)  If the CC&Rs allow monetary penalties or other discipline, but are silent on the right to adopt rules, then an association should still be able to adopt an enforcement policy and fine schedule because they are expressly referenced in the rule adoption portion of the Civil Code.

Rule Adoption Procedure. Once authority for making rules has been established, boards of directors must follow a specific process for enacting rules. Rules adopted by the associaton cannot be in conflict with the CC&Rs. (Ekstrom v. Marquesa at Monarch Beach HOA (2008) 168 Cal.App.4th 1111.)

Recommendation: Older documents that lack authority to enact rules and impose penalties should be amended to include authorizing language. 

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Adams Stirling PLC