If you are considering moving into a condo, either as a homeowner or a renter, it is essential to review the governing documents of the condominium before you commit. We have previously discussed the CC&R’s of a condo, so, what are condo by-laws?
Condo By-laws contain the rules and regulations which cover how your homeowner’s association is run. This includes things like how members of the board of directors are elected and the board members duties. These are distinct from the CC&Rs which cover the rights and responsibilities of the board to the residents and the residents to the board.
Together the by-laws and the CC&Rs make up the “Declaration” of the homeowners association, and along with the rules and regulations, these documents govern everything to do with the condominium.
How Are Condo By-laws Created?
The by-laws are created when the condominium is first incorporated.
Wait. What? Incorporated? What do you mean “when a condo is incorporated”? To give you some context, let’s take a quick diversion from the by-laws and look at what a condo actually is.
What Is A Condo?
A condominium is not a style of building or residence; it is instead a legally defined term for a specific type of property ownership structure. A non-profit organization owns and operates the common areas of the building while each unit can be individually owned. The owner of a unit also holds an interest in the homeowners association which runs the condo building.
The developer who builds a condominium block is the first owner, and this developer creates a “condominium association.” This is also known as a homeowners association and is the non-profit entity which will own and manage the building as well as the land on which the building stands.
The developer operates the association until a particular percentage of units in the condominium have been sold once this point has been reached, usually 50% of the building, the developer hands over the running of the association to the unit owners.
And Now Back To – How Are Condo By-Laws Created?
When the condo is first incorporated, the developer is in sole charge of the development. The developer will write the declaration of covenants, conditions, and restrictions (CC&Rs) and the by-laws for the condo. The declaration will then be filed with the Recorder of Deeds of the county in which the condo has been built.
The declaration lays out the details of the property. These details include:
- A definition of and the difference between common areas, limited common areas, and units.
- Which parts of the condo are common areas, restricted common areas, and units.
- The specific percentage interest that the owner of each unit has in the condo.
- Maintenance responsibilities.
In some states, there is a requirement that the by-laws are also filed and many developers file the declaration of CC&Rs and the by-laws together as a matter of course.
The majority of condominiums have very similar declarations and by-laws with many developers having a standard document that they use for all of their developments.
What Exactly Do The Condo By-laws Cover?
While a condo association is a non-profit, it must still be run as a corporation. The condo by-laws cover the structure of the day-to-day governance of the homeowners association.
This is a crucial point. The by-laws apply only to how the board is structured and run and do not cover the broader governance of the condominium itself.
The by-laws will contain items such as:
- How often the board holds elections.
- The number of members that can be on the board at one time.
- Term limits for board members
- How members of the board are nominated.
- How new members can be elected.
- How often the board will meet.
- The number of members required for a quorum.
- The roles of board “officers” such as the treasurer and the secretary.
- The duties and responsibilities of board members
- If and how disciplinary action will be taken against board members
- The circumstances under which a member may be removed from the board.
- The process for removing a board member.
As you can see, the by-laws are all about the board and how it works.
Think of it like this.
If the condominium were a car, the declaration of the CC&R’s would be the manufacturers specs for the vehicle. They outline how the seats are laid out, how big the seats are etc. The by-laws would cover the driver of the vehicle. How drivers are licensed, what a driver can and cannot do in the car, how the vehicle is driven, and what happens if a driver breaks a traffic law.
Finally, the rules and regulations are what the driver says you can and cannot do in the vehicle. They decide who gets to ride shotgun, what music is played, and whether or not the dog’s allowed in the car.
It’s not a perfect analogy – but you get the idea.
Can Condo By-laws Be Changed?
When a developer produces the condos documentation, they try to anticipate the kind of residents who will be living in the condo and the type of lifestyle to which they aspire. For example, a complex which consists exclusively of one-bedroom units and no real amenities will have a very different demographic to one that has two and three-bedroom units, a swimming pool, a children’s play area, and outdoor walking trails.
Even with the best intentions, developers may not get it right. Or, alternatively, things may change over the years. The residents and board of a condominium may feel that an update of one or more governing rules is appropriate.
If there is only one item to change, this can be done through an amendment.
The details of how this is done can vary significantly from condo to condo, but the basic process goes something like this:
- Either a board member or a resident suggests a change to one of the by-laws.
- The change is discussed at a board meeting.
- If there is enough support, the proposed change will be circulated to all owners in the condo. This is done to allow all stakeholders to participate in the process.
- A date will be set for a vote – usually the next board meeting.
- If the voters approve the change, an amendment to the by-laws will be made.
- Depending on the rules in the state in which the condo is located, the amendment may or may not have to be filed with the Recorder of Deeds.
If several changes to the by-law are being suggested, it may be appropriate for a board to consider a complete by-law review.
How Does A Condo By-law Review Work?
A condo by-law review may be appropriate if:
- There are several proposed changes to the current condo by-laws.
- The condo by-laws have been changed and updated over the years and have developed a confusing patchwork of amendments.
- It has been ten years or more since the condo by-laws were reviewed to ensure they are still appropriate.
Before changing any condo by-laws, the board may want to ask some of the following questions:
- Is there a possibility of legal challenges because our documentation does not cover everything we need it to?
- Are we leaving ourselves open to financial liabilities because of gaps in our by-laws?
- Do we want to make condo units more marketable and promote real estate appreciation by having clear, easy to understand, loop-hole free condo documents?
- Are there financial difficulties for the condo association because the board does not have the authority or a process to pursue:
- Unpaid Homeowners Association fees
- Delinquent special assessment payments
- Fines for bylaw infractions
- Other outstanding financial considerations.
- Do the current condo by-laws discriminate, either directly or indirectly, against a particular demographic? Does this prevent the board from being a true representation of the residents?
- Are there any persistent problems within the condo? If so, are the structure or the working practices of the board a help or a hindrance?
- Do residents attend the board meetings? If not, are there issues around the board or the way in which the board works, that prevent resident attendance? Can this be changed?
- Are there enough people involved in the board? Do you have difficulties attracting and keeping board members? Are the qualifications too stringent?
- Is the process for removing a board member accessible and transparent?
- Are there adequate and appropriate remedies for dealing with by-law infringement?
- Do the condo by-laws have outdated references to government agencies which no-longer exist, legislation which has been changed, or potentially discriminatory language?
As you can see, there are many areas of governance which are affected by the condo by-laws. A responsible board will undertake such a review to ensure both the board and the residents are adequately serviced and protected.
What Happens If A Condo By-law Is Broken?
The details of what happens when someone contravenes one of the condo by-laws vary from board to board. It also depends on the impact or potential impact of the contravention and many other factors.
Possible consequences could include:
- A verbal warning.
- A written warning.
- A fine.
- Suspension from the board until the issue is resolved.
- Expulsion from the board.
The language of legal documentation associated with condos can be confusing. This is especially true when people use different terms interchangeably or in a technically incorrect manner.
Condo by-laws cover the workings and authorities of the condo/homeowners association board. They outline how the board of directors is chosen, elected, and removed from the board as well as how the board itself works and the limits of its authority.
About The Author
Geoff Southworth is the creator of RealEstateInfoGuide.com, the site that helps new homeowners, investors, and homeowners-to-be successfully navigate the complex world of property ownership. Geoff is a real estate investor of 8 years has had experience as a manager of a debt-free, private real estate equity fund, as well as a Registered Nurse in Emergency Trauma and Cardiac Cath Lab Care. As a result, he has developed a unique “people first, business second” approach to real estate.
This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policy.