Amending Bylaws

LoriP4 (Maine)
Posts: 11

Posted:

I sit on the BOD for a relatively small, yet growing HOA (non-profit corp.) in Maine. Prior to my moving here, the Board had proposed changes to the bylaws that were approved at the annual meeting in 2001. However, I am challenging one of the supposed revisions that has become a point of controversy within the community. A major change was made to the "PURPOSE" statement in the bylaws, that is now inconsistent with the "PURPOSE" statement filed with the Secretary of State. Aside from some scribblings on rough drafts, there is no record in the minutes to that annual meeting what the proposed revisions were. Also, no version of the original bylaws nor the revision was ever filed in the registry of deeds. Am I wrong to assume that a judge, if that is the path taken, would find the original version valid, as it is the one that is consistent with the Articles of Incorporation currently on file?

Thanks - Lori

KirkW1 (Texas)
Posts: 1,665

Posted:

I would first look to your state's non-profit laws as they do vary from state to state. For example in Texas you can change the number of positions on the Board of Directors through an amendment to the by-laws. But I have been told here that Florida requires both the by-laws and articles of incorporation changed.

One thing that should be kept in mind is that the nature and purpose of an organization is subject to change. You can probably find many non-profit organizations that are now quite different then would be stated in their articles of incorporation. I just would not put much stock in what the stated purpose of the organization is as a means to limit their actions.

While perhaps some house keeping needs to be done with your organization, I personally wouldn't put much effort into a purpose statement.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Lori,
You will need to check with your State's non Profit Corp to see exactly which documents they have on file. Explain to us why the "Purpose" or at least how the "Purpose is worded and why would this be an issue so grand that you think it is worth being contentious over?

Whatever documents are on file with the State are the prevailing Articles and should be consistant with the filed Bylaws. If there are later copies or changes that were not filed properly, they are invalid.

I just read my documents from my rentals and the "Purpose is just a few sentences basically stateing the the XXXX associations is to provide a decent place to live for the members. (very short version) Maybe yours is much more word wordy.

LoriP4 (Maine)
Posts: 11

Posted:

Here is the bulk of the purpose statement:

Maintaining in a reasonable state of repair...any additional roadways constructed on the land shown on the said plan, or any extensions, revisions or further re-subdivisions thereof, herein after called ("the Development"), and any common areas or facilities used or made available for use in common by all members of the Association in the Development.

They supposedly added the following phrase at the end:

"and having been accepted by the Association by a majority vote."

While this revision sounds reasonable, a few of us believe that in a development that is only at about 25% capacity, we are setting ourselves up for a lawsuit from a developer that might buy 100 acres to build a 20 home subdivision, and then the association votes not to accept the road (mainly because no one wants to pay more in dues).

Here is what the statute says about bylaw revisions:

Controlling amendment to bylaws. Unless the articles of incorporation provide that a change in the number of directors shall be made only by amendment to the articles of incorporation, a change in the number of directors made by amendment to the bylaws shall be controlling. In all other cases, whenever a provision of the articles of incorporation is inconsistent with a bylaw, the provision of the articles of incorporation shall be controlling.

LoriP4 (Maine)
Posts: 11

Posted:

Here is the bulk of the purpose statement:

Maintaining in a reasonable state of repair...any additional roadways constructed on the land shown on the said plan, or any extensions, revisions or further re-subdivisions thereof, herein after called ("the Development"), and any common areas or facilities used or made available for use in common by all members of the Association in the Development.

They supposedly added the following phrase at the end:

"and having been accepted by the Association by a majority vote."

While this revision sounds reasonable, a few of us believe that in a development that is only at about 25% capacity, we are setting ourselves up for a lawsuit from a developer that might buy 100 acres to build a 20 home subdivision, and then the association votes not to accept the road (mainly because no one wants to pay more in dues).

Here is what the statute says about bylaw revisions:

Controlling amendment to bylaws. Unless the articles of incorporation provide that a change in the number of directors shall be made only by amendment to the articles of incorporation, a change in the number of directors made by amendment to the bylaws shall be controlling. In all other cases, whenever a provision of the articles of incorporation is inconsistent with a bylaw, the provision of the articles of incorporation shall be controlling.

LoriP4 (Maine)
Posts: 11

Posted:

Here is the bulk of the purpose statement:

Maintaining in a reasonable state of repair...any additional roadways constructed on the land shown on the said plan, or any extensions, revisions or further re-subdivisions thereof, herein after called ("the Development"), and any common areas or facilities used or made available for use in common by all members of the Association in the Development.

They supposedly added the following phrase at the end:

"and having been accepted by the Association by a majority vote."

While this revision sounds reasonable, a few of us believe that in a development that is only at about 25% capacity, we are setting ourselves up for a lawsuit from a developer that might buy 100 acres to build a 20 home subdivision, and then the association votes not to accept the road (mainly because no one wants to pay more in dues).

Here is what the statute says about bylaw revisions:

Controlling amendment to bylaws. Unless the articles of incorporation provide that a change in the number of directors shall be made only by amendment to the articles of incorporation, a change in the number of directors made by amendment to the bylaws shall be controlling. In all other cases, whenever a provision of the articles of incorporation is inconsistent with a bylaw, the provision of the articles of incorporation shall be controlling.

SusanW1 (Michigan)
Posts: 5,202

Posted:

The purpose in the Articles of Corporation is usually 1 or 2 sentences about the corporation. You can change Articles in our state by simply re-filing the form and giving them $10 or $15. They will check over the main purpose to make sure it fits the not-for-profit criteria.

Sometimes, bylaws have purposes stated in them (our do; they outline our obligation to provide water, roads, etc) Sometimes these are on file with the State, when the Articles are sent in for the first time, or there are other changes.

So the question is: were the bylaws or the Articles amended?

If it's the bylaws, don't worry. The State really doesn't care about the bylaws and how you resolve your voting procedures.

KirkW1 (Texas)
Posts: 1,665

Posted:

First, a developer can not (and should be able to) force your acceptance of his development into your organization. It just doesn't work that way.

Second, this is just the wrong place to put the means of joining additional areas into your corporation. You need to develop a means of acceptance that should include an engineer's report on all items which you will maintain. You should also set minimum standards for acceptance of such. I can promise you that cities do so all the time before accepting a street. If it isn't to their standard they simply will not accept the street.

You may also find that the cost of allowing a membership to vote becomes very real as you grow.