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Subject: Amending Bylaws and Declaration in the time of Covid-19
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AlbertE
(Maryland)

Posts:7


06/21/2020 9:15 AM  
Maryland lowered the bar to amend Declarations to a percentage of owners in good standing not just a percentage of all owners. Would it appropriate for an HOA to amend their documents in the time of Covid-19 presumably because so few owners are in good standing with many people are now out of work or dealing with another hardship? Is there anything in the law to raise the bar to a percentage of homeowners in good standing before Covid-19 hit? Spending thousands of dollars in postage/photocopies during Covid-19 would mean someone did the math and figured it would pass right?
GeorgeS21
(Florida)

Posts:2816


06/21/2020 9:24 AM  
I don't have a frame of reference.

In my three neighborhoods, the "in good standing" status is virtually unchanged.

Some governing docs call for anyone voting to be in good standing.
AlbertE
(Maryland)

Posts:7


06/21/2020 9:52 AM  
Good standing is not more than 60 past due.
LetA
(Nevada)

Posts:989


06/21/2020 9:53 AM  
What covenants need amending?
AlbertE
(Maryland)

Posts:7


06/21/2020 10:08 AM  
Some of the changes include:
Increasing board member terms from 1 year to 3 years
Reducing the board from 7 to 5
Prohibiting AirBnB
Authorizing towing of delinquent homeowners
Simple majority can approve special assessments up to 30%
SheliaH
(Indiana)

Posts:3307


06/21/2020 10:24 AM  
I don't think COVID makes a difference. This isn't something that happens overnight anyway - you need to look at what you'd like to change, your own documents to see how it's done, work with your attorney to make sure the law is followed, contact everyone to give them a chance to vote and then do it.

You say your state law changed to allow a percentage not all owners, not just those in good standing, but you may need to take another look at that statute. In some cases, changes to HOA law only apply to those established after a certain date. Depending on how long your film's been around, this law may not apply, so you'd be left with whatever's in your documents.

The only problem I see with trying to do this now is that people are preoccupied with their jobs, finances and so on, as you've said. That may mean this wouldn't get anyone's attention and the process would take even longer. The documents may still need to be amended for a number of other reasons, so it's ok to start the process. Take advantage of the time to review the issues carefully and ask homeowners for their take on what's needed, what no longer works and what can be tweaked. You can use the rest of the year for that and perhaps schedule a vote for next year.

As for delinquent ownwers, that usually hurts when it comes to board elections in that they can't run or vote. It doesn't always mean they can't vote to amend the documents, but if that's what your documents say and state law doesn't apply to your community, I would say the board should focus on working with them to keep money coming in so the bills continue to be paid. You can still commission an advisory committee to research the issue and make recommendations to the board. The expenses associated with amending the documents can keep until next year.

And if you're one of the delinquent homeowners, do what you can so you don't fall behind and propose a payment plan and stick to the terms. Your assessment should be considered essential expenses because if you don't pay, you risk a lot more in late fees and legal action that could put your home at risk for foreclosure.
AugustinD


Posts:3495


06/21/2020 11:34 AM  
Posted By AlbertE on 06/21/2020 9:15 AM
Maryland lowered the bar to amend Declarations to a percentage of owners in good standing not just a percentage of all owners. Would it appropriate for an HOA to amend their documents in the time of Covid-19 presumably because so few owners are in good standing with many people are now out of work or dealing with another hardship? Is there anything in the law to raise the bar to a percentage of homeowners in good standing before Covid-19 hit? Spending thousands of dollars in postage/photocopies during Covid-19 would mean someone did the math and figured it would pass right?


Posted By AlbertE on 06/21/2020 10:08 AM
Some of the changes include:
(a) Increasing board member terms from 1 year to 3 years
(b) Reducing the board from 7 to 5
(c) Prohibiting AirBnB
(d) Authorizing towing of delinquent homeowners
(e) Simple majority can approve special assessments up to 30%


I can see why you are troubled by this. I do not think there is any statute to support your position. From reading here https://www.peoples-law.org/disagreements-your-condo-or-homeowners-association-maryland there appears to be no Maryland authority other than first, the HOA, and then court, to whom you could take your objections. You could go to court, at great expense, and try to get a precedent set. I'd say your chances of prevailing, with an argument that COVID-19 is a special situation and so on, are under 50%.

I would campaign hard, through mass mailings and emails, to my neighbors who are in good standing to vote against (a), (b) and (e).
MarkW18


Posts:1195


06/21/2020 11:54 AM  
Let's say you have an association of 100 units and 4 are "not in good standing".

If you use the 100 in good standing, then 60 yes votes would be required to amend.

If you have 4 not in good standing, then 58 are required.

If 50 are in good standing, my strong recommendation, MOVE!
KerryL1
(California)

Posts:7333


06/21/2020 12:40 PM  
Wha size is your HOA, Albert? How many Owners do you estimate are not in good standing?

Are you on the Board?

It's interesting to note that in CA, eff. 1/20, Owners do not need to be in "good standing" in order to vote.

Your list, Albert, seems to include a mixture of bylaws and CC&Rs. Does it actually say that he cars of delinquent owners can be towed? I have a feeling your HOA attorney would not support that one.
AlbertE
(Maryland)

Posts:7


06/21/2020 12:53 PM  
Thanks for all the useful advice. The proxy that was sent out states only yes or no. There is no option to vote no on individual items. It is either all or nothing.

I don’t like the optics of all this. Most people are dealing with staying safe and family issues. I will talk more with my neighbors to hear their opinions. I may have to mount an email campaign. Door to door is hard in these times.

AlbertE
(Maryland)

Posts:7


06/21/2020 1:19 PM  
Kerry,
My HOA is about 390 townhomes. I would say around 20% are delinquent from what I hear. I’m not on the board but did one year maybe 7 years ago. I don’t know if the attorney support cars being towed. In Maryland it is common for delinquent cars of homeowners to be towed until 2 years ago when a judge ruled that it had to be in the Declaration before an HOA could tow. That is what triggered the rewrite of our documents.

Some of the changes make since like removing the references to the developer but others are just need community discussion before passing.
CathyA3
(Ohio)

Posts:1077


06/21/2020 2:42 PM  
Posted By AlbertE on 06/21/2020 12:53 PM
Thanks for all the useful advice. The proxy that was sent out states only yes or no. There is no option to vote no on individual items. It is either all or nothing.

I don’t like the optics of all this. Most people are dealing with staying safe and family issues. I will talk more with my neighbors to hear their opinions. I may have to mount an email campaign. Door to door is hard in these times.





All of the proposed amendments seem more or less reasonable, but they absolutely should be voted on separately. You don't want to lose several good changes because one of them happens to be unpopular for some reason.

Did the association's attorney draft the proposed amendments? I'm asking because that combined proxy, together with the timing, seems amateurish and not well thought out. If your board drafted them, it's *very* likely that they are improperly worded, or may contradict other provisions in your governing documents. These things are written in legalese for a reason, and homeowners lack the knowledge and skill to do legal work. Poorly written governing documents will lead to conflict, inability to enforce your CC&Rs, and even lawsuits if people decide to fight something that doesn't seem lawful.
AlbertE
(Maryland)

Posts:7


06/21/2020 6:38 PM  
Posted By CathyA3 on 06/21/2020 2:42 PM
Posted By AlbertE on 06/21/2020 12:53 PM
Thanks for all the useful advice. The proxy that was sent out states only yes or no. There is no option to vote no on individual items. It is either all or nothing.

I don’t like the optics of all this. Most people are dealing with staying safe and family issues. I will talk more with my neighbors to hear their opinions. I may have to mount an email campaign. Door to door is hard in these times.





All of the proposed amendments seem more or less reasonable, but they absolutely should be voted on separately. You don't want to lose several good changes because one of them happens to be unpopular for some reason.

Did the association's attorney draft the proposed amendments? I'm asking because that combined proxy, together with the timing, seems amateurish and not well thought out. If your board drafted them, it's *very* likely that they are improperly worded, or may contradict other provisions in your governing documents. These things are written in legalese for a reason, and homeowners lack the knowledge and skill to do legal work. Poorly written governing documents will lead to conflict, inability to enforce your CC&Rs, and even lawsuits if people decide to fight something that doesn't seem lawful.




The attorney draft the documents with direction from the board. There was a board member who was going to revise the bylaws but never had a draft available for our review. The attorney will conduct the special meeting and answer any questions about the changes. Board members are not going to participate in answering questions.
TimB4
(Virginia)

Posts:16808


06/22/2020 12:46 AM  
Albert,

Read your declarations on how to amend.


Typically, to amend a Declaration of Covenants requires x% of the membership NOT x% of members in good standing.


Take a look at your covenants and let us know what it actually takes to amend.




Note: Some of the items you identified can be in the Bylaws. Most of what you identified need to be in the covenants to withstand a court challenge.
CathyA3
(Ohio)

Posts:1077


06/22/2020 5:46 AM  
Posted By AlbertE on 06/21/2020 6:38 PM
... snippage ....

The attorney draft the documents with direction from the board. There was a board member who was going to revise the bylaws but never had a draft available for our review. The attorney will conduct the special meeting and answer any questions about the changes. Board members are not going to participate in answering questions.



Yipes. I guess here is another example for those who think HOA attorneys are incompetent. As I'd mentioned earlier, the proposed changes should be voted on separately if the items are independent from one another. For example, the Airbnb restriction (which should be in the CC&Rs and needs a vote of the membership) has nothing to do with the size of the board (a change that would be made to the bylaws and which may be able to be made by a vote of the board only, depending on your current bylaws). We amended our CC&Rs a few years ago. We had three proposed amendments, voted on separately, two passed and the third neither passed nor failed.

Re: having the board members answering questions - We snail-mailed all homeowners the text of the proposed amendments plus a plain-English version plus a FAQ-style summary. I support having your attorney and not your board members answer questions. However, I believe these questions should be answered well ahead of the vote so that people have time to think about things. In addition, our vote was conducted outside of a meeting. Our ballots were returned via snail-mail or email, our PM collected and maintained the returned ballots, and we sent out periodic reminders to those who hadn't voted. The voting period remained open until we had a decision one way or the other (we need 75% Yes to pass, 25% No to fail). Details of how to handle the actual voting may be and probably are different in other communities and states, but my comments about separate ballots and providing information well ahead of the actual vote are pretty much best practices, I think.



GeorgeS21
(Florida)

Posts:2816


06/22/2020 7:09 AM  
Absolutely take Cathy's point wrt providing information to owners - in advance - in many ways - and more than once. This has the advantage of convincing everyone nothing is being hidden, and it actually gives them time to digest the information.
AugustinD


Posts:3495


06/22/2020 7:09 AM  
Posted By TimB4 on 06/22/2020 12:46 AM
Typically, to amend a Declaration of Covenants requires x% of the membership NOT x% of members in good standing.
The Maryland Condominium Act appears to support TimB4's concern. From the Act:
==========================
§ 11-104. BYLAWS.
...
(e) Amendments.
(6)(ii) Notwithstanding the provisions of the bylaws, the council of unit owners may amend the bylaws by the affirmative vote of unit owners in good standing having at least 60% of the votes in the council [meaning condo membership], or by a lower percentage if required in the bylaws.

§ 11-103. DECLARATION.
...
(c) Amendments or orders of reformation. — (1) Except for a corrective amendment under § 11-103.1 of this title or as provided in paragraph (2) of this subsection or subsection (d) of this section, the declaration may be amended only with the written consent of 80 percent of the unit owners listed on the current roster. Amendments under this section are subject to the following limitations:
[For rest, see https://sos.maryland.gov/Documents/CondominiumBooklet.pdf]
==========================
I am betting these are proposed Bylaw amendments:
(a) Increasing board member terms from 1 year to 3 years
(b) Reducing the board from 7 to 5

I am betting these are proposed Declaration amendments:
(c) Prohibiting AirBnB
(d) Authorizing towing of delinquent homeowners
(e) Simple majority can approve special assessments up to 30%


Because of the apparent different rules for voting on Bylaws vs. the Declaration, putting these on one ballot, sent say to all owners (whether in good standing or not) seems to promise confusion and invite challenges by owners to the process.
JohnC46
(South Carolina)

Posts:9577


06/22/2020 7:13 AM  
Posted By AugustinD on 06/22/2020 7:09 AM
Posted By TimB4 on 06/22/2020 12:46 AM
Typically, to amend a Declaration of Covenants requires x% of the membership NOT x% of members in good standing.
The Maryland Condominium Act appears to support TimB4's concern. From the Act:
==========================
§ 11-104. BYLAWS.
...
(e) Amendments.
(6)(ii) Notwithstanding the provisions of the bylaws, the council of unit owners may amend the bylaws by the affirmative vote of unit owners in good standing having at least 60% of the votes in the council [meaning condo membership], or by a lower percentage if required in the bylaws.

§ 11-103. DECLARATION.
...
(c) Amendments or orders of reformation. — (1) Except for a corrective amendment under § 11-103.1 of this title or as provided in paragraph (2) of this subsection or subsection (d) of this section, the declaration may be amended only with the written consent of 80 percent of the unit owners listed on the current roster. Amendments under this section are subject to the following limitations:
[For rest, see https://sos.maryland.gov/Documents/CondominiumBooklet.pdf]
==========================
I am betting these are proposed Bylaw amendments:
(a) Increasing board member terms from 1 year to 3 years
(b) Reducing the board from 7 to 5

I am betting these are proposed Declaration amendments:
(c) Prohibiting AirBnB
(d) Authorizing towing of delinquent homeowners
(e) Simple majority can approve special assessments up to 30%


Because of the apparent different rules for voting on Bylaws vs. the Declaration, putting these on one ballot, sent say to all owners (whether in good standing or not) seems to promise confusion and invite challenges by owners to the process.




I agree. Two different type changes.
JohnC46
(South Carolina)

Posts:9577


06/22/2020 7:16 AM  
Some Covenants do call for only Members In Good Standing being able to vote on Covenant/Bylaw changes, others do not. Ours do not.

Some Bylaws do call for only Members In Good Standing being able to vote in BOD Elections, others do not. Ours do.

CathyA3
(Ohio)

Posts:1077


06/22/2020 7:45 AM  
Posted By AugustinD on 06/22/2020 7:09 AM
Posted By TimB4 on 06/22/2020 12:46 AM
Typically, to amend a Declaration of Covenants requires x% of the membership NOT x% of members in good standing.
The Maryland Condominium Act appears to support TimB4's concern. From the Act:
==========================
§ 11-104. BYLAWS.
...
(e) Amendments.
(6)(ii) Notwithstanding the provisions of the bylaws, the council of unit owners may amend the bylaws by the affirmative vote of unit owners in good standing having at least 60% of the votes in the council [meaning condo membership], or by a lower percentage if required in the bylaws.

§ 11-103. DECLARATION.
...
(c) Amendments or orders of reformation. — (1) Except for a corrective amendment under § 11-103.1 of this title or as provided in paragraph (2) of this subsection or subsection (d) of this section, the declaration may be amended only with the written consent of 80 percent of the unit owners listed on the current roster. Amendments under this section are subject to the following limitations:
[For rest, see https://sos.maryland.gov/Documents/CondominiumBooklet.pdf]
==========================
I am betting these are proposed Bylaw amendments:
(a) Increasing board member terms from 1 year to 3 years
(b) Reducing the board from 7 to 5

I am betting these are proposed Declaration amendments:
(c) Prohibiting AirBnB
(d) Authorizing towing of delinquent homeowners
(e) Simple majority can approve special assessments up to 30%


Because of the apparent different rules for voting on Bylaws vs. the Declaration, putting these on one ballot, sent say to all owners (whether in good standing or not) seems to promise confusion and invite challenges by owners to the process.




For what it's worth, my Declaration states that voting rights of delinquent owners must be suspended until their accounts are brought to $0. I re-read that and the section regarding amending our Declaration, and it appears that the voting rights suspension applies to that as well as to voting for directors at the annual meeting.

Our Declaration was reviewed by our attorneys when we first became a client (about 6 years ago), so this is consistent with state condo law.

So here is at least one example in one state where this is being done.
AugustinD


Posts:3495


06/22/2020 8:23 AM  
Posted By CathyA3 on 06/22/2020 7:45 AM
For what it's worth, my Declaration states that voting rights of delinquent owners must be suspended until their accounts are brought to $0. I re-read that and the section regarding amending our Declaration, and it appears that the voting rights suspension applies to that as well as to voting for directors at the annual meeting.

Our Declaration was reviewed by our attorneys when we first became a client (about 6 years ago), so this is consistent with state condo law.
In my layperson's opinion, Ohio's Condo Act appears to support your and your condo attorneys' take. The only section of the Ohio Condo Act that I found that was relevant states simply:
==========
5311.081 Powers and duties of board of directors.
...
(B) Unless otherwise provided in the declaration, the unit owners association, through the board of directors, may exercise all powers of the association, including the power to do the following:
...
(18) Suspend the voting privileges and use of recreational facilities of a unit owner who is delinquent in the payment of assessments for more than thirty days;
=======

I think 'it is what it is' in Ohio and no doubt other states. Still I wonder whether an amendment to an Ohio condo Declaration that radically changes an owner's rights, passed by a vote where many owners were delinquent and so prohibited from voting, would survive a court challenge. E.g. a bunch of owners (who are not delinquent) vote to demolish the clubhouse and close the pool permanently. If the Declaration required a "100% vote of owners" to radically change the use of such common areas, I wonder if there is a conflict here that would defer to the wording in the Declaration. Speaking as an academic matter.

The difference between Ohio and Maryland on the point is interesting. California's new statute, prohibiting any suspension of voting, thickens the plot.
AlbertE
(Maryland)

Posts:7


06/22/2020 4:27 PM  
The bylaws and Declaration are “Amended and Restated”. It appears to be a template with some verbiage from the old documents. There are several new items in there including the Airbnb prohibition and the option to enforce a universal lease for anyone renting their home. There is language for the HOA to collect rent directly from the tenet. Not sure why that is there.
KerryL1
(California)

Posts:7333


06/22/2020 5:23 PM  
Are you saying, Albert, that the bylaws and Declaration (CC&Rs) are the same document?
TimB4
(Virginia)

Posts:16808


06/22/2020 5:52 PM  
Sometimes the Declaration and Bylaws are combined into one document and registered together.
They are two documents (or if you wish, one document with two chapters/sections - covenants and bylaws).
CathyA3
(Ohio)

Posts:1077


06/23/2020 6:19 AM  
Posted By AlbertE on 06/22/2020 4:27 PM
... snippage ....There is language for the HOA to collect rent directly from the tenet. Not sure why that is there.



Speculating here, but they may want to give the HOA the right to collect rents when the owner is delinquent in their assessments. We had a case where one of our chronically unemployed and delinquent owners was renting their condo for a nice, fat rent payment but was still not paying assessments. It was VERY frustrating for the board, and it would have taken court action to allow us to collect the rents (which would have ended up costing us more than the amount of outstanding assessments - this person played the game very well).

If the amendment proposes allowing the HOA to collect rents for all tenants, I'm not sure that would be lawful. The HOA has no legal relationship with the tenant, only with the homeowner, and generally needs to butt out - otherwise the HOA risks being accused of interfering in a legal contract. Requiring a copy of the lease or requiring certain language in the lease (ie, that the tenant is obligated to obey the CC&Rs and community rules) is usually OK.

GeorgeS21
(Florida)

Posts:2816


06/23/2020 7:36 AM  
Re Cathy comment,

The first thing our attorney does when an account is turned over for collection is to offer a payment plan with a startup fee.

The second thing, if the property is rented, is to notify the tenant to pay the attorney, with a copy of the letter to the owner. This is very effective.
GenoS
(Florida)

Posts:3867


06/23/2020 12:47 PM  
Posted By CathyA3 on 06/23/2020 6:19 AM
... If the amendment proposes allowing the HOA to collect rents for all tenants, I'm not sure that would be lawful. The HOA has no legal relationship with the tenant, only with the homeowner, and generally needs to butt out - otherwise the HOA risks being accused of interfering in a legal contract. Requiring a copy of the lease or requiring certain language in the lease (ie, that the tenant is obligated to obey the CC&Rs and community rules) is usually OK.

It's perfectly legal in a Florida HOA.

FS 720.308(8) starts out by saying the following (there's a more to it but this is the key part):

"If the parcel is occupied by a tenant and the parcel owner is delinquent in paying any monetary obligation due to the association, the association may demand that the tenant pay to the association the subsequent rental payments and continue to make such payments until all the monetary obligations of the parcel owner related to the parcel have been paid in full to the association and the association releases the tenant or until the tenant discontinues tenancy in the parcel."
JohnC46
(South Carolina)

Posts:9577


06/23/2020 3:47 PM  
Posted By GenoS on 06/23/2020 12:47 PM
Posted By CathyA3 on 06/23/2020 6:19 AM
... If the amendment proposes allowing the HOA to collect rents for all tenants, I'm not sure that would be lawful. The HOA has no legal relationship with the tenant, only with the homeowner, and generally needs to butt out - otherwise the HOA risks being accused of interfering in a legal contract. Requiring a copy of the lease or requiring certain language in the lease (ie, that the tenant is obligated to obey the CC&Rs and community rules) is usually OK.

It's perfectly legal in a Florida HOA.

FS 720.308(8) starts out by saying the following (there's a more to it but this is the key part):

"If the parcel is occupied by a tenant and the parcel owner is delinquent in paying any monetary obligation due to the association, the association may demand that the tenant pay to the association the subsequent rental payments and continue to make such payments until all the monetary obligations of the parcel owner related to the parcel have been paid in full to the association and the association releases the tenant or until the tenant discontinues tenancy in the parcel."




Wish SC had the same.
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