Living in a community association offers an array of benefits – well-maintained common areas, a sense of community, and shared amenities. However, a smooth-running community association relies on a strong foundation built upon a clear and documented framework called the “governing documents.” This framework, however, can be complex and downright overwhelming at times. The governing documents, which are generally voluminous and difficult to understand, encompass a range of individual documents, each playing a specific role in governing the community.
The three core documents — the master deed, declaration of covenants and restrictions, and bylaws – provide the essential structure. Additionally, rules and regulations established by the board of directors or trustees, translate the broader principles of the declaration, master deed, and bylaws into more specific, actionable guidelines for everyday living. A community association wouldn’t be complete in New Jersey without a Public Offering Statement – a hefty marketing document that developers are required to register with the New Jersey Department of Community Affairs.
Understanding what these documents are and the distinctions between them is crucial for residents, tenants, and association managers. Residents and their tenants can ensure they are in compliance with the governing framework, avoiding the imposition of fines, and association managers can effectively enforce the rules and navigate any issues that may arise, confident in their understanding of the governing framework. By adhering to a well-defined structure and maintaining a public record of these critical documents, community associations in New Jersey can foster a harmonious and well-maintained living environment for all residents. The following is an overview of each of these documents and their key aspects:
Master Deed/Declaration of Covenants and Restrictions
The master deed is the foundational document that establishes the legal structure of a community association. (A declaration of covenants and restrictions, often referred to simply as the “declaration,” is akin to a master deed and is typically found in homeowner association communities, whereas master deeds are typical for condominium associations.) It is filed with the county clerk’s office where the community is located and outlines the physical boundaries of the property, including common areas, limited common elements or areas, and individual units/lots. The master deed also delineates, among other items, the ownership rights and responsibilities of unit owners or lot owners within the community, including the maintenance, repair, and replacement responsibilities of the association and unit owners. Through the recording of the master deed, a link is established for each piece of real estate within the community and the master deed, placing all future owners on notice of the restrictions of the property.
- Purpose: Establishes the community as a condominium or planned development and defines the property rights and obligations of the association and unit owners. Provides notice through its recording to all future owners of the property restrictions
- Required Contents:
- If a condominium, a statement submitting the land to the New Jersey Condominium Act and must include the work “condominium.”
- Detailed land survey, property description, description of common elements, limited common elements, and unit owner property.
- The proportional undivided interests in the common elements.
- Voting rights of unit owners.
- The method of amending or supplementing the master deed.
- The proportion or percentages and manner of sharing common expenses.
- The bylaws of the association.
- Recording Requirements: The master deed/declaration must be recorded with the county clerk where the community is located, including all amendments.
The Bylaws
Bylaws are the internal rules and regulations that govern the day-to-day operations of the community association. They establish the structure and procedures for the association’s board of directors or trustees, including rules for meetings, elections, and the decision-making processes. Bylaws also address issues such as assessments, budgeting, and the enforcement of rules and regulations. Unlike the master deed or declaration, which focus on property use and restrictions, the bylaws primarily govern the internal affairs of the association.
- Purpose: Govern the administration and operation of the association, including board and membership meetings, voting procedures, elections, and duties of the board.
- Required Contents:
- The form of the association.
- The titles of officers and governing board of the association, including powers, duties, and manner of selection.
- Meeting, quorum, and voting requirements.
- The manner of collecting from association members their respective share of common expenses.
- The method the bylaws may be amended.
- Recording Requirements: Bylaws must be filed along with the Master Deed. Amendments to bylaws must be filed with the county clerk.
Rules and Regulations
The “Rules and Regulations” are additional guidelines and restrictions that may be established by the association’s board of directors or trustees to address specific issues or concerns within the community. These rules are typically more detailed than those outlined in the master deed or declaration and may cover topics such as pet policies, parking regulations, noise restrictions, and recreational facility usage. Rules and regulations are designed to promote the health, safety, and welfare of the community and are enforced by the association’s board of directors. The authority for the rules and regulations stems from the powers granted to the board of directors or trustees by the master deed or declaration and the bylaws of the association.
- Purpose: Set forth rules, restrictions, and procedures for residents to follow regarding the use of units, common areas, amenities, and the community in general. Promote the health, safety, and welfare of residents and protect property values within the community.
- Required Contents: Must comply with the master deed/declaration and bylaws.
- Recording Requirements: Not required to be recorded. Subsequent changes by the association do not need to be recorded but must be properly noticed and maintained as part of the official records.
Public Offering Statement
The public offering statement is a marketing document provided to the initial prospective buyers of units or lots by the developer of a community association. It is required by law in New Jersey and serves as a disclosure document that provides important information about the association, the surrounding community, the association’s governing documents, financial status, and any potential risks or liabilities, including whether the property was environmentally remediated. The public offering statement helps buyers make informed decisions about purchasing property within the community and ensures transparency in the real estate transaction process.
- Purpose: Provides full disclosure of the project details, finances, governance, rules, and risks to potential buyers. Allows buyers to review and understand what they are purchasing and the associated obligations. Protects buyers by mandating transparency from the developer/declarant.
- Required Contents:
- Description of the property, units, common areas, and amenities to be offered.
- Copies of the master deed, declaration, and bylaws.
- Description of management services including a copy of the contract.
- Financial information — budgets, fees, assessments, reserves.
- Terms of any encumbrances, easements, liens, etc.
- Legal rights and cancellation periods for buyers.
- Recording Requirements: This document is not recorded with the county clerk where the property is located but is submitted and must be registered with the New Jersey Department of Community Affairs, including any proposed changes or amendments to the Public Offering Statement.
Not only is understanding the purpose and substance of the governing documents important but how these documents interact with each other is critical. Though each document furthers the operation and management of the community, they do not stand on equal footing. In terms of the hierarchy of the governing documents, first, above all else, federal and state laws and statutes control, followed by the recorded map plat, master deed/declaration, bylaws, and finally, the rules and regulations. For instance, if there is a conflict between the rules and regulations and the master deed, the master deed’s provision will control. Conversely, if there is a conflict between a state statute and the master deed, the master deed must give way to the state statute.
Living in a community association offers a multitude of benefits, conveniences, and luxuries, but it also comes with responsibilities outlined in the governing documents. By understanding the distinctions between the master deed/declaration, bylaws, and rules and regulations, residents and association managers can work together to ensure a smooth-running and harmonious community. Ultimately, a well-informed community and a well-managed framework of governing documents create a foundation for a thriving community association.
To read the original article on page 14 in Community Trends click here.