Rules amendment question - California

Started by MarnaR • 12 replies • 2930 views

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MarnaR (California)
Posts: 27

Posted:

I am new to this group, and new to my community's board. My community has been run for years by a board that was out of touch with the rest of the membership, and like many here, the President was in bed with the management company. A group of concerned homeowners banded together and selected a group of people they felt represented them to run for the board. The five of us then canvassed our neighborhood, talked to the homeowners, listened to concerns, and encouraged proxy return. Since being turned over by the builder, we have never once made quorum (51%) for our annual meeting. The Board was regularly elected by about 1/4 - 1/3 of the membership, as our bylaws reduce quorum requirements for a rescheduled membership meeting. This year, we had election returns of 62% of the membership, and the group I ran with was elected.

One of our promises, as a result of the frequent complaints that we heard on the 'campaign trail', was to repeal some of the more ridiculous rules on our books. I am talking about our community Rules and Regulations, not our CC&Rs or Bylaws. Some of the rules are no longer in compliance with state law. Some are simply petty. Some directly contravene what is stated in the CC&Rs and Bylaws. We are in California, and in 2004, a new law regarding creating and amending rules in HOAs went into effect that I completely agree with in theory, but which in practice is making fulfilling our promise to the membership much more difficult. Has anyone here had experience with amending community rules and regulations (or other governing documents) in CA since the new law went into effect? And in the interim, does anyone have any suggestions regarding how we handle the rules we wish to change? The easy ones are the ones in conflict with state law and our governing documents, since local, state and federal law trumps all, and CC&Rs and Bylaws trump the rules. But the petty rules - the ones that make people sorry they bought a home here....Can we simply choose not to enforce?

RogerB (Colorado)
Posts: 5,067

Posted:

MarnaR, I am not familiar with California but here are some general guidelines. Usually the Bylaws give the authority to the Board to establish rules and regulations. Therefore, the majority of the Board members can change the rules. A rule can not violate a higher order document but can make it more restrictive.

The Hierarchy of controlling documents is: U.S. Constitution, Federal, State, County, Municipal then Plat, Declaration, Bylaws, and lowest is Rules and Regulations.

With regards to enforcement, do not ignore restrictions change them to reasonable. And until you do "use good business judgement". BTW, why not reduce the quorum requirement for member meetings to 20%?

RogerB

MarnaR (California)
Posts: 27

Posted:

The problem is that here in CA, we are required by a relatively new amendment to the Davis Stirling act (which governs all HOAs) to communicate any and all proposed rules and rule changes to the membership, typically in writing. Notification must include the proposed change, the reason for the change, and how it is estimated to impact the membership. We must do this no less than 30 days before any vote to amend the rules and must provide homeowners time to comment. Once this has happened, we vote to make the changes (or add the rules) and then must deliver the new rules/changes to the membership within 15 days. This law was created to allow greater homeowner input to the rules procedure, and it's a good law to prevent abuse. The pettier rules in our association (fines for having more than one manufactured doormat being the most ridiculous, imho) were enacted just prior to the law taking effect.

Anyway, our rules need a comprehensive review, and it makes financial sense for us to do this once - especially since we're faced with the need to fund an external management company audit as we've discovered that the previous manager and the previous president were potentially mismanaging the funds of the association. Our reserves, which were fully funded for years are no longer fully funded, at a critical time in our community's age. So, we've got to make sound financial decisions as well...and make sure that we can justify everything we do. We're also faced with needing to raise HOA dues as a result of the mismanagement/shortfall.

As far as changing the quorum requirement for membership meetings, that requirement is in the Bylaws, which requires a 67% affirmative vote of the association. We only have one membership meeting a year, with the rest of our meetings being monthly board meetings where members can attend, but their participation is limited to the homeowners forum.

RogerB (Colorado)
Posts: 5,067

Posted:

MarnaR, thanks for informing on the CA amendment on proposed rules and rules changes. I concur the procedures and will suggest them to the HOAs we manage.

Change your bylaws from 67% to 20%, then you may be able to get a quorum to hold a meeting without going through several postponements.

RogerB

MarnaR (California)
Posts: 27

Posted:

RogerB,

Thanks for the post. One of the issues that my group ran on was updating ALL governing documents, and that is what we will begin doing at our first meeting, on the 28th.

Our CC&R's have areas that are now obsolete due to changes in state law, so it would be nice to officially "86" those areas. Our Bylaws have election procedures that refer to the Builder's voting rights. Builder's been gone for years. We're also trying to determine whether or not we still want cumulative voting. Changing the quorum requirement without changing the ability to cumulate votes could lead to very bad places, with abuses by the board that could put the association into financial danger. In all honesty, basically what we'd been dealing with - it just took the board longer to be able to do their dirty work. Homeowner 'apathy' was a big perceived problem, but when we went around pre-election, we found that homeowners were in fact NOT apathetic, just frustrated because complaining and proposing got them nowhere.

We'll be proposing a Governing Documents Review committee that I'll probably end up as the board liaison to, as I am also a law student in addition to having more knowledge than I'd like to about Davis Stirling and its various amendments, made necessary by the actions of our previous board.

My concern is that the process takes a longer time to implement than the membership would like. In the interim, we can instruct the property manager to disregard people who have wreaths on their doors or two doormats, or their hoses coiled around their spigots in their front yards, and we can encourage the architectural and landscape committee members of the same, but if a homeowner complains, we have to send a violation letter.

I suppose this simply comes down to making sure we have a good communication channel with the membership to make sure that they understand that we're working to deliver on our promises, but I know how frustrating it is to get one of those letters about a petty matter. And of course, the financial concerns I shared before are a constant issue. That said, after reading about some of the things going on with some of the other members on this board, I know we're in okay shape.

An aside - I grew up in Aurora, in a Writer (I think that's it) community - their HOA issues are still fodder for conversation with me and my parents!

KathyS (California)
Posts: 145

Posted:

"The problem is that here in CA, we are required by a relatively new amendment to the Davis Stirling act (which governs all HOAs) to communicate any and all proposed rules and rule changes to the membership, typically in writing."

I don't understand why you think this is a problem. Don't you think the members of the association have a right to know you are changing the rules?

Two years ago our new Board sent out eight pages of new rules. They included such things as wearing proper attire on the tennis courts (not telling us what the proper attire should be) to being able to knock on your door demanding to see the AKC registration and licensing of your pet.

Needless to say, the members of the association followed the new law, had a special meeting and voted the NEW rules out 87-1.

MarnaR (California)
Posts: 27

Posted:

Perhaps my wording could have been better. My issue is more with the length of time required by the state - understandable, but it makes achieving our goal that much harder.

However, I did not state that our intention has always been to inform the membership of what we're doing, and perhaps I should have. We live in a community that is recovering from the reign of a very secretive board and an incompetent property manager. The previous board never communicated with the membership, and did not take their concerns into consideration when carrying out their actions. In fact when one homeowner set up an unofficial community website and another started publishing an unofficial newsletter, they engaged legal counsel to order these homeowners to cease and desist.

The group I ran with campaigned on open and honest communication with the membership, and working to foster a sense of community by focusing on preserving our property values while at the same time eliminating some of the rules that serve no real purpose, other than to aggravate.

We're trying to expeditiously get rid of some of the pettier rules put in place by previous boards, who were able to slip them in before the amendment of Davis Stirling.

The majority of the members in our community are anxious to have these rules repealed as quickly as possible, and we would like to accommodate them. If you'll read my posts, you'll see that I am in support of this law as I believe it helps to avoid abuses by power hungry boards, such as the one that we were able to get voted out of office. It just has the unfortunate side effect of hampering us in our efforts to quickly do what the membership wants us to do. It also puts us in the awkward position of having to continue to enforce some very unpopular rules, such as fining members for having more than one manufactured doormat or hanging wreaths on their doors.

BearC (Maryland)
Posts: 2

Posted:

Our Board spent an entire year drafting the following amendment to your by-laws. It was defeated. When we confronted the Board on the need for such a document, Board members said there was indeed a problem, but refused to provide details on the number or type of violations of our architecutal guidelines. I fondly describe it as the "loansharking" amendment because the fee for a violation is $150, which doubles each month the architectural violation is unresolved (we have a slow process and Architectural control committee members do not hold open meetings despite state law requiring Boards to do so). We have over 24 pages of single spaced, 12 point font guidlines for such trivial matters as satellite dishes must be colored either gray or black.

* * * * *
APPROVED BY BOARD FOR CIRCULATION
AND REVIEW BY MEMBERS
10/01/05
RESOLUTION FOR AMEMDMENT OF BY-LAWS OF
FALLS FARM HOMES CORPORATION
The current By-Laws of the Falls Farm Homes Corporation (the "Corporation") authorize the Board to establish an Architectural Control Committee to, among other things, ascertain whether the architectural control requirements and guidelines set forth in the Falls Farm Homes Corporation governing documents are being met by Members. However, other than rejecting applications for additions and/or alterations, or notifying Members of non-compliance with architectural control requirements and guidelines, or otherwise notifying Members of non-compliance with recorded covenants and restrictions, there are no reasonable measures available to the Board to enforce architectural covenants and restrictions and other recorded covenants and restrictions short of formal legal action. Such legal action generally takes considerable time and expense to pursue, and the non-complying issue remains unabated until those proceedings are finally resolved by judgment and/or settlement. In light of the foregoing, the Members of the Falls Farm Homes Corporation, by special, duly noticed meeting, hereby agree and resolve to amend the By-Laws of the Falls Farm Homes Corporation as follows:
BE IT RESOLVED, that the By-Laws of the Corporation be and hereby are amended, based upon approval of two-thirds of eligible voting members by Special Vote duly noticed and taken, to provide that the Board shall have the authority to impose a special property assessment in the amount of S150.00 should a Member not comply with a written notice of non-compliance with an architectural control requirement or guideline or with any other recorded covenant or restriction of the Corporation within thirty (30) days of the Member's receipt of such written notice from the Corporation or its Property Manager, or within such longer time as may be set forth in such notice of non-compliance. For each thirty (30) day period after the original S 150 assessment becomes due that the Member fails to correct the noncompliance issue(s) for which notice was originally issued, the assessment shall double, such that the original assessment shall be S150, then increase to 5300, then increase to 5600, and so forth. Such assessments shall be against the Falls Farm real property owned by the Member for which the violation was issued, shall be enforceable as a lien against such property in addition to and not in lieu of any other enforcement rights available to the Falls Farm Homes Corporation, and the Member shall be responsible for the costs and expenses, including without limitation, legal fees and expenses, incurred by the Falls Farm Homes Corporation in connection with such assessment whether or not formal legal action is initiated.
SO RESOLVED this day of 2005.
I hereby certify that the foregoing Resolution was agreed to and approved by two-thirds of eligible voting members by Special Vote duly noticed and taken on , 2005.
SECRETARY, FALLS FARM WITNESS HOMES CORPORATION

* * * * *

MichelleS (California)
Posts: 2

Posted:

I live in California in a neighborhood of just 17 homes. Our BOD are the same members that were elected in the late '70's when the homes were first built and have lived here the whole time. Trying to get a new member (there are 4 of us that moved here in the last 12 years) in this last year proved futile, since the president used the proxies he received to re-elect his buddy to the only open spot. But - now we know how the game is played and will make changes next year. Througout the years, this board has "amended" the by-laws as they chose fit, including payment for board members to attend board meetings. This was not a problem last year, since they did not have one meeting, contrary to the by-laws. None of the amendments have been formally added/changed on the by-laws, nor filed. I would like to know where I can find copies of all CA laws governing HOAs and boards for my own knowledge so we can address the violations with the board, and hopefully get some of the newer residents involved on the board next year. Thanks, Michelle

MarnaR (California)
Posts: 27

Posted:

MichelleS,

One of the best sites I've found that covers how HOAs must conduct themselves in CA is www.davis-stirling.com. It's run by a law firm that represents boards as opposed to homeowners, but it's free to browse and it provides a great interpretation of some of the grayer areas of the Davis Stirling Act. Make sure you check the newsletters, legislation and case law sections.

I would find out if the board has counsel either on retainer or under a pay per use contract. If not, you may simply be able to pool some resources to have an attorney look at this and send a cease and desist letter. If they do have counsel, I would find out if any of these changes have been filtered through them. If none of these amendments have been added or changed on the bylaws, do you have written record of them? If they are in the Rules and Regulations, they may not conflict with the bylaws. Changes to your CC&Rs must be recorded with either the county or the state, I'm not positive which, and usually must receive an affirmative vote of 2/3 - 3/4 of the membership AND possibly their mortagees. Bylaws typically require 2/3 to amend, though your community may differ.

Also, a site that I've found to be extremely helpful, which I found out about here on HOAtalk is www.communityassociations.net. It's not CA specific, but has some great articles nonetheless.

Hope that helps.

KathyS (California)
Posts: 145

Posted:

I also have found www.davis-stirling.com to be helpful. It is surprising that I have had to copy and paste many of the laws and send them to the association manager. Don't ever think the management companies are up to date on everything and NEVER think the Boards are. Most of our Board members don't even know what Davis-Stirling is.

MichelleS (California)
Posts: 2

Posted:

Thank you Marna and Kathy. I'll check out the website!

MarnaR (California)
Posts: 27

Posted:

KathyS,

You are so right. Last year, (before I was a board member) I stood up at a meeting and quoted 1353.6 to our board president who just got finished stating that none of our current rules and regulations were in conflict with state law. I know that our new property manager is still learning Davis Stirling, but she's WAY more up to date than the prior manager. As far as the board, the members who were just elected last month do know the basics of the law, and I get to be the resident expert. But it's a good thing - we're starting to clean up SUCH a mess. I'm just impatient to get stuff fixed - like getting rid of the stupid rules that we've had imposed for so long that so many residents hate, which is the reason I started this thread. We've also got to rewrite our bylaws to conform to the elections law that takes effect on 7/1/06. And somehow fix the financial shortfall the last board left us with. SUCH fun!

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