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Subject: COVENANTS CHANGE, AMEND OR TERMINATE IN WHOLE OR PART
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Author Messages
SantosH1
(Oklahoma)

Posts:1


10/18/2008 8:40 PM  
I live in Oklahoma City. This is a section in our covenants that states the following. How do I as President go about holding a vote/not hold a vote?

These covenants shall be binding upon all parties and all persons claiming under them through December 31, 2008, at which time they shall be automatically extended for an additional ten (10) years, unless by vote of at least two-thirds of the then owners of the lots in the addition (the term “lots” being defined herein), it is agreed that these Covenants should be changed, amended, or terminated in whole or in part.

This is what a lawyer interpreted earlier in Dec 07.

Section 3 owners must vote unanimously to amend their Covenants, except on December 31, 2008, which at that time they will get a 2/3 majority. Therefore, it is my opinion that the section 3 Covenants may be amended before December 31, 2008 with 100% approval of the current lot owners, or on November 13, 2008 with 70% approval of the current lot owners under 11 Oklahoma Statute 42-106.1, or on December 31, 2008 with 2/3 (67%) approval of the current lot owners.

Help never had to approach this with the homewowners.
SusanW1
(Michigan)

Posts:5202


10/19/2008 6:28 AM  
San -

Covenant "renewal" is not the same as changing the CCRs. It is simply a vote of the owners to "renew" their committment to function as an Association.

Our HOA are renewed every 48 years.
BrianB
(California)

Posts:2803


10/19/2008 7:12 AM  
i would say your lawyer took a horse hoof to the head once too often. (where does his idea of 70% between November and December come from????)

Your HOA will automatically renew itself, as written, unless at least 2/3rds of your current lot owners agree, in a vote, to change something about it. If, in an election, they agree that something must be changed (or abandoned), then you will need to set up a system to determine what needs to be altered, write a new covenant, and have that voted upon by your owners. if the owners vote to abandon the covenants, the HOA will need to figure out what to do with common areas, assets, etc.. and put that plan to a later vote.

KirkW1
(Texas)

Posts:1665


10/19/2008 7:25 AM  
I would look up the property codes in Oklahoma as they may also provide some information. For instance in Texas, a group of not less then three people can sign a petition for change of the covenants. Said group then has one year to secure an amendment to the covenants.

To secure said amendment they must distribute the proposed change to 100% of the owners based on address of record. Then they must secure the needed number of votes as indicated by a signed ballot with the proposed change on it.

If you are looking to change your covenants (or do away with them) you are comming to a great time to do so. You need to get the changes in order. Then after the first of the year get the proposed changes out and get people to return their vote. You might have several drives as getting 2/3 is not a small hurdle.

I would focus first on resident owners. Hopefully they represent your number needed to pass. The reason I would focus there is because you might be able to get them ti sign off while you stand there and not have to rely on them getting the thing back in the mail.
MaryA1


Posts:0


10/19/2008 3:44 PM  
Santos,

Unless the board is proposing an amendment to the CCRs or to terminate the HOA, no action is required to be undertaken on 12/31/08. The CCRs will AUTOMATICALLY renew at that time. This is a standard article in the CCRs. I'm thinking that whatever the attorney recommended he was misquoted. Yes, I'm giving him the benefit of the doubt to what would otherwise be called bad advice. But, if he did in fact say this, I would recommend a new attorney!!
DanW1
(Colorado)

Posts:5


10/21/2008 8:22 AM  
Hi there, could someone familiar with Colorado answer the following: We would like to make our HOA voluntary, the covenants currently say "These covenants and restrictions are to run with the land.........unles an instrument signed by a majority of the then owners of the tracts has been recorded, changing said covenants in whole or part." The question is how do we get this done without actually gettin 3 to 4 hundred owners to sign the same document. We can mail the form to each owner, but recording 400 forms is not logical. Also how should the form be worded, we want to do this right the first time, thanks Dan
MaryA1


Posts:0


10/21/2008 8:31 AM  
Posted By DanW1 on 10/21/2008 8:22 AM
Hi there, could someone familiar with Colorado answer the following: We would like to make our HOA voluntary, the covenants currently say "These covenants and restrictions are to run with the land.........unles an instrument signed by a majority of the then owners of the tracts has been recorded, changing said covenants in whole or part." The question is how do we get this done without actually gettin 3 to 4 hundred owners to sign the same document. We can mail the form to each owner, but recording 400 forms is not logical. Also how should the form be worded, we want to do this right the first time, thanks Dan




Dan,

The procedure to terminate the HOA should be outlined in your covenants. Only the amendment to terminate needs to be recorded. The members do not sign the amendment, they cast their vote on a ballot. The individual deeds will remain the same as the CCR restrictions will remain with the land. Only the HOA is being terminated, not the deed restrictions. Then, a voluntary assn can be formed and only those property owners who wish to be members can join. Any violatons of the CCRs can be enforced by the voluntary assn (on behalf of its members) or by any individual property owner.
GeorgerwilliamsW
(Indiana)

Posts:975


10/21/2008 8:48 AM  
Dan, I don't agree with the posting by Mary at all.

The language you posted from the covenants do not specify a vote, it specifies, "an instrument signed by a majority of the then owners..." A vote simply is the wrong way to do this.

My guess is that your recorder of deeds charges a fee per page, so it might cost a thousand dollars or more if each owner signed a separate document.
RogerB
(Colorado)

Posts:4876


10/21/2008 8:49 AM  
Dan, follow your Declaration and the Colorado Common Interest Ownership Act. To become voluntary you will have to amend the Declaration of CC&Rs or go to court. If you can get sufficient signatures of the owners of record and the mortgage companies (if required), I recommend the signatures (which you may want to have notorized) be file with the document which terminates the Declaration of CC&Rs. The cost of filing at $1.00 per page is very cheap compared to the other costs you may incur. You are dealing with a process which may be legally challenged and so you need to "cross your t's and dot your i's".
DanW1
(Colorado)

Posts:5


10/21/2008 9:44 AM  
thanks,you all. Once we have the majority of signatures, would we have to get a judge to approve our documents before we record it with the county?
RogerB
(Colorado)

Posts:4876


10/21/2008 11:48 AM  
No Dan. You file them with the Clerk and Recorder of every county in which the HOA is located. A judge is only involved if your change is challenged in court.
ColeK
(Oklahoma)

Posts:9


12/09/2008 2:30 PM  
Posted By SantosH1 on 10/18/2008 8:40 PM
I live in Oklahoma City. This is a section in our covenants that states the following. How do I as President go about holding a vote/not hold a vote?

These covenants shall be binding upon all parties and all persons claiming under them through December 31, 2008, at which time they shall be automatically extended for an additional ten (10) years, unless by vote of at least two-thirds of the then owners of the lots in the addition (the term “lots” being defined herein), it is agreed that these Covenants should be changed, amended, or terminated in whole or in part.

This is what a lawyer interpreted earlier in Dec 07.

Section 3 owners must vote unanimously to amend their Covenants, except on December 31, 2008, which at that time they will get a 2/3 majority. Therefore, it is my opinion that the section 3 Covenants may be amended before December 31, 2008 with 100% approval of the current lot owners, or on November 13, 2008 with 70% approval of the current lot owners under 11 Oklahoma Statute 42-106.1, or on December 31, 2008 with 2/3 (67%) approval of the current lot owners.

Help never had to approach this with the homewowners.






Just something to think about.
I live in Oklahoma. I am currently fighting a corrupt POA in Federal Court. I have also studied all of the Oklahoma statutes and researched the related case laws in depth, on this same issue.

The lawyer that gave the interpretation in 2007 that you stated, is for the most part, correct.

The Covenants will be automatically extended for an additional 10 year period as written unless changed, and here is how and when you can change them.

1: You can change the covenants at any time you want providing 100% of the "Then" Property Owners Agree to the change. The 10 year period means nothing.
2: You can also change them prior to December 31, 2008 by a vote of 2/3 of the members agreeing to the changes, or otherwise they will renew for 10 more years.

Now here is something that has not been mentioned, not even by the lawyers statement above. The word VOTE mentioned above is very important. It has to be by Vote. You can only Vote at a meeting that has been duly called, whether a regular, annual or special membership meeting, with proper notice posted. You can't run around and just obtain signatures on a document agreeing to changes in the covenants. It has to be done by VOTE and VOTES are cast only at membership meetings.
Of course the easiest way would be to get them to sign a special proxy and allow you to vote on their behalf at this meeting. The Board would just keep minutes, prepare a resolution stating that a membership meeting was held on a certain date after proper notice was posted, and a proposal to ammend the covenants was presented to the membership and it was passed by XXX number in favor and XXX number in opposition. Save all documents, proxies, etc. File the resolution along with the new covenants at the courthouse and be done with it.

As far as his 70% figure the attorney states above, he is incorrect.

The Oklahoma Statute that he cites above, 11 OS 42-106.1 was passed for the purpose of giving Oklahoma associations a Percentage of the required number to ammend covenants in case the covenants failed to state an amount. The Statute actually states that it will take 70% or whatever the percentage the covenants state, WHICHEVER IS LESS. In your case it is 2/3 or 67%, so the statute wouldn't apply.

However, this same Statute mentioned does provide for a lessor 60% vote or what ever the percentage stated in the covenants, WHICHEVER IS LESS, if your association has been in existance for 15 years or longer which could make a little difference. Hope this helps and Good Luck



RogerB
(Colorado)

Posts:4876


12/09/2008 5:00 PM  
Cole,
I disagree with your statement "The word VOTE mentioned above is very important. It has to be by Vote. You can only Vote at a meeting that has been duly called, whether a regular, annual or special membership meeting, with proper notice posted. You can't run around and just obtain signatures on a document agreeing to changes in the covenants. It has to be done by VOTE and VOTES are cast only at membership meetings."

We get the vote by written signatures via a mailout. Seldom if ever can an HOA get enough owners to attend a meeting to pass an amendment to the Covenants. Often this takes approval of 2/3 of all owners or more.
ColeK
(Oklahoma)

Posts:9


12/09/2008 6:35 PM  
Roger,
I agree it is hard if not impossible to get that percentage at a meeting. We have over 3,000 members in our POA. It will be 2014 before we can change our covenants. Then we have to do it a year in advance of the 10 year renewal term. I personally think it is virtually impossible.
As far as my previous statement goes, I have case law where the 10th circuit, (Denver) overturned a court here for doing just what you said. I can locate it for you if you want to look at it.

The point I was trying to make, which is what the 10th circuit said was, "memberhip votes, can only be taken at a membership meeting that has been properly called. The Court went on to say that Proxies or absentee ballots would be fine, as long as proxies and absentees are not prohibited by the Covenants or Bylaws.
I am going with Oklahoma Law, but Oklahoma is in the 10th Circuit in Denver, just like you are. Membership Votes can only be cast at a Membership Meeting duly called, notice and posting requirements met etc.
The case I am referring to did the same thing, gathered written votes. Enough votes to meet the percentage requirements. 2 members contested, because the VOTE was not done at a membership meeting and appealed.
The 10th circuit court overturned.
They have made some very clear rulings on the 10 year automatic renewal of the covenants and membership voting. Had the developer actually not meant that to be, they wouldn't have stated it in the covenants.
Here is what we have to do to amend ours in 2014. We missed the chance in 2004.
First we formed a covenants committee to determine the changes, keeping in mind that the fewer restrictions we have, the better. It is very simple to just pass a resolution adding some additional restrictions at a latter date. Take the 10 year restriction and the super majority requirement out completely.

We then will go door and do mailouts to get a proxy to vote for the amendments. Again, we have to vote 1 year in advance to the expiration of the 10 year term, so we will have to have a meeting in 2013. If passed, they become effective in 2014, a year later. The Board will sign a Resolution stating it was passed by the required percentage at a Membership meeting on _____. 1 page document to file at the courthouse. No signatures required on the document except board members. I would certainly hang on to the minutes and ballots though.
Oh, One more thing worth mentioning. If the Deed to the property is Joint Tenant, like husband and wife, Make sure that BOTH Parties sign the proxy or absentee, otherwise, it is invalid. It's not like voting at an election of Directors. It also has no bearing whether dues are current or not, or the owner is in good standing in order to be elegible to vote. It's changing the covenants.
ColeK
(Oklahoma)

Posts:9


12/09/2008 7:07 PM  
Roger,
One other thing to help explain this, In the original post, he quoted what his covenants said, which was VOTE. My statements pertain to that post. Some Covenants say they can Only be amended by an "Instrument" signed by xxx % of the property owners and filed at County Courthouse. That's a whole different issue. That would not require a vote or even a membership meeting, Just a certain required percentage of the property owners signatures on an Instrument agreeing to the change. In this case, signatures could be obtained by a mailout. As you well know, it is all in the exact wording of the Covenants.
Cole
RogerB
(Colorado)

Posts:4876


12/09/2008 7:53 PM  
Cole,
I would agree that "memberhip votes, can only be taken at a membership meeting that has been properly called. The Court went on to say that Proxies or absentee ballots would be fine, as long as proxies and absentees are not prohibited by the Covenants or Bylaws."

However, members do not vote to amend Covenants; owners vote to amend Covenants. Thus, approval to amend the Covenants can be done without a members meeting. A good example would be a voluntary HOA where all owners are not members. The owners who are not members can not vote at an HOA meeting but must be included when voting on amendments to Covenants. Words can be critical.
MaryA1


Posts:0


12/10/2008 3:39 AM  
An assn can notice and hold a members' meeting and still only allow mail-in ballots; my assn does this every year. In fact, our annual meeting was held last night. There were about 30 members in attendance, out of 1,702! There were no ballots cast at the meeting. Elections were conducted by mail-in ballot only. Thee was a date indicated on he ballot by which the ballots were to be returned; the ballots were counted b/4 the meeting and the results announced at the meeting. This was all accomplished IAW AZ HOA statutes and our amended bylaws.
SusanW1
(Michigan)

Posts:5202


12/10/2008 7:06 AM  
Cole:
You can amend your documents at any time.
You can vote to dissolve at any time.

The "renewal" is just a time cycle, an automatic renewal of your group as an HOA - and is automatic UNLESS it is terminated (by a vote of the owners)

Think of it kind of like your gym membership - unless you call them and stop the membership, it automatically renews itself.
ColeK
(Oklahoma)

Posts:9


12/10/2008 2:36 PM  
Susan,
I hate to differ with you, but I can assure you, you CAN NOT amend your covenants any time you want if there is a provision in those covenants, say for a 10 year automatic renewal, unless it is timely done before the renewal period or, or by 100% unanimous consent of every property owner in the development,(which can be done at any time).

I believe Roger will agree with this also. I can post court opinions on this site for people to read if anyone wants.
The Courts explain this very well in their Written Opinions. Better than I do. If it says these covenants shall automatically extend for a 10 year period unless changed before hand, I assure you, they can not be changed within that 10 year period without unanimous consent and can be enforced or contested by any property owner.
The courts have basically said, if there is any doubt or ambiguity as to what is meant by this 10 year renewal statement, we must look at the original intent of the declarant, (developer). If he had intended for them to be amended at any time without a 10 year period, he would not even have to reference a 10 year renewal period in the covenants. He could have just said, "they can be amended at any time".
Let me know if anyone wants to see the Court Opinions to back up what I am saying.
Cole
ColeK
(Oklahoma)

Posts:9


12/10/2008 2:40 PM  
One other thing to you response,
Yes you are right in that you can dissolve the Association at any time providing you have the proper votes, but this does nothing to the restrictive covenants, with the excetion of dissolving the association. Square footing building requirements in the covenants would still be in effect. etc.
Cole
ColeK
(Oklahoma)

Posts:9


12/10/2008 3:08 PM  
Better yet, here is a link to just one appellate case that adresses this issue. If it doesn't come up, just do a search on Wallace v Southmour.
Remember this is Oklahoma case law also.
cole

http://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=20124
CharlesH9
(Michigan)

Posts:123


12/10/2008 3:15 PM  
I would love to see these court opinions as we currently have letigation in our HOA regarding this very thing. The CCR's say they may not be ammended for x number of years and then are renewed at 10 year increments.
Thanks in advance for the links
RogerB
(Colorado)

Posts:4876


12/10/2008 4:07 PM  
Posted By ColeK on 12/10/2008 2:36 PM
Susan,
I hate to differ with you, but I can assure you, you CAN NOT amend your covenants any time you want if there is a provision in those covenants, say for a 10 year automatic renewal, unless it is timely done before the renewal period or, or by 100% unanimous consent of every property owner in the development,(which can be done at any time).

I believe Roger will agree with this also.
Cole


I agree with you Cole. Amendments to Covenants may not be done at any time, unless this is stated in the Covenants. Amending the Covenants can only be done within the provisions allowed in the Covenants, or through a court process (this is allowed in CO).
ColeK
(Oklahoma)

Posts:9


12/10/2008 7:15 PM  
Roger,
Of course the court process can work on amending, or voiding covenants. It is very tough to do as I am sure you are aware. Abandonment, Unfair, against State Statutes, etc. It can be done that way, but it is very rare. I have preached until I am Blue in the face to our Board Members about an obsolete recorded covenant that you can't get changed.
I tell them to just put it on the record to the membership that the Board Members feel after much discussion,and in following the "Good Business Judgement Rule", and in the best interest of the association, the Board has chosen NOT to enforce a particular Covenant. At the same time, let every member know that this does NOT prevent them from personally enforcing it should they choose to do so, as they have that right. This should cover the Board Actions. Just leave the selective enforcement outside, and apply it to all.
As far as unenforcable covenants, most of you know about the Landmark Case that holds true today in each and every state, not just here in Oklahoma, Shelley v: Kraemer. Here is a link for a little history on that case.

http://en.wikipedia.org/wiki/Shelley_v._Kraemer

Abandonment of a covenant is also very possible. I have a few Court Case Opinions on what constitutes an abandonment of a covenant that would make it unenforceable if anyone wants.
Cole
MaryA1


Posts:0


12/11/2008 7:52 AM  
Cole,

Just a word of caution! Be very careful about adopting an unofficial "rule" to not enforce any covenant the board feels might be outdated, etc. If your docs contain the word "duty"; in other words, it's the BOARD'S duty to enforce, think twice about not enforcing the covenants. Note that the declaration is talking about the duties of the board not the duties of the members. The declaration might say the members may enforce; but I doubt they say it's the members' duty to enforce. There is case law in AZ, a case which the assn lost, because the board had a duty to enforce and chose not to. Just because you're not in AZ, doesn't mean AZ case law can't come back to bite you.
EllenS1
(Florida)

Posts:1148


12/11/2008 2:56 PM  
Dan,

My question to you is why do you want a voluntary HOA? What are the benefits?
ColeK
(Oklahoma)

Posts:9


12/11/2008 8:06 PM  
Posted By MaryA1 on 12/11/2008 7:52 AM
Cole,

Just a word of caution! Be very careful about adopting an unofficial "rule" to not enforce any covenant the board feels might be outdated, etc. If your docs contain the word "duty"; in other words, it's the BOARD'S duty to enforce, think twice about not enforcing the covenants. Note that the declaration is talking about the duties of the board not the duties of the members. The declaration might say the members may enforce; but I doubt they say it's the members' duty to enforce. There is case law in AZ, a case which the assn lost, because the board had a duty to enforce and chose not to. Just because you're not in AZ, doesn't mean AZ case law can't come back to bite you.




Mary,
I don't need caution. I also don't need to be careful. Neither does any Board Member that will understand what the term "Good Buisness Judgement Rule" means. If you don't know what it means, Understand it. If you don't, just Google it.

My point I was trying to make is this: If you have a bad covenant, and you are a board member trying to enforce this BAD covenant, you are in a lot of trouble. Even if it is a covenant.

The "Good Business Judgement Rule" will always Protect and defend any Board Member from Enforcing or NOT Enforceing a Covenant.

As far as being a member contesting a violation, that the Board refused to contest, The Courts,(whether in your area or mine,) will Look at the facts based on the the Covenants, (Contract) They will also look at the Boards decision to see if they applied the "Good Buisness Judgement Rule."
This is the best defense that a board member has. It will work for them also. Think about it.
Understand this also Mary, any member has a right to enforce a covenant, like you stated. I personally am doing that right now as we speak. The Court will decide whether I am right, or did the Board follow the Good Buisness Judgement Rule and determine that they are right.
Doesent take a rocket scientist to figure that out. Just a Judge, or a Jury.
Cole
GeorgerwilliamsW
(Indiana)

Posts:975


12/12/2008 2:01 AM  
Cole, I tend to agree with your position. There seem to be two divergent approaches to covenant/rule enforcement expressed here. One is "if it is a rule, enforce it or get rid of it." The second is, "the association board is empowered to use its reason, wisdom and judgment."

As long as a board acts in good faith, in the best interests of the association, on an informed basis, not wasteful and avoids self-interest, it is acting properly.

There are times when it is in the best interest of the association not to enforce a rule or covenant. Sometimes the cost of enforcement is greater than the benefit obtained through enforcement.

We elect boards to make such determinations.



ColeK
(Oklahoma)

Posts:9


12/12/2008 5:01 AM  
That is EXACTLY my point. Well said.
MaryA1


Posts:0


12/12/2008 7:08 AM  
George & Cole,

Tell that to the HOA that lost the case in AZ!! Business judgement rule never entered into the case. It was based on the fact that the declaration stated the board had a "duty" to enforce -- period; and that was the only point I was making in my response. I'm only the messenger so don't take me to task. Forewarned is forearmed!!
MaryA1


Posts:0


12/12/2008 7:13 AM  
Cole,

I am well aware of the business judgment rule, which means:

The board will act in good faith in what they consider to be the best interests of the corporation and with the care that an ordinary prudent person in a like position would exercise in similar circumstances.

I don't believe that equates to violating the declaration or any other gov. doc. of the assn.
GeorgerwilliamsW
(Indiana)

Posts:975


12/12/2008 2:36 PM  

Let me offer a quote from the text of a document prepared by Hindman Sanchez:

Covenant Enforcement: The Role of the Business Judgment Rule
    "The Colorado Court of Appeals has ruled homeowners associations are entitled to broad discretion in the manner and method of pursuing covenant enforcement. A lawsuit challenging those decisions must prove
    the association acted unreasonably, in bad faith or in an arbitrary and capricious manner."

    "The court will consider the fiduciary duty owed by a homeowners association to the community as a whole, and the fact that a homeowners association has a fiduciary duty to enforce the covenants. Fiduciary duties impose a high legal standard upon homeowner associations and board members. This obligation is tempered by the business judgment rule allowing considerable latitude and discretion to the board’s decisions as long as they are undertaken prudently and in good faith.

    "The Cross Creek decision provides a lesson that homeowners associations must carefully investigate and evaluate requests for covenant enforcement. The board must act prudently, in good faith, and with consideration of both the specific covenant violation and the overall interests of the community when making decisions about the strategies, timing and methods for enforcing the covenants."

    http://www.hindmansanchez.com/docs/covenant_enforcement._role_of_business_judgement_rule__05287884_.pdf
MaryA1


Posts:0


12/12/2008 3:42 PM  
George,

I believe this excerpt from the doc you posted says it all:

"The court will consider the fiduciary duty owed by a homeowners association to the community as a whole, and the fact that a homeowners association has a fiduciary duty to enforce the covenants."

Note: "a fiduciary duty to enforce the covenants"! I can't imagine applying the business judgement rule and ruling the board did NOT have a fiduciary duty to enforce the covenants, when the declaration explicitly says the board has a "DUTY".
PamelaB2
(Missouri)

Posts:16


04/23/2012 3:07 PM  


Posted By GeorgerwilliamsW on 10/21/2008 8:48 AM
Dan, I don't agree with the posting by Mary at all.

The language posted from the covenants do not specify a vote, it specifies, "an instrument signed by a majority of the then owners..." A vote simply is the wrong way to do this.





GeorgerwilliamsW,You are right. It does NOT require a vote if the covenants only require an instrument signed by a majority of the then owners.
MelissaP1
(Alabama)

Posts:4782


04/23/2012 3:14 PM  
This was posted 4 years ago...FYI...

Former HOA President
PamelaB2
(Missouri)

Posts:16


04/27/2012 1:48 PM  

I am aware that this is an old discussion but many of us still read them by doing a google search and find good information on them.



Posted By ColeK on 12/11/2008 8:06 PM
Posted By MaryA1 on 12/11/2008 7:52 AM




Mary,
I don't need caution. I also don't need to be careful. Neither does any Board Member that will understand what the term "Good Buisness Judgement Rule" means. If you don't know what it means, Understand it. If you don't, just Google it.

My point I was trying to make is this: If you have a bad covenant, and you are a board member trying to enforce this BAD covenant, you are in a lot of trouble. Even if it is a covenant.

The "Good Business Judgement Rule" will always Protect and defend any Board Member from Enforcing or NOT Enforceing a Covenant.

As far as being a member contesting a violation, that the Board refused to contest, The Courts,(whether in your area or mine,) will Look at the facts based on the the Covenants, (Contract) They will also look at the Boards decision to see if they applied the "Good Buisness Judgement Rule."
This is the best defense that a board member has. It will work for them also. Think about it.
Understand this also Mary, any member has a right to enforce a covenant, like you stated. I personally am doing that right now as we speak. The Court will decide whether I am right, or did the Board follow the Good Buisness Judgement Rule and determine that they are right.
Doesent take a rocket scientist to figure that out. Just a Judge, or a Jury.
Cole




I did google as your suggested, Cole. Thanks for the tip.

The Business Judgment Rule creates a presumption that in making a business decision the directors acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interest of the corporation. However, the protections of the business judgment rule do not apply unless the directors are shown to have actually exercised their business judgment in a matter.


If the board has failed to act, or has abdicated its responsibilities it makes no difference why the director or officer failed to pursue the best interest of the corporation. The director’s or officer’s “intentional dereliction of duty” or “conscious disregard for one’s responsibilities,” can constitute a violation of the duty of good faith (and therefore the duty of loyalty).


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Forums > Homeowner Association > HOA Discussions > COVENANTS CHANGE, AMEND OR TERMINATE IN WHOLE OR PART



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