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Subject: Waiver of Bylaws
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NpS
(Pennsylvania)

Posts:3987


12/23/2019 1:23 AM  
Augie. Please note the following:

"Courts generally do not view legal encyclopedias as persuasive authority on the law because this research tool tends to be a survey of the law and not an in-depth analysis of it. Thus, you might choose to use an encyclopedia to begin your research, but you would never cite one in a brief or memo."

The source is https://lawguides.mainelaw.maine.edu/c.php?g=470036&p=3213832

You seem to be attracted to the wide sweeping nature of the rulings you found. But that expansiveness is their primary weakness.

Every ruling in case law depends on a particular set of facts. All 4 of your cases are similar to each other in ways that are different than Nicole's situation. I described some of those differences in my long post.

But to say that any bylaw not actively worked is automatically waived makes no sense to me. Sure it's a possibility. But there is no magic wand that would treat every bylaw like any other. What are the specific facts involved?

So far we know (maybe) that the Condo allowed delinquent people to vote. Does the failure to limit voting to members in good standing somehow waive the part of the bylaws that said only members in good standing could vote? Was the part about being in good standing waived for lack of use? I think not. Were there risks of not excluding delinquents? Sure. But I cannot see how that would result in some kind of blanket rewrite of the rules by means of waiver.

Note that AmJur, as the Maine article states, is a preliminary tool only and would not be used to present a case in court. IMO, you have read too much into a legal encyclopedia.

I could go on, but enough for now.

Sikubali jukumu. Read all posts at your own risk.
CathyA3
(Ohio)

Posts:667


12/23/2019 6:29 AM  
I don't think anyone has said that case law will prevail here.

The reason I originally mentioned looking into this, and Augustin researched the case law, was because Nicole's community had been doing business one way long enough to make it a possibility to consider before Nicole's association goes through the necessary steps of re-writing the bylaws.

However:

- an AZ court may uphold the existing bylaws, making the point moot.

- the community may not want to go through the expense of taking this to court since they will then need to pay the lawyer in conjunction with re-writing the bylaws, resulting in increased expenses overall.

So it's a good question to ask that lawyer, but nothing more at this point.

My take is that Nicole's question is a good-faith effort to find information. I'm pretty good at spotting "vocational dissidents", and you need to see telltale behavior play out repeatedly over time to be sure. I haven't noticed that here.
GeorgeS21
(Florida)

Posts:1877


12/23/2019 6:57 AM  
I’m hoping you are correct, Cathy, but my alarm went off right from the beginning.

It sounds to me like the OP is trying to rationalize ignoring their current Bylaws, by pretending something serious has occurred that will render them meaningless, or illegal, in some way.

I’m probably just more cynical than you 🙂
AugustinD


Posts:2411


12/23/2019 9:54 AM  
Posted By NpS on 12/22/2019 11:33 AM
All of [AugustinD's cited cases] involved commercial enterprises in crisis - a bank, a lumber yard, etc.
I cited four appeals court decisions. Maybe one involved a corporation in crisis. Here they are:

Bay City Lumber Company v. S. M. Anderson Jr.(Washington, 1941).
http://courts.mrsc.org/supreme/008wn2d/008wn2d0191.htm

Hernandez v. Banco De Las Americas (Arizona, 1977)
https://law.justia.com/cases/arizona/supreme-court/1977/12946-pr-0.html

Schaft v. Leis (Kansas, 1984)
https://law.justia.com/cases/kansas/supreme-court/1984/55-954-1.html

Kern v. Arlington Ridge Pathology (Illinois, 2008)
https://caselaw.findlaw.com/il-court-of-appeals/1455324.html

These decisions cite still other decisions observing that a Bylaw may be waived due to a course of conduct. I have yet to find any case law saying, 'No, a Bylaw may never be waived due to a course of conduct that is contrary to the Bylaw. If the Bylaw is written down and properly filed yada, then it applies forever.' It would be nice if you produced something saying this. I do not think it exists.

I believe the common law rule I have repeatedly cited derives from well-established tenets of contract law.

Posted By NpS on 12/22/2019 11:33 AM
All of the challenges involved the distribution of funds to individuals - typically in the form or compensation.
This is roughly so. Sometimes the plaintiff was the corporation wanting compensation back. Sometimes the plaintiff was an individual wanting compensation for work done. Waiver of Bylaws was key to each. The Bylaws that were waived varied highly in content. Some certainly involved how the Boards conducted themselves. In every decision, the court ruled that Bylaws had been waived by a course of conduct. The decisions above cite other decisions that say the same.

Posted By NpS on 12/22/2019 11:33 AM
They were closely held companies.
The defendant in the 1977 Arizona appeals court decision was Banco de las Americas. To establish this bank back in 1971, it appears some 40,000 shares were sold door-to-door. See https://webcms.pima.gov/cms/One.aspx?portalId=169&pageId=467631 . Banco del Las AMericas was not "closely held."

Posted By NpS on 12/22/2019 11:33 AM
Now to my real question -- What's the underlying motivation involved here?
https://en.wikipedia.org/wiki/Appeal_to_motive

Posted By NpS on 12/23/2019 1:23 AM
Note that AmJur, as the Maine article states, is a preliminary tool only and would not be used to present a case in court. IMO, you have read too much into a legal encyclopedia.


I believe your argument is not with me but the many courts who have routinely cited Am Jur 2d and similar authorities as a part of their reasoning.

Posted By NpS on 12/23/2019 1:23 AM
So far we know (maybe) that the Condo allowed delinquent people to vote. Does the failure to limit voting to members in good standing somehow waive the part of the bylaws that said only members in good standing could vote? Was the part about being in good standing waived for lack of use? I think not. Were there risks of not excluding delinquents? Sure. But I cannot see how that would result in some kind of blanket rewrite of the rules by means of waiver.
I agree that exactly which of the written Bylaws were disregarded for many years, as apparently consented to by members attending annual meetings, and so which of the Bylaws is vulnerable to being ruled by a court as "waived," remains to be seen. I do think that Bylaws concerning the number of directors; how elections are to be run; and more, along with these being disregarded for years, may be a big deal here. You disagree, without a single citation from case law to back up your position.

I would also point out that the premise for court rulings that covenants have been abandoned follow the same principles of estoppel. This is one reason why CathyA3's post the other day got my attention and caused me to dig deeper. Obviously Nicole was a bit clued into this as well.

Re motives in debate, I think this fairly expresses my feelings: https://en.wikipedia.org/wiki/Appeal_to_motive

The web has cautions on it for corporations about ignoring Bylaws. E.g. as noted earlier: https://www.muchlaw.com/insights/article/corporate-bylaws-use-them-or-lose-them . I take these seriously. I think every HOA and condo director should.

CathyA3's post today has wisdom.






JeffT2
(Iowa)

Posts:518


12/23/2019 4:11 PM  
Some bylaws will have a statement that says failure of the Association or any Owner to enforce the bylaws shall not constitute a waiver of the right to enforce the same thereafter.

Does that make a difference?
AugustinD


Posts:2411


12/23/2019 4:45 PM  
Posted By JeffT2 on 12/23/2019 4:11 PM
Some bylaws will have a statement that says failure of the Association or any Owner to enforce the bylaws shall not constitute a waiver of the right to enforce the same thereafter.
I recently spoke of this in another thread. In Michigan for one, an anti-waiver clause like the one JeffT2 describes can stop a condominium member from claiming a Bylaw has been waived. As interested see:

-- Dearborn West Village Condominium Association v. Makki (Michigan, January 2019) https://law.justia.com/cases/michigan/court-of-appeals-unpublished/2019/340166.html

-- Fox Point Association v. Ryal (Michigan, July 2019) https://law.justia.com/cases/michigan/court-of-appeals-unpublished/2019/344232.html


On the other hand, this 2005 Minnesota appeals court decision said otherwise, re an anti-waiver clause in a condominium's bylaws: https://mn.gov/law-library-stat/archive/ctappub/0507/opa042057-0705.htm . The Minnesota appeals court wrote: "Appellants contend that it was an error of law for the district court to grant summary judgment [to the Condominium Association] on the basis of the nonwaiver clause alone when the evidence shows that respondents failed to enforce the rule for 12 years and even encouraged violation of the rule. ... But the cases cited by [the Condominium Association] do not stand for the proposition that a waiver by conduct can never occur where a contract contains a nonwaiver provision, and we find no authority to support such an argument."
AugustinD


Posts:2411


12/23/2019 4:57 PM  
From https://www.hoaleader.com/public/301.cfm :

Don't Waive Your Right To Enforce Your HOA's Rules
June 19, 2009

"If you have rules, use them or lose them. "Waiver" is a basic idea in contract law. It means that if you regularly let contract violations pass without complaint, you can't later try to enforce those provisions.

This holds true for association rules, says Joel Hilgendorf, an associate at Hellmuth & Johnson PLLC in Eden Prairie, Minn. Though many association declarations contain a non-waiver clause stating that non-enforcement of the association's governing documents isn't a waiver of the right to enforce the governing documents at any time in the future, courts can consider those clauses void.

For example, in Pollard v. Southdale Gardens of Edina, the Minnesota Court of Appeals held that an association's failure to continually enforce its rule may have modified the association's rules, and the non-waiver clause—by itself—wasn't sufficient to alter that outcome.

If you've failed to enforce existing rules, Joel recommends that your association re-adopt a new rule rather than attempting to enforce an old, possibly waived, rule."
NicoleC5
(Arizona)

Posts:15


01/01/2020 12:55 PM  
Little more info about the muddy details of the building.

I understand its alarming to hear that a building developed in 2006 lost the bylaws about three years into its existence, but here are some of the things that contributed to that:

1. The developer was going bankrupt and units went into foreclosure.
2. In 2010 there was a second wave of foreclosures.
3. Out of 41 units, most of the units were purchased as investment properties. Currently, only 4 units are occupied by owners, myself included. 5 units are vacant. The rest are rental properties.
4. Most of the owners live out of state or in other countries.
5. There was no interest from a lot of owners to participate in the operation of the building, or even regularly checking in. Basically bills needed to get paid so some people stepped up and did things as best they could.


The lady who supplied the bylaws was the first president of the association. She said that when she was president they followed the bylaws. However, that statement is inconsistent with what is on the corporate paperwork. The bylaws say a minimum of three directors need to be on the BOD. When she was president, she was acting alone, and then one year with another individual. Things needed to get done, and I am sure she got them done as best she could given the circumstances. It is my understanding that the building was about $30k in debt during this time though.

I bought a unit from another President on the BOD. He never supplied me bylaws, and was not aware they existed. I had this same unit sold by another BOD that served with this President, and he was also not aware of bylaws.

Obviously, the association needs bylaws and to implement a system moving forward.

BonnieG1
(Nebraska)

Posts:1181


01/04/2020 8:49 AM  
Posted By MelissaP1 on 12/20/2019 3:41 PM
By-laws are typically INTERNAL documents of the HOA. They do not require to be filed in many states. Easily changed and adaptable.

Now you could be referencing to "Covenants & Restrictions" or what is called "CC&R's". Those are similar but different than by-laws. CC&R's run with the title. They do require being filed with the county. The document is also considered PUBLIC. Which means they should be available at the local courthouse in the records department. Sometimes can find them online. The By-laws may be filed with them if your lucky.

The Articles of Incorporation is how the HOA is incorporated. That is also a PUBLIC document. It is filed at the STATE level. Which they may also post them online to be viewed. A HOA can be non-profit or a for-profit corporation. Most are non-profit.

So what are you referencing? Have you read them and seen how your HOA can make changes? I would consult a lawyer on formerly changing and filing them. No reason the HOA can't modify them per the requirements to be changed. Do not use a Real Estate attorney. Best to use a Lawyer familiar with HOA or contractual/corporate laws.




If I remember correctly our documents state that lack of previous enforcement does not negate future enforcement of our documents.
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