Need to change CC & Rs

Started by GaryL4 • 3 replies • 1645 views

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GaryL4 (Arizona)
Posts: 1

Posted:

Our HOA has 185 units. The CC & Rs are decades out of date, and some may be in violation of state law. Our problem is that when the original CC & Rs were written and recorded, any changes or amendments had to be approved by all Eligible First Mortgagees. This is impossible; the banks could care less about wasting time going over our CC & Rs. We can't amend the CC & Rs to write out the Eigible First Mortagagess because these same folks have no interest in going over the paperwork to approve writing them out.

We are caught in a circular error. Any suggestions on how to rewrite and record our new proposed CC & Rs without getting the approval of approximately 100 banks that have no interest in giving their approval?

Thanks;

Gary Lape

TimB4 (Tennessee)
Posts: 21,047

Posted:

I would recommend doing what is authorized in Virginia Law.

Send a notice with the proposed amendments to all mortgage holders saying that unless the Association hears from them to the contrary, that they concur with the proposed changes. Send the letters certified if you desire better documentation that they were sent.

If concerned, if this is legal or not for AZ, run the option by your Associations attorney.

Here is the specific language in the VA law:

In the event that any provision in the declaration requires the written consent of a mortgagee in order to amend the bylaws or the declaration, the association shall be deemed to have received the written consent of a mortgagee if the association sends the text of the proposed amendment by certified mail, return receipt requested, or by regular mail with proof of mailing to the mortgagee at the address supplied by such mortgagee in a written request to the association to receive notice of proposed amendments to the declaration and receives no written objection to the adoption of the amendment from the mortgagee within 60 days of the date that the notice of amendment is sent by the association, unless the declaration expressly provides otherwise. If the mortgagee has not supplied an address to the association, the association shall be deemed to have received the written consent of a mortgagee if the association sends the text of the proposed amendment by certified mail, return receipt requested, to the mortgagee at the address filed in the land records or with the local tax assessor's office, and receives no written objection to the adoption of the amendment from the mortgagee within 60 days of the date that the notice of amendment is sent by the association, unless the declaration expressly provides otherwise.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Gary:

Arizona has no language in its statutes similar to what Tim has quoted. Also, I am unaware of any AZ court decisions that address this situation, You are almost definitely going to need the assistance of an attorney in doing anything to re-write your CC&R's.

One thing to take note of: Your CC&R's make reference to First Mortgagees. Somewhere back in the early 1970's the Arizona legislature created deeds of trust to perfrom the same function as a mortgage without the need for court action when foreclosing. Mortgages are still legal but virtually never written in Arizona as the deed of trust is far more favorable to the lenders. You probably do not have a single unit in your HOA that has a mortgage. This is splitting fine hairs, but if there are no mortgages then there are no First Mortgagees. By law, under a deed of trust the lender is called a beneficiary. Since a beneficiary is not exactly the same as a mortgagee, you might argue that the revision of the CC&R's do not need the approval of the lenders.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Mixing your apples and oranges here. I would read your documents again on how to change them. I don't think it's the banks it is referencing but the OWNERS/MEMBERS of the HOA. The vote has to be taken by the people who are listed as the owners on the deed. They can't be renters or other type occupents.

You need a lawyer familiar with contractual laws or business. It took us about 2 - 3 years and about $2.5K in cash to get the job done. We had to have 90% of the owners to sign for the CC&R's and 75% for the incorporation/by-laws. It's ONLY the CC&R's and Incorporation documents that have to be filed. The By-laws aren't required to be filed but can as courtesy. They By-laws/CC&R's are COUNTY level and Incorporation are STATE level.

Your HOA may require to have a special meeting requirement to make these changes as well. There is a way around this and will involve an additional document drafted by the lawyer. It will require a member to give up their rights to that meeting so they can sign the petition of change outside of it. An option that will save ALOT of time and energy in the long run.

This really needs an attorney. There may be some cost saving tips we can provide. However, it's best to consult with the attorney on what options those may be.

Former HOA President

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