Are you wondering what Governing Documents are? Let us explain. When you purchased your home, the seller should have provided a Disclosure Package for your review. The Disclosure Package includes the Governing Documents for the Association, financial reports, and special statements on specific rules and information on whether the home you are purchasing is in compliance with the Association's covenants. Reviewing the Disclosure Package before purchasing allows buyers to make an informed decision about the community they are becoming a member of, and decide if the Covenants, rules, and future expenditures are all things the buyer can accept. Typically, a buyer may cancel their purchase contract without penalty within three days of receiving the Disclosure Package if they review it and decide something in the packet is not acceptable.
So what are the Governing Documents? They are exactly as they sound, the documents that regulate how the Association is governed. The first document is usually the Declaration of Covenants. This document sets up the Association, the Assessment(s), how things are run, and the Covenants or rules that go with the lots in the Association.
If the Association is Incorporated (this provides some additional protections for the Association and Board), then there are also Articles of Incorporation and Bylaws. The Bylaws further lay out the business operations of the Association by setting the responsibilities of the Board, Homeowners, and how meetings shall be conducted.
In these documents, you will find the rules and regulations regarding living in the community, how to maintain your property, and how the common areas are managed. The Virginia POA Act also requires Associations to have a Reserve Study.
The Reserve Study identifies all of the common assets in the community, including signs, roads, parking lots, and amenities. It shows the life span of each asset, the remaining useful life, and the future cost of replacement. This important tool allows Owners to see if current Assessments are enough for the Association to save the money after operating costs for repairs and replacements, or if special assessments in the future are likely. Associations who are able to save a little more now and adjust with small assessment increases make their communities more desirable to purchase in, because buyers can see there will be no need for large special assessments in the future, and that the community will remain well maintained.
Spend some time reviewing and getting to know your community's Governing Documents. The time spent getting familiar with your community governance helps you be a good Home Owner and Neighbor.