Can an HOA Make a Retroactive Rule?
Can your HOA change a rule and make it retroactive? Yes, retroactive rules are permissible, and there are situations where it makes sense to change a rule and make it retroactive. If your association isn’t enforcing an existing rule and doesn’t plan to enforce it, it’s a sound business decision to amend the homeowners association governing documents. But, that doesn’t mean that retroactive rule changes are without risk.
Many people confuse “grandfathering in” with “retroactive” when rules are changing, so let’s define these terms. “Grandfathering in” occurs when create an exception that allows some people to break a new rule. “Retroactive” means a new rule that takes effect on a past date for everyone in the community.
For example, an HOA may have a rule that prohibits hardwood floors. This rule is especially common for older communities built when carpet was the preferred floor covering. As hardwood flooring became more popular in recent years, some homeowners in the community installed wood floors. The rule is still on the books, even though the Board has chosen not to enforce it. When the majority of homeowners favor not enforcing a particular violation, it should be simple to amend the governing documents and make the rule retroactive.
However, there can be risks associated with retroactive rules. If wood floors were prohibited because they would increase noise in lower units, the Board may face complaints from owners who are disturbed by the noise. In this situation, the HOA may consider adopting a rule that specifies a certain percent of the floors be covered by rugs to minimize noise.
While this example appears to be simply changing a rule and making it retroactive, there were other issues to consider. The noise issue could be a major problem for the HOA if the failure to enforce the original CC&Rs created noise that interfered with an owner’s enjoyment of his/her home.
If a retroactive change interferes with owners’ rights, the HOA may want to consider grandfathering. For example, an HOA decides to prohibit something that was previously permissible such as banning pets. Generally, existing pets would be grandfathered in while no new pets would be allowed. However, safety concerns could also influence whether an existing pet was allowed.
Look at retroactive rules on a case-by-case basis. These rules have the potential to cross legal boundaries, especially if you take away a privilege that some owners previously enjoyed. If your HOA Board is considering a retroactive rule, the best rule of thumb is to consult your association attorney before taking action.