A Tool that Solves Issues and Prevents Bigger Problems (Oregon Law)

One of the functions of an HOA Board of Directors is to pass resolutions.  While the board can make and pass motions in a board meeting, with actions then recorded in the minutes, a resolution is a stand-alone document that is the formal expression of board action.  The adoption of the resolution should be recorded in the board meeting minutes, and the resolution itself should be part of a book of resolutions maintained by the association.  There are certain resolutions, such as a collections resolution and an enforcement resolution, which must be mailed out to all of the owners after they are adopted.

There are three types of resolutions that a board of directors can adopt.  However, with any of these resolutions, the board cannot exceed the authority given to it in the association’s governing documents and state statutes.  First, the board can adopt interpretive resolutions.  These are resolutions that are adopted to clarify ambiguities in the association’s governing documents.  Great care should be taken to thoroughly review the possible interpretations before adopting an interpretive resolution.  This would include consultation with legal counsel to determine the potential risks of a particular interpretation.  As with all actions of the board, they must consider what would be in the best interest of their association.

Second, the board can adopt procedural resolutions.  A procedural resolution is a step-by-step process or procedure that the board adopts to apply uniformly to all owners.  For example, in a homeowners association, the board could adopt an application and review procedure for architectural control committees.  The resolution could state what needs to be submitted in the application in order for the committee to consider the construction or change.

Third, the board can adopt rules via resolution.  The board has authority to adopt rules for the association, and this ability should be cited in the resolution.  The rules are typically contained in a separate rules and regulations manual that then becomes part of the governing documents of the association.  The board can adopt or modify the rules one by one, or together as a whole.  Again, the rules must be: 1) reasonable, 2) consistent with the Declaration, Bylaws, and state statutes, and 3) not exceeding the authority given to the board.

There are many different resolutions that the board can adopt, and they vary from association to association.  However, there are certain resolutions that we recommend all communities adopt.  These are: 1) a collections resolution, which specifies the authority and the procedure for collecting assessments and what happens if the owners do not pay assessments; 2) an enforcement resolution with an attached schedule of fines, which denotes how the board will address potential violations of the governing documents and rules, as well as the amount of the fines; 3) an insurance resolution, which states how the association’s deductible will be paid in the event of a covered claim; and 4) a records inspection resolution, which sets out the procedure for handling a records request and allows the HOA to charge a [reasonable] fee for the inspection.

Resolutions are an important tool to help associations run efficiently and effectively.  If properly adopted and followed, resolutions can help resolve many issues before they become bigger problems.