Get 2 months of free community web site hosting from Community123.com!
Sunday, June 16, 2019
Get 2 months of free community web site hosting from Community123.com!
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: Changing CCR: 50% of Members vs. 50% of the vote
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
AaronA3
(Texas)

Posts:2


04/02/2019 7:13 PM  
Backstory: Our developer has a HUGE voting majority in our HOA member votes and elections until 2020, and can do basically whatever he wants-- except change the covenants... I think. Development has not gone at the speed he originally planned, and the homeowners are beginning to take control of the HOA board, the architectural control committee, etc. The developer is a shady fellow, and tried to do some things homeowners didn't approve of and violate the CCR, got put in his place, and now says he's leaving the HOA and taking the rest of the development with him so he can essentially railroad things and make his own rules again.

However, our CCR's state the following:

Section 7. Amendment. The terms and provisions of this Declaration may be amended at any time by a fifty-one percent (51%) majority of the members voting at an annual or special meeting of the Members; provided that before any amendment may be voted upon at any such meeting, there must be a quorum of fifty-one percent (51%), being the presence (in person or by proxy) of 51% of all Members entitled to cast a vote. Upon the approval of any amendment hereunder, in order to be effective, such amendment must be placed on record in the Real Property Records of Liberty, County, Texas.

Section 16. "Member" shall refer to every person or entity which is an owner.

My interpretation is that the builder CANNOT change the covenants and/or de-annex the remaining portion of the development without actual participation of 50% of the owners. So theoretically, as long as he doesn't have 50% to participate in his vote, we can prevent him from leaving the HOA. He is contending that he alone represents the required 50% because he has 50% of the vote.

Am I correct?
MelissaP1
(Alabama)

Posts:8180


04/02/2019 7:50 PM  
Unfortunately no. You have to factor in that developers have a different class vote when developer owned. You may find in your documents "Class A and/or Class B" voting class. As long as the developer is in control they are in the "Class A" class. Which translates roughly to twice the voting power. That figure should change as soon as developer turns over to the owners. The member owned HOA should change that reference to the Class A voting when they update the CCR's.

My suggestion is to get a committee together to start working on changing CC&R's when time comes. There's a lot of ins/outs involved. So starting early to understand them and what changes are wanted is best to organize ASAP. It will help at turnover.

Former HOA President
TimB4
(Virginia)

Posts:16355


04/03/2019 4:14 AM  
Posted By AaronA3 on 04/02/2019 7:13 PM

However, our CCR's state the following:

Section 7. Amendment. The terms and provisions of this Declaration may be amended at any time by a fifty-one percent (51%) majority of the members voting at an annual or special meeting of the Members; provided that before any amendment may be voted upon at any such meeting, there must be a quorum of fifty-one percent (51%), being the presence (in person or by proxy) of 51% of all Members entitled to cast a vote. Upon the approval of any amendment hereunder, in order to be effective, such amendment must be placed on record in the Real Property Records of Liberty, County, Texas.




Expecting 1 vote per lot, 100 lots.

Quorum = 51

Expecting 1 vote per lot, 100 lots, 60 show up at the meeting and vote:

measure to pass = 31 (rounded up)


However, when a declarant is in control they typically have certain rights outlined within the governing documents (Covenants, Bylaws, Articles of Incorporation). They often have more then 1 vote for each lot that they own. I've seen documents that give the declarant enough votes per lot to still control the majority of votes owning only one lot. Additionally, some declarant rights allow the declarant to control changes to the covenants either by giving them direct power without a vote or by having final approval control.


That said, I see your point.
The term members vs votes.
An argument can be made that "members present (person or proxy)" does not equate to the number of lots owned by each member.

This is something you will likely need to ask a court to rule on if you really want to have clarification.

AaronA3
(Texas)

Posts:2


04/03/2019 4:58 AM  
Posted By TimB4 on 04/03/2019 4:14 AM
Posted By AaronA3 on 04/02/2019 7:13 PM

However, our CCR's state the following:

Section 7. Amendment. The terms and provisions of this Declaration may be amended at any time by a fifty-one percent (51%) majority of the members voting at an annual or special meeting of the Members; provided that before any amendment may be voted upon at any such meeting, there must be a quorum of fifty-one percent (51%), being the presence (in person or by proxy) of 51% of all Members entitled to cast a vote. Upon the approval of any amendment hereunder, in order to be effective, such amendment must be placed on record in the Real Property Records of Liberty, County, Texas.




Expecting 1 vote per lot, 100 lots.

Quorum = 51

Expecting 1 vote per lot, 100 lots, 60 show up at the meeting and vote:

measure to pass = 31 (rounded up)


However, when a declarant is in control they typically have certain rights outlined within the governing documents (Covenants, Bylaws, Articles of Incorporation). They often have more then 1 vote for each lot that they own. I've seen documents that give the declarant enough votes per lot to still control the majority of votes owning only one lot. Additionally, some declarant rights allow the declarant to control changes to the covenants either by giving them direct power without a vote or by having final approval control.


That said, I see your point.
The term members vs votes.
An argument can be made that "members present (person or proxy)" does not equate to the number of lots owned by each member.

This is something you will likely need to ask a court to rule on if you really want to have clarification.





That's my point exactly. Lots and votes cannot be present in person. I realize that if there is a vote we have no chance, but this says specifically "before any vote can occur."
MelissaP1
(Alabama)

Posts:8180


04/03/2019 3:55 PM  
Our lawyer drafted an additional ballot form to sign when we changed our CC&R's, By-laws, and Article of Incorporation. It was in regards to that special meeting requirement to cast the vote. The "ballot" form gave up one's right to attend a special meeting to cast their vote. Basically, by signing that form we no longer had to be tied down by a special meeting. It allowed us to collect votes door to door or at meetings. We then had them sign the actual vote for making the changes. (It was 5 changes and we shortcutted it by just listing them on a separate form. No one had to read every page of the rules).

You may find that helpful when you want to gather votes. Giving up your "right" to cast vote at a special/annual meeting can free up the process or allow people to take their time in making a decision. It took us 2 years to get the required vote. So be aware it's a time consuming process and not that cheap. Cost us 3K in legal/filing costs.

Former HOA President
GenoS
(Florida)

Posts:2959


04/03/2019 7:07 PM  
$3,000 over 2 years is dirt cheap.
MelissaP1
(Alabama)

Posts:8180


04/03/2019 11:52 PM  
That is not the total costs but the lions share. It was high for us considering we did not have that much in our tight buget without having a special assessment. That did not include copy expenses. That was just filing cost and legal fees.

Former HOA President
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > Changing CCR: 50% of Members vs. 50% of the vote



Get 2 months of free community web site hosting from Community123.com!



News Articles Provided by: Community Associations Network
News, articles and blogs about condos/HOA's

Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
HindmanSanchez Legal Notice:  (For messages posted by HindmanSanchez) This message has been prepared by HindmanSanchez for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Members of HOATalk.com should not act on this information without seeking professional counsel. Please do not send us confidential information unless you speak with one of our attorneys and get authorization to send that information to us. If you wish to initiate possible representation, please contact an attorney in our firm. Our attorneys are licensed to practice law in the state of Colorado only.

Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement