An association’s “operating rules” (aka “Rules & Regulations”) are regulations adopted by the board that apply “generally to the management and operation of the common interest development or the conduct of the business and affairs of the association.” (Civ. Code § 4340(a).)

Distinct From Declaration
Unlike the association’s declaration (“CC&Rs”), operating rules are not contained in a recorded document and generally do not require membership approval for their adoption, amendment or repeal by the board. (See “Adopting & Amending Operating Rules.”)

Operating Rule Subject Areas
Civil Code Section 4355 identifies specific subject areas where a rule or regulation adopted by the board would constitute an operating rule. Those subject areas include:

• Use of the common area or of an exclusive use common area (i.e, clubhouse rules, parking rules, etc.).
• Use of a separate interest, including any aesthetic or architectural standards that govern alteration of a separate interest.
• Member discipline, including any schedule of monetary penalties (fines) for violations of the governing documents and any procedure for the imposition of monetary penalties.
• Any standards for delinquent assessment payment plans.
• Any procedures adopted by the association for resolution of disputes (i.e., an IDR policy).
• Any procedures for reviewing and approving a proposed physical change to a member’s separate interest or to the common area (i.e., an architectural application and approval process).
• Procedures for elections.

Procedural Issues
The Civil Code contains provisions governing the procedures through which operating rules must be adopted or amended by the board, as well as how an operating rule may be reversed by an association’s membership. (See “Adopting & Amending Operating Rules” and “Veto of Rule Change by Members.”)

Board Actions which do not Constitute “Operating Rules”
Civil Code Section 4355(b) exempts the following board actions from the procedural requirements applicable to adopting, amending, or repealing “operating rules.” As such, the following actions/items do not constitute “operating rules” as contemplated by Civil Code Section 4340(a):

• A decision regarding the maintenance of the common area;
• A decision on a specific matter that is not intended to apply generally;
• A decision setting the amount of a regular or special assessment;
• A rule change that is required by law, if the board has no discretion as to the substantive effect of the rule change; or
• Issuance of a document that merely repeats existing law or the governing documents.

When Valid and Enforceable
Civil Code Section 4350 contains five (5) requirements that must all be satisfied before an operating rule becomes “valid and enforceable.” Those requirements include:

1. The rule is in writing;
2. The rule is within the authority of the board conferred by law or by the CC&Rs, articles of incorporation or association, or bylaws of the association;
3. The rule is not in conflict with governing law and CC&Rs, articles of incorporation or association, or bylaws of the association; (See also Ekstrom v. Marquesa at Monarch Beach HOA (2008) 168 Cal.App.4th 1111.)
4. The rule is adopted, amended, or repealed in good faith and in substantial compliance with the Civil Code’s procedural requirements governing the adoption, amendment, and repeal of operating rules; and
5. The rule is reasonable.

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