Governance, Governing Documents, and Legal and Ethical Standards
Hierarchy of authority
Every governance question begins with a document check. The stack generally runs: applicable statutes and recorded covenants, the recorded declaration (CC&Rs) and plat/map, the articles of incorporation, the bylaws, board policies, then rules and regulations, and finally custom and practice. A lower document may fill a gap but may never contradict one above it. Rules are the board's everyday tool; the declaration and bylaws usually require a membership vote to amend.
Fiduciary duties
Directors owe care (informed decisions), loyalty (association's interest ahead of personal interest), and obedience (stay inside the documents and the law). The business judgment rule shields reasonable, informed, good-faith decisions - it does not shield conflicts of interest, fraud, or ultra vires acts. Know the mechanics: disclose, recuse, document.
Process and ethics
Enforcement requires notice, an opportunity to be heard, and consistent application. Selective enforcement is the most common defense raised against a covenant action. Ethical practice means no self-dealing, confidentiality around personnel and litigation, no gifts that create obligation, and no use of office for private advantage.
Traps
Questions often plant a board-adopted rule that conflicts with the declaration (the rule fails), imply the bylaws outrank the declaration (they do not), or describe a declaration amendment approved by board vote alone (usually invalid). Another favorite: a director voting on a contract with his own company.
Rule of thumb
Read the highest document that speaks to the issue, then ask two questions - who holds the authority, and what process is required? When a rule and a covenant collide, the covenant controls.
Worked example: A board resolves to ban overnight commercial-vehicle parking, but the declaration grants "one vehicle per unit" with no restriction and the bylaws are silent. The resolution is unenforceable as written; the board must pursue a declaration amendment or a narrowly justified, uniformly applied rule within the declaration's terms.