RebeccaA1
(Maryland)
Posts:12
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| 05/14/2008 11:40 AM |
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I have several questions and concerns so let me lay out some background information...
I am a member of a HOA made up of 35 single family homes. The majority of the homes are on quarter to half acre lots. There is one single lot that is nearly 10 acres and is accessed through a driveway that goes between two houses and stretches behind several other homes. All 35 homes were built by the same developer and are bound by the same set of covenants and bi-laws.
My first question is regarding Article 10 of our 'Articles of Incorporation':
"Tenth: Amendment. Amendment of these Articles shall require the assent of seventy-five percent (75%) of the total votes of the membership voting as a single class."
My question is regarding the 75% threshhold. As worded, 75% equals 27 out of 35 homeowners, but there has been a non-participation problem in the neighborhood due to both absentee landlords and lack of interest. There is a proposal on the floor to attempt to get "75% of the total votes" changed into "75% of participant votes". So if only 20 ballots were returned then 15 votes would be the magic number. I am a little concerned that this could cause problems though and open up the door for a few individuals to hijack the HOA.
Does anyone have a similar experience or advice on which is better. |
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DonnaS
(Tennessee)
Posts:2791
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| 05/14/2008 11:56 AM |
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Rebecca,
In order to pass an amendment to change the vote passing number, you will still need 75% of the total membership or 27 positive votes. Changing it to read "75% of participating votes is very dangerous because this would allow a very small number of members to pass or deny items that affect the total membership. Sad but true, owner apathy is such a big problem in associations but you cannot allow a very small numer of members to rule the roost.
Perhaps, 2/3rds of the entire membership would be easier to obtain for a vote response but not the 75% of votes. That could be as little as 8 votes if only 10 people vote or worse. |
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BrianB
(California)
Posts:1731
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| 05/14/2008 11:59 AM |
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donna is completely right. you will have to get high participation in order to change the rule, and once you do... watch out...
3 people coming to a meeting can do a LOT of damage to an HOA if you use a simply majority of those in attendance for allowing changes to be implemented. Or, 1 guy with a couple proxies can wreak havoc. |
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DonN
(Michigan)
Posts:237
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RebeccaA1
(Maryland)
Posts:12
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| 05/14/2008 12:13 PM |
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| I am not asking about interpretation, and I do realize we would need 75% of all homeowners to vote yes in order to change it. It would be up to the current members to work their butts off to get the 27 votes for this amendment, but if it passes we would be able to make some much needed changes to the covenants and bi-laws. I probably should have mentioned this in the original post, but our documentation (originally drawn up by the builder) is riddled with spelling errors, contradictions, loopholes, etc. Also, a voting quorum is now set at 10% so the minimum number of votes would be 4 which is scary. Two thirds would be 24 out of 25. That would be a little bit easier to reach. Maybe instead of a percentage we should just state a minimum number of votes to pass. |
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GlenL
(Ohio)
Posts:1362
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| 05/14/2008 12:28 PM |
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| Rebecca the bar is set high for a reason as previous posters have stated. Yes you have the best of intentions and would never use the change for your own evil purposes; but what about the next BOD or the one after that? Better to make the all of the needed changes to the CC&R's and work your butt's off to get them all passed at once. Also is there a minimum % required by Maryland law to change the CC&R's? |
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RebeccaA1
(Maryland)
Posts:12
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| 05/14/2008 12:29 PM |
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| I just did a quick count of how many participanting votes we could get on a regular basis and I would say approximately 20-23 as a best guess. That's about 57-65%. Does that seem like too low of a threshhold? |
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GlenL
(Ohio)
Posts:1362
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| 05/14/2008 12:37 PM |
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| Rebecca you're going to do what you're going to do; I however would go no lower than 2/3rds to change the CC&R's if a higher number is not specified by law. |
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DonnaS
(Tennessee)
Posts:2791
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| 05/14/2008 12:40 PM |
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Rebecca,
2/3rds would be 23 votes to pass and amendment. Your telling us that your Documents are riddled with misspellings, contradictions, loopholes? Boy, that's not that bad because you don't have ambiguities? Welcome to the world of association documents, probably written off of some lawyers web site. We have all been there and done that. I personally would never lower a vote to a number lower than 2/3rds or 66% of the total membership.
Does not your State of Maryland have Statutes that require a minimum for quorums and vote percentages? Yes, the numbers seem high but as Glen said, that is for a reason which is to insure that a couple of eager beavers don't keep changing things too easily. Yes, you will have to work your butt off in order to keep things moving forward but that is part of the "perks" of being a Board member. My Board pounded the pavement for a couple of months just to get enough votes to increase the Board size from 3 (Developer screw up) to 5 members. We did it and now we feel great knowing that we accomplished something worthwhile for the community. |
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RebeccaA1
(Maryland)
Posts:12
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| 05/14/2008 12:52 PM |
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Donna, I am not (yet) versed in the state statutes. I'm sure it's only a matter of time before I get my full lesson.
As an example of a loophole that needs attention...
Right before a single home was built and closed on the 9+ acre lot, another developer came to our general HOA meeting and tried to convince us to exclude the lot from the HOA so that he could subdivide it and make a fortune. His only weapon against us was the difinition of 'lot'. Here's the exact wording...
"“Lot” or “Lots” shall mean and refer to any plot of land shown upon any recorded subdivision map of the Property on which it is intended that a single family residential dwelling will be constructed."
The developer's lawyer claimed that 'a single family residential dwelling' could be interpreted to mean a four story apartment building full of residential dwellings. We (the whole room full of homeowners) basically told the guy to go to he11 because we were not about to let that lot be subdivided. |
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MaryA1
(Arizona)
Posts:2156
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| 05/14/2008 12:53 PM |
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Rebecca,
When considering changing the requirement to a % of only those voting, the quorum must come into play. If the quorum is only 10% at present, changing the requirement to 75% of those voting would mean as few as 3 people could change the CCRs. That IS scary. If you really want to change the requirement I would suggest leaving the quorum at 10% and changing the % to a majority of the membership. It's my personal belief that nothing less than a majority (50% + 1) of the homeowners should be required to change the CCRs. |
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DonnaS
(Tennessee)
Posts:2791
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| 05/14/2008 12:59 PM |
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I don't think that a multi family building would be classed as "single family residential" by your County but would be a class 2 multifamily dwelling, therfore he would not be correctly zoned to build that. His Lawyer was just blowing smoke, trying to be a big bully, smarter that the members in attendance. But then again, I have seen developers get by (or is it "buy")with unheard of projects.
Every set of documents that I have ever read needs some fine tuning or tweeking and removal of outdated language or restrictions. Yours are no different so just be diligent and it will be worth all of the effort. |
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RebeccaA1
(Maryland)
Posts:12
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| 05/14/2008 1:14 PM |
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| Any idea what how to handle a home that has been foreclosed upon and doesn't have an 'owner' as far as voting? Should their non-vote count as a 'NO' or should that house not have a vote? There is nothing in our rules about this btw. |
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GlenL
(Ohio)
Posts:1362
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| 05/14/2008 1:29 PM |
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| It is not a "no" vote however it could be counted as an abstention. If your documents or state law allow the BOD to suspend voting privileges for lots not in good standing you would then need 75% of 34 not 35 lots. |
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RebeccaA1
(Maryland)
Posts:12
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| 05/14/2008 1:36 PM |
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| Glen - That's a good point. I think there is a clause like that. I'll have to look into it some more. Thanks! |
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SusanW1
(Michigan)
Posts:2116
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| 05/14/2008 2:01 PM |
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Could someone explain: "Tenth: Amendment. Amendment of these Articles shall require the assent of seventy-five percent (75%) of the total votes of the membership voting as a single class."
the "as a single class" is not clear to me.
I have seen "75% of the members" and "75% of the members voting" but don't understand the "voting as a single class".
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GlenL
(Ohio)
Posts:1362
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| 05/14/2008 2:17 PM |
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| I believe that this would occur when the developer is still involved; there are usually two classes of membership Class A for the developer and Class B for the homeowners. After transition there is only one class of membership. |
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BruceF1
(Connecticut)
Posts:525
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| 05/14/2008 2:23 PM |
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Rebecca,
If you have a unit that is in foreclosure, then that unit is not included in the voting requirement. Your documents read "75% of the total votes"; not 75% of the total homes
As far as changing the voting requirements - be careful what you wish for. |
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SusanW1
(Michigan)
Posts:2116
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| 05/14/2008 2:24 PM |
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Then this is VERY ambiguous: "Tenth: Amendment. Amendment of these Articles shall require the assent of seventy-five percent (75%) of the total votes of the membership voting as a single class."
Could mean: 75% of the total votes of the members that are voting at any particular time - or - that are present and voting at the meeting.
Which MAY mean, after your quorum is assured at the annual meeting, then "75% of the total votes of the members voting" could pass a motion.
It SHOULD have said " a vote of 75% of the membership is needed to amend . . . "
if they wanted to make it a vote of 75% of ALL the members.
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RebeccaA1
(Maryland)
Posts:12
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| 05/14/2008 3:03 PM |
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Yes, there was Class A and Class B, but B no longer exists because the builder is out of the picture.
I believe, as it is currently worded, that it must be 75% of all the 35 votes. |
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GlenL
(Ohio)
Posts:1362
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| 05/14/2008 3:04 PM |
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Susan she did also say: I probably should have mentioned this in the original post, but our documentation (originally drawn up by the builder) is riddled with spelling errors, contradictions, loopholes, etc.
Maybe this is one of those.
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GlenL
(Ohio)
Posts:1362
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| 05/14/2008 3:07 PM |
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| Nothing to add right now but I just couldn't stand having my counter at 666. |
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HaroldS
(Arizona)
Posts:904
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| 05/14/2008 3:40 PM |
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In any vote which requires a certain percent of the owners' "yes" votes to pass an issue, it doesn't matter what you call a non-vote since only yes votes are what's important and what are needed to acheive that percentage. Everything else has to be considered a "no." If it isn't a "yes" it has to be a "no." I've never seen any provisions for "absentions" in percentage requirements.
I also don't think a property in foreclosure changes the percentage requirements. Why would it? Wouldn't the owner still be legally the owner, and qualified to vote, until the bank actually takes possesskon? And at that point the bank would be the owner and qualified to vote? If you follow that "limbo" theory, what happens if the house burns down during that transition period? Who's the owner and gets the insurance? Someone has to always be the owner. |
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GlenL
(Ohio)
Posts:1362
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| 05/14/2008 4:20 PM |
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| Harold if the H/O is in foreclosure the member is no longer eligible to vote in most HOA's depending on their CC&R's or state law (Member in good standing clause). The only votes you can count yes or no are the ones that are actually cast. I've actually seen proposed legislation on our state election ballot where a no vote would actually pass the ordinance and a yes vote would mean its defeat. Assuming the non-votes to be no votes brings up some interesting possibilities; word it right and you could pass anything. |
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HaroldS
(Arizona)
Posts:904
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| 05/14/2008 6:39 PM |
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That's true Glen. You can rig a vote to do almost anything. However, all HOA documents I've seen require a specified percent of YES votes to pass to change the CC&Rs. Consequently only the YES votes determine if it passes or fails.
As far as denying voters based on being "not in good standing": I think we have discussed that subject here before, and some believe the good standing requirement should not be applied in votes changing the CC&Rs since it would disenfranchise those members in a matter that could have major implications affecting their property. Everyone should be entitled to vote when a matter could affect their property. I happen to agree with that. |
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GlenL
(Ohio)
Posts:1362
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| 05/14/2008 9:35 PM |
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| Harold you're certainly entitled to your opinion. However if it's in the CC&R's that a person loses the right to vote if they don't pay their dues then they shouldn't come crying when they loose the right to vote because they're a deadbeat. IMO it's no different than a felon not being able vote in a lot of states because that's how the states rules (laws) are written. |
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CharlesW1
(Georgia)
Posts:818
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| 05/15/2008 5:57 AM |
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This particular post has certainly taken a turn……again!
I personally believe (made clear on several occasions) that homeowners NOT in good standings have “forfeited” their voting privileges! “IF” those (not in good standings) show any concern for their community,then they would still have their voting privileges. PERIOD! That’s in the majority of covenants today.
I’ve suggested amending our governing documents to say something along the lines of allowing ONLY those present (eligible to vote) at annual meetings (i.e. elections) to establish quorum, and to vote. NO PROXY VOTING. ONLY MAIL IN BALLOTS AND THOSE IN ATTENDANCE WILL BE ELIGIBLE TO VOTE.
I know from personal experiences that out of 275 Lot owners, we’ll have present (at an annual meeting), in which 25% (eligible voters) are required just to establish a quorum. There has NEVER been enough present to establish a quorum. Therefore, members of the board must solicit for proxies every year. RIDICULOUS!
I do however, agree that to amend the governing documents should require a minimum of 2/3 of those eligible to vote, NOT TOTAL ASSOCIATION.
Just my two cents
Chuck W.
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Charles E. Wafer Jr. |
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SusanW1
(Michigan)
Posts:2116
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| 05/15/2008 6:03 AM |
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In our bylaws, it says that a quorum is NOT requred to conduct business at the Annual Meeting, including election of officers. So this year, 25 (out of 250) people elected the entire board and officers. !!
HOWEVER, to raise the dues, there must be a quorum. Funny thing is that we never lack a quorum when we want to adjust the dues - or there is a controversial issue on the agends (like the speedbump question)
To get back to the Original Question: this person's CCRs should get corrected, if she wants it to read that amendments must pass by 75% assent of all eligible members. It currently reads, "75% of all members voting"
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DonN
(Michigan)
Posts:237
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| 05/15/2008 6:44 AM |
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In Michigan, the case law on amendments is in Ardmore Park Subdivision Ass'n, Inc v Simon, 117 Mich App 57; 323 NW2d 591 (1982), which reads:
"We hold that where a deed restriction properly allows a majority, or a greater percentage, of owners within a particular subdivision to change, modify or alter given restrictions, other owners are bound by properly passed and recorded changes in the same manner as those contained in any original grant and restriction."
More information is available at
http://swagman.typepad.com/poa_governance/2006/02/michigan_case_l.html#ArdmorePark. A link to the full opinion as published in the Michigan Appellant Reports provided.
The opinion indicates that other states have similar case law. |
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Don Nordeen
Governance of Property Owners Associations
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BruceF1
(Connecticut)
Posts:525
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| 05/15/2008 7:41 AM |
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Susan,
I agree, the sentence in the CCRs is ambiguous and could be interpreted either way. It depends on whether you interpret "voting" as modifying the first part of the sentence, as in "seventy-five percent (75%) of the total votes of the membership voting" or modifying the last part of the sentence to mean, "voting as a single class."
I prefer the latter interpretation because the word "membership" is used instead of the word "members". "Membership" implies the entire body; the membership of an organization is all the members who belong to the organization, whereas the members of an organization is some subset of all the members of an organization. The phrase, "voting as a single class" implies just what is said, that all members who do vote, regardless of which class they belong to, must be considered as a single class for the purpose of voting. In some organizations, where there are different classes of membership, one class of members may have different voting privileges than another class.
Thus, I interpret the requirement to mean 75% of the entire membership and that all members voting must vote as a single class with the same privilges. There is no mention here of eligibility to vote, so I would have to conclude that whoever meets the definition of being a member is also eligible to vote.
We've seen many documents that have been written so they contain vague or ambiguous requirements. Unfortunately, when the author writes such a document, he or she understands what the intention is. Later, when the rest of us try to figure it out without the guidance of the author, we can arrive at different conclusions. That's why lawmakers have to be very careful in the wording used when writing laws.
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