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Subject: [California] Old Bylaws Amendments Produced by Resident
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MikeA14


Posts:0


07/27/2021 12:24 PM  
Hello again everyone,

We're almost through our election which is turning out to be quite successful. Days before we count ballots, an original owner and first president produced an amendment to our bylaws (a 20 year old copy of a document) along with proof of notification by the property manager at the time. These amendments provide for staggered terms (of 2 years for directors) and provide a restriction to nominating the president and vice president (in which the director must have served for at least 1 year).

Our currently available bylaws are not amended in place, and I was not provided with these amendments when I moved in, nor does our property manager distribute them on request.

As far as I can tell, Adams Sterling is the only literature I can find on the subject:

https://www.davis-stirling.com/HOME/Evidence-of-Approval

The problem I have with some of the case law here, is that these amendments were actually never enforced because quorum has not been reached during election time in 10 years or more. So circumstantial evidence is likely out the window.

Has anyone dealt with this before? Are these amendments enforceable? Does it void our election since the terms of office stated in the election rules do not match with the bylaws amendments? (1 year vs 2 years).


It seems as though the directors are complying as our inspector of elections has informed me they are working to update the terms of the candidates. Presumably, the director's have spoken to legal counsel and is working with them.

I'm still concerned considering the letter that went out to residents still stays 1 year terms, so I'm not sure how we can get away with changing the terms after ballots have already been sent and received.

Disclaimer: I'm not a director so I don't have the privilege of speaking to our association's counsel, nor can I persuade the board of directors to do anything.
MaxB4
(California)

Posts:1601


07/27/2021 12:57 PM  
If the Bylaw amendment is legitimate, then it would be enforceable. It is possible, over time, that governing documents get lost, change of management, change of boards.

Question: How have previous elections been held, based on the old Bylaws? Has any election been held using the amended language?

I would say that your elections must halt and start over again. First, your Election Rules have to be re-done and sent to owners for a 28 day review, then follow the new timeline for holding an HOA election.

We had a similar situation in California, but instead of a Bylaw amendment, it was a Private Street Agreement which got the HOA tangled in a $10M Civil suit.
AugustinD


Posts:1920


07/27/2021 12:59 PM  
MikeA14, I looked at a few Davis-Stirling sites and did not find anything particularly helpful. I am aware that a long "course of conduct" by a Board that is (1) not consistent with the Bylaws and that (2) goes unchallenged for years may mean (or will definitely mean) that the course of conduct acts, as a matter of law, as an informal amendment having legal force. Consider: "Bylaws may be amended informally as may be evidenced by a course of proceeding or conduct on the part of a corporation inconsistent with the bylaws purporting to be amended. 18A Am. Jur. 2d, Corporations § 269."

For case law on the subject, supporting the position that a longstanding course of conduct regarding directors' terms supersedes any alleged amendment to the contrary, see:

https://www.hoatalk.com/Forum/tabid/55/forumid/1/tpage/1/view/Topic/postid/274860/Default.aspx

Staggered terms are a huge annoyance administratively. When a director resigns in the midst of her or his term, all he-- breaks loose about how long his/her replacement will serve.

I advise your board to continue with its longstanding practice of one year terms, with no requirement that the President have served as a director for a year before becoming President.
MikeA14


Posts:0


07/27/2021 1:00 PM  
This is the first election in over 10 years that we have made quorum, but I do recall election material suggesting them being staggered where a subset of the seats were open. At this point, all terms mentioned in the amendment have expired.
MikeA14


Posts:0


07/27/2021 1:05 PM  
Thank you, I'll check out that thread.

The corp code you cited doesn't exist in California, nor am I able to find its text.
MaxB4
(California)

Posts:1601


07/27/2021 1:21 PM  
Posted By MikeA14 on 07/27/2021 1:05 PM
Thank you, I'll check out that thread.

The corp code you cited doesn't exist in California, nor am I able to find its text.



Please disregard what Augustine is suggesting. He doesn't do business in California, I don't think he has any ties to HOA's at all.
AugustinD


Posts:1920


07/27/2021 1:23 PM  
Posted By MikeA14 on 07/27/2021 1:05 PM
The corp code you cited doesn't exist in California, nor am I able to find its text.
If you mean this:
Posted By AugustinD on 07/27/2021 12:59 PM
Consider: "Bylaws may be amended informally as may be evidenced by a course of proceeding or conduct on the part of a corporation inconsistent with the bylaws purporting to be amended. 18A Am. Jur. 2d, Corporations § 269."
Then be aware that I am not quoting corporate statutes but instead, am quoting a well known encyclopedia of law that summarizes case law from across the country. One can easily turn up court decisions that speak of this. For example, from a 2005 federal district court decision:

Courts have routinely held that bylaws may be amended informally. See In re Osteopathic Hosp. Ass’n of Delaware, 195 A.2d 759, 762 (Del. 1963) (quoting In re Ivey & Ellington, Inc., 42 A.2d 508, 509 (Del. Ch. 1945)) (“Ordinarily, a corporate by-law may be amended by implication and without any formal action being taken by clear proof of a definite and uniform custom or usage, not in accord with the by-laws regularly adopted, and by acquiescence therein; but usually the course of conduct relied on to effect the change must have continued for such a period of time as will justify the inference that the stockholders had knowledge thereof and impliedly consented thereto.”); Keating v. K-C-K Corp., 383 S.W.2d 69, 71 (Tex. Civ. App. – Houston 1964, no writ) (“it is a general rule that by-laws may be adopted, or amended, orally or by acts evidenced by a uniform course of proceeding, or usage and acquiescence.”). If bylaws may be amended through informal means, it necessarily follows that here, where the bylaws explicitly provided for Board control over the CEO, the ATG Board could exercise control over Mehta through an established course of conduct."

As interested, see https://www.govinfo.gov/content/pkg/USCOURTS-txnd-3_04-cv-00475/pdf/USCOURTS-txnd-3_04-cv-00475-0.pdf
AugustinD


Posts:1920


07/27/2021 1:25 PM  
Posted By MaxB4 on 07/27/2021 1:21 PM
Please disregard what Augustine is suggesting.
Until you produce a statute or California case law to refute my contention, then your posts in this thread have no value.
MikeA14


Posts:0


07/27/2021 1:25 PM  
Posted By AugustinD on 07/27/2021 1:23 PM
Posted By MikeA14 on 07/27/2021 1:05 PM
The corp code you cited doesn't exist in California, nor am I able to find its text.
If you mean this:
Posted By AugustinD on 07/27/2021 12:59 PM
Consider: "Bylaws may be amended informally as may be evidenced by a course of proceeding or conduct on the part of a corporation inconsistent with the bylaws purporting to be amended. 18A Am. Jur. 2d, Corporations § 269."
Then be aware that I am not quoting corporate statutes but instead, am quoting a well known encyclopedia of law that summarizes case law from across the country. One can easily turn up court decisions that speak of this. For example, from a 2005 federal district court decision:

Courts have routinely held that bylaws may be amended informally. See In re Osteopathic Hosp. Ass’n of Delaware, 195 A.2d 759, 762 (Del. 1963) (quoting In re Ivey & Ellington, Inc., 42 A.2d 508, 509 (Del. Ch. 1945)) (“Ordinarily, a corporate by-law may be amended by implication and without any formal action being taken by clear proof of a definite and uniform custom or usage, not in accord with the by-laws regularly adopted, and by acquiescence therein; but usually the course of conduct relied on to effect the change must have continued for such a period of time as will justify the inference that the stockholders had knowledge thereof and impliedly consented thereto.”); Keating v. K-C-K Corp., 383 S.W.2d 69, 71 (Tex. Civ. App. – Houston 1964, no writ) (“it is a general rule that by-laws may be adopted, or amended, orally or by acts evidenced by a uniform course of proceeding, or usage and acquiescence.”). If bylaws may be amended through informal means, it necessarily follows that here, where the bylaws explicitly provided for Board control over the CEO, the ATG Board could exercise control over Mehta through an established course of conduct."

As interested, see https://www.govinfo.gov/content/pkg/USCOURTS-txnd-3_04-cv-00475/pdf/USCOURTS-txnd-3_04-cv-00475-0.pdf




This is perfect and what I was looking for thanks. My only concern was that California is highly litigious and strict in law, so what might work in another state would not here.
MaxB4
(California)

Posts:1601


07/27/2021 1:32 PM  
Mike,

Your stated here that the Association held an election where they were using staggered terms, which mean they were using the amended Bylaws. Or that doesn't matter any longer?
AugustinD


Posts:1920


07/27/2021 1:36 PM  
Posted By MikeA14 on 07/27/2021 1:25 PM
This is perfect and what I was looking for thanks. My only concern was that California is highly litigious and strict in law, so what might work in another state would not here.
I do not know about "strict in law." I do agree that the details are messy and that litigation by either faction (those who say the amendment is active; and those who say the amendment has no validity today due to a long course of conduct with the membership's assent) could occur, and it could be a long, expensive battle.

My suggestion is something for the board to ponder.

If I were on this board, I would argue that a long course of conduct means this alleged amendment is not enforceable. Let the other guy haul the HOA/COA to court.

I would also support a total re-write of the bylaws to be consistent with recent changes in California statute re HOA/COA elections.
MikeA14


Posts:0


07/27/2021 1:38 PM  
Posted By MaxB4 on 07/27/2021 1:32 PM
Mike,

Your stated here that the Association held an election where they were using staggered terms, which mean they were using the amended Bylaws. Or that doesn't matter any longer?




The point is mainly that they didn’t this year but we actually made quorum. I’m concerned the election is invalid since the rules do not comply with the amendments.
KerryL1
(California)

Posts:8729


07/27/2021 1:41 PM  
What does this mean, Mike? "...along with proof of notification by the property manager at the time..." The best document would be the minutes of the meeting when the amendments were approve. And this? "Our currently available bylaws are not amended in place..." I don't know what "in place" means.

Did your Board approve new election rules, as Max notes, last year after they'd been sent out to owners for the new (2020) state-required 28- day owner review period for their comments ? If so, the term for directors expressed in the election rules, and anything about staggered terms would prevail according to our HOA attorney in a a written opinion last year.

He also in the past and in our rewritten Bylaws recommended for staggered terms With all Board seats up for election, for example, the top three vote-getters would serve two years and the next two, one year.

If you don't have election rules per state statutes, your election isn't valid and I agree you'd have to start over. BUT, what will the HOA attorney advise? And What will the Board do?

I assume your interest in they, Mike, is because there haven't been any new board members in a long time?
MaxB4
(California)

Posts:1601


07/27/2021 1:45 PM  
I am suggesting the right thing be done. As I first stated, IF this/these amendment(s) are legitimate, then toss the election and fix it once and for all. Make sure the amended Bylaws are put together and on a web site so there isn't an issue down the road. In 13 years as a property manager/owner, I have never had a HOA sued by anyone. Augie lives for litigation.
MaxB4
(California)

Posts:1601


07/27/2021 1:59 PM  
Mike, you have stated that terms have expired with no election for 10 years. Also if no elections, terms will naturally get screwed up. The rule of thumb is IF quorum has not been met after repeated try's, the directors remain until the next election. If no one challenges them, a case might be made that they get new terms, but if they are staggered, what term is assigned to them.

We had the very same issue where I lived. No ballots opened for eight years because of quorum. We tried proxies, but their attorney wouldn't allowed them, even though they were allowed the previous year. So in 2010, we restated the entire Bylaws and eliminated quorum upon the recommendation of Adrian Adams of Adams-Kessler (now Adams-Stirling),
https://www.davis-stirling.com/HOME/Eliminating-Quorum
. I even thanked him in 2010, https://www.davis-stirling.com/Awards


MaxB4
(California)

Posts:1601


07/27/2021 2:59 PM  
Mike

What is the issue> Staggered terms. You made quorum after ten years, congrats. Why not just say in the event there are five positions open, the top three get two year terms and the next two get one year term. Does that solve your issue? What happens if you don't make quorum for another ten years? Your issue is quorum.
KerryL1
(California)

Posts:8729


07/27/2021 3:14 PM  
The thing is, Max, Mike isn't on the Board so he can't o much of anything if the "old" board wants to stay in owner. His opening sentence seems to suggest they've already made quorum. Is that right, Mike?

Glad Max agrees with my above about how to assign staggered terms.
MaxB4
(California)

Posts:1601


07/27/2021 3:24 PM  
Posted By KerryL1 on 07/27/2021 3:14 PM
The thing is, Max, Mike isn't on the Board so he can't o much of anything if the "old" board wants to stay in owner. His opening sentence seems to suggest they've already made quorum. Is that right, Mike?

Glad Max agrees with my above about how to assign staggered terms.



I wasn't on the board in 2010 when I had the Bylaws restated, just needed a Special Meeting.

If you have professional management, staggered terms don't mean a lot.
DouglasK1
(Florida)

Posts:1689


07/27/2021 3:50 PM  
This thread is an example of why bylaws (and ammendments) should be recorded even when not required by law.

We had a situation when our association was about 15 years old where the board was calling the CCRs the "bylaws" and apparently none of the directors had a copy of the actual bylaws. They were getting ready to hold an election that didn't follow the bylaws so I provided them. When we made bylaw changes a couple of years later we recorded them so they are available online from the county at any point in the future.

Escaped former treasurer and director of a self managed association.
MikeA14


Posts:0


07/27/2021 3:57 PM  
Posted By KerryL1 on 07/27/2021 1:41 PM
What does this mean, Mike? "...along with proof of notification by the property manager at the time..."




Meaning that in addition to the amendment to the two sections of the bylaws, two other pages from the property manager at the time showing correspondence to the owners regarding quorum, number of votes and the amendments were produced.

Posted By KerryL1 on 07/27/2021 1:41 PM

The best document would be the minutes of the meeting when the amendments were approve. And this? "Our currently available bylaws are not amended in place..." I don't know what "in place" means.




Unfortunately I don't believe the minutes are available with the amendments.

Posted By KerryL1 on 07/27/2021 1:41 PM

Did your Board approve new election rules, as Max notes, last year after they'd been sent out to owners for the new (2020) state-required 28- day owner review period for their comments ? If so, the term for directors expressed in the election rules, and anything about staggered terms would prevail according to our HOA attorney in a a written opinion last year.




Good to know; I'll have to see about looking for last years election notice.
MikeA14


Posts:0


07/27/2021 4:00 PM  
Posted By MaxB4 on 07/27/2021 2:59 PM
Mike

What is the issue> Staggered terms. You made quorum after ten years, congrats. Why not just say in the event there are five positions open, the top three get two year terms and the next two get one year term. Does that solve your issue? What happens if you don't make quorum for another ten years? Your issue is quorum.




I agree, I think this is the best path forward; we use this election to reset following the amendments as closely as possible. My concern was only that the election rules themselves (the ones that all of these residents who have helped make quorum have voted on) stated a 1 year term. This seems like a liability to me, and I'm wondering if the election could be challenged this year causing our newly elect to be invalid.

It would be unfortunate if we have to resend all of the ballots with updated/corrected verbiage and then have to make quorum again.
AugustinD


Posts:1920


07/27/2021 4:08 PM  
Posted By DouglasK1 on 07/27/2021 3:50 PM
This thread is an example of why bylaws (and ammendments) should be recorded even when not required by law.
What to do then when a 2010 HOA Board records bylaws but a few years later, the 2015 HOA membership properly amends the bylaws without recording the amendment, and no state law requires the bylaws to be recorded. Which set of bylaws controls?

By my reading of FS 718, Florida requires bylaws (and amendments to the bylaws) to be recorded for COAs. Not so for Florida HOAs.

I would support a requirement in the CC&Rs to record Bylaws and all amendments to the Bylaws.
DouglasK1
(Florida)

Posts:1689


07/27/2021 4:54 PM  
Posted By AugustinD on 07/27/2021 4:08 PM
Posted By DouglasK1 on 07/27/2021 3:50 PM
This thread is an example of why bylaws (and ammendments) should be recorded even when not required by law.
What to do then when a 2010 HOA Board records bylaws but a few years later, the 2015 HOA membership properly amends the bylaws without recording the amendment, and no state law requires the bylaws to be recorded. Which set of bylaws controls?

By my reading of FS 718, Florida requires bylaws (and amendments to the bylaws) to be recorded for COAs. Not so for Florida HOAs.

I would support a requirement in the CC&Rs to record Bylaws and all amendments to the Bylaws.


You can't solve stupid. If the people driving the changes don't bother to record, then if the changes get lost to time, it's on them. If the amended bylaws are later found, they that found them would need to show some evidence that they are validly amended bylaws.

Escaped former treasurer and director of a self managed association.
KerryL1
(California)

Posts:8729


07/27/2021 7:09 PM  
Mike, what does "election rules" mean in this sentence? "...the election rules themselves (the ones that all of these residents who have helped make quorum have voted on)...?" The election rules now required(eff. 1/1) by CA are lengthy--ours are 10 pages. Please tell me who wrote your election rules.

I'm also confused about why "residents (Owners) voted on them. The board is able to vote on them after a 28-comment period by owners.
KerryL1
(California)

Posts:8729


07/27/2021 7:10 PM  
Mike, what does "election rules" mean in this sentence? "...the election rules themselves (the ones that all of these residents who have helped make quorum have voted on)...?" The election rules now required(eff. 1/1) by CA are lengthy--ours are 10 pages. Please tell me who wrote your election rules.

I'm also confused about why "residents (Owners) voted on them. The board is able to vote on them after a 28-comment period by owners.
MikeA14


Posts:0


07/28/2021 3:30 PM  
Posted By KerryL1 on 07/27/2021 7:10 PM
Mike, what does "election rules" mean in this sentence? "...the election rules themselves (the ones that all of these residents who have helped make quorum have voted on)...?" The election rules now required(eff. 1/1) by CA are lengthy--ours are 10 pages. Please tell me who wrote your election rules.

I'm also confused about why "residents (Owners) voted on them. The board is able to vote on them after a 28-comment period by owners.




Sorry my wording was poor there. I simply meant that the election rules stated 1 year terms. Residents voted on and sent in their ballots for the directors based on those rules.
MikeA14


Posts:0


07/28/2021 3:31 PM  
Update: The board ended up honoring the amendment. The inspector of elections simply clarified the terms at the actual meeting before counting ballots. However, residents who did not attend the meeting were confused later as to why the terms changed (as expected).
KerryL1
(California)

Posts:8729


07/28/2021 3:38 PM  
Glad things worked out, Mike, in that it sounds like you have a new Board. Or, do you?
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