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RichardD (North Carolina)
Posts: 66
Posted:
Here in NC we have a conflict in some of our Documents. We have a set of 4 documents, 1)Declaration, 2)Articles of Inc. 3)Bylaws and 4)Rules and Regs.
The conflict arises between the Declaration and the Articles. The Declaration states that the Board shall consist of a minimum of 3 members, of which a majority shall be members of the Association. The Articles state that Board members are not required to be members of the Association.

To make any changes to the Declaration or Articles requires a positive majority of 2/3 of members. My question is: since the Declaration is the senior document and the Articles must agree, could a BOD just delete that sentence from the Articles and inform members that it was done to bring the Articles in line with the other documents? Basically a pen change correcting an error. Thanks
BarbaraS12 (New Mexico)
Posts: 9
Posted:
Our small 20 Unit HOA needs to update the Bylaws imposed by the Developer. Would someone please tell me 1. what the Declaration is and consists of? 2. Our HOA would like to limit the executive board to unit owners - is there a problem with this as the present Developers bylaws states differently? Help greatly appreciated.
RogerB (Colorado)
Posts: 5,067
Posted:
Barbara, your Bylaws should state how they can be amended. Comply with them and the members can make whatever changes are needed at a duly called members meeting. The Bylaws define the organizational structure of the MEMBERS HOA. The Declaration of CC&Rs defines the community and the OWNERS responsibilities.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
If you are no longer developer controlled then take out ALL references to the developer. This then would cause a ripple effect and change the membership/voting structure of your HOA. The only reason now the HOA allows outside members is because the developer allowed this. Which is a factor many HOA's overlook when updating/modifying their documents. It will also allow the HOA to lower the number of required board members and if your forward thinking enough....lower the number required to make changes to they documents. Ours had a 90% quota for the CC&R's and 75% for the by-laws/incorporation docs. A number impossible to meet out of 107 homeowners.

You need a good contractual type lawyer who can go over the changes. However, I would organize a committee dedicated to making changes first. That way you will spend much less money on the lawyer and legal fees. There are fees to pay when you file these documents. So be prepared for those costs. The by-laws aren't required to be filed but can be with the CC&R's if you wish. They are more in-house type documents that can be changed more readily and easily.

It took us over 2years and over 2K...It was well worth it.

Former HOA President
GlenL (Ohio)
Posts: 5,491
Posted:
Quote:
Posted By RichardD on 01/29/2012 12:12 PM

To make any changes to the Declaration or Articles requires a positive majority of 2/3 of members. My question is: since the Declaration is the senior document and the Articles must agree, could a BOD just delete that sentence from the Articles and inform members that it was done to bring the Articles in line with the other documents? Basically a pen change correcting an error. Thanks

I'm not an attorney but my gut reaction is NO! It is a legal document filed with the State and doing so could open the HOA to a legal nightmare. Not that most homeowners even know what the AIC is, let alone read it. It is typical for the AIC not to require residency as the first Board members are typically family members or employees of the Declarant. You should speak to the HOA's attorney as to how best to handle it.

Studies show that 5 out of 4 people have problems with fractions
TimB4 (Tennessee)
Posts: 21,046
Posted:
Quote:
Posted By RichardD on 01/29/2012 12:12 PM

The conflict arises between the Declaration and the Articles. The Declaration states that the Board shall consist of a minimum of 3 members, of which a majority shall be members of the Association. The Articles state that Board members are not required to be members of the Association.

Richard,

If there is a conflict, the higher document controls. In your case, if there were a conflict, the Declaration would control.

I would have to see the exact wording used to say if a conflict existed or not. Based on what you posted, it might not.

The articles specify that you do not have to be a member of the Association to be a board member. This is in compliance with the Declaration that specifies that only a majority of the board must be made up by members. Granted it might need to be worded better OR the Declaration was modified after declarant control but the Articles never were.

BradP (Kansas)
Posts: 2,640
Posted:
Richard:

I think the others are spot on...I would never, ever, ever (did I mention ever) just make an editorial change to a legal document. Those things sometimes can come back to haunt you big time.
TimB4 (Tennessee)
Posts: 21,046
Posted:
Quote:
Posted By RichardD on 01/29/2012 12:12 PM

To make any changes to the Declaration or Articles requires a positive majority of 2/3 of members. My question is: since the Declaration is the senior document and the Articles must agree, could a BOD just delete that sentence from the Articles and inform members that it was done to bring the Articles in line with the other documents? Basically a pen change correcting an error. Thanks

Richard,

I expect that your Association is incorporated as a nonprofit (most are). If I am correct, your Association must comply with the North Carolina Nonprofit Corporation Act (in addition to any HOA laws).

The authority to amend the Articles of Incorporation is specified in that act, NC ยง 55Aโ€‘10โ€‘01.
Under ยง 55Aโ€‘10โ€‘02 and ยง 55Aโ€‘10โ€‘03 of that same act, the law defers to the governing document on the process to amend the Articles.

As others have posted, DO NOT AMEND THE ARTICLES WITHOUT FOLLOWING THE REQUIRED PROCESS as this can only cause issues for the association.

Tim

RichardD (North Carolina)
Posts: 66
Posted:
Thanks to all that have responded.
For Tim, a little background. We are an 86 unit single family homes, over 55, condo ass'n.
We are almost 9 years old and the developer has departed and no longer has any unsold units, nor are they a factor in our operations.
My question was about the legality of 2 documents that were in conflict. Excerpts from each are as follows:

Declaration: Not later than the termination of any period of Declarant control, the Unit Home Owners shall elect an Executive Board of at least three (3) members, at least a majority of whom shall be Unit Home Owners. The Executive Board shall elect the officers.

Articles of Incorporation: The business of the corporation shall be conducted by its Executive Board of Directors, which shall be five (5) in number. The Directors shall be elected by the members after the period of Declarant control, as more fully provided in the Declaration and By-Laws of the Association. Directors need not be members of the Association.

My contention is that the Declaration plainly states that at least(a majority of 3)or (2) members "SHALL" be Unit Home Owners, and that is in direct conflict with the Articles, which states that Directors are not required to be members of the Association.

We are currently in the process of trying to change the Articles to eliminate that last sentence and bring them into harmony with the Declaration. Because of apathy, etc, we probably cannot get the needed 57 votes to make the change and that is my reason for being here and seeking help to find another way of changing this document. Seems to me that a glaring discrepancy like this could be changed without a vote of the entire ass'n. Of course this document is on file at the Court House, and the change would have to be recorded.

Thanks to all. This is a great site.
TimB4 (Tennessee)
Posts: 21,046
Posted:
Richard,

Thanks for providing the language. I agree the documents should be amended. Note, I said should not must. This is because, as pointed out earlier, when there is a conflict between two documents (or between the documents and the law) the document/law that has the higher precedence will control (i.e. must be followed).

Therefore, although the document should be amended, it's not required to be.

I would suggest putting together a committee of homeowners to review all the governing documents and amend all the documents at the same time. After all, if you have to go through the process for one amendment you might as well take the time to get everything done at once.

Tim
RichardD (North Carolina)
Posts: 66
Posted:
I have a high degree of respect for all the opinions offered on this subject. I agree with Tim that we probably ought to form a committee to basically rewrite the documents now that the declarant is gone. There are other conflicts besides the one I have questioned on this thread. Semper Fi to all.

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