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Subject: FL HOA – Proposed Amendment that radically changes our Doc’s.
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ZacheryK
(Florida)

Posts:24


02/13/2020 8:07 AM  

I’m in a quandary and could some advice, apologies for length but it paints the picture.

We’re a 90 home, over 55, FL HOA. At the Annual Meeting on Sat 02/15/20 the BOD is proposing a single Amendment that radically alters the percentage of Membership votes required to make Amendments to our Doc’s. The current requirements are:

• Articles of Incorporation – 75% of BOD and 60% Members, OR 80% of Members
• By Laws – 75% of BOD, 75% Members, and Mortgagees Consent, OR 80% of Members
• Declaration of Restrictions – 66% Members and Mortgagees Consent.
• Rule and Regulations – 60% of Members

The single proposed Amendment changes the Articles, By Laws, and Declaration to 50% of Members (a majority). It strikes out Mortgagees Consent and the rights of 80% of Members to Amend.

Our HOA membership has many snow birds and absentee owners who rent. So, the 7 person Board controls enough proxies to always have a Majority. Many view this as a power grab that will be difficult to reverse considering that 80% of the Members can no longer make Amendments. It’s easy to envision disasters, for example: The RR’s require 60% Member approval. Apparently, that’s too cumbersome for the Board as discussed in my recent post “Official Records”. So, they vote to eliminate 60% Member approval of RR’s – that solves their problem but a disaster for Members.

There have been 2 Amendments to our Docs in the last 50 years. The roadblock of Mortgagees Consent was mitigated with 720.306 (d) (1-6) limiting Consent to those prior to July 01, 2013. Our last Amendment was filed with no Mortgagees Consents BUT it was not contested within the 5 year limitation – so it’s Official. It worked once so why not try it again? Not this time, not with this Amendment – it’s too important.

This Board continually tries to circumvent compliance requirements. Here’s the questions I submitted 2 days ago at the monthly Board Meeting and requested a written response by Sat 02/15 Annual Meeting:

• Does the Board intend to make all Members aware that Mortgagees consent is required before it’s official?
• Has the Board identified all Mortgages prior to 07/01/2013?
• Has the Board received Consent from those Mortgagees?
• Does the Board intend to have the Membership vote on the Amendment without Mortgagees consent?
• Does the Board intend to file the Amendment, should it pass, with the County without Mortgagees consent?

As always, I really appreciate your thoughts, time and expertise.

Zach


AugustinD


Posts:2915


02/13/2020 8:23 AM  
Zach, I gave your post a good read and checked some of the citations. To me it looks like your concerns, research and actions are right on. Small typo: It's 720.306 (1) (d) (1-6).
CathyA3
(Ohio)

Posts:832


02/13/2020 9:27 AM  
I also agree with Zach's concerns. The higher percentages make it harder for a community to shoot itself in the foot and should not be abandoned for anything other than compelling reasons.

Some comments:

* As noted, lowering the percentages makes a community more vulnerable to voting blocks. During the previous housing bust, a number of communities found themselves taken over by groups of investors who would then vote to dissolve the condo structure and turn the community into rental property. Owners who hadn't seen the writing on the wall and bailed early were given the choice to either rent their units or sell them for a reduced price.

An HOA and one that is 55-and-older will probably be a less attractive target - but such a scenario could still play out if the property is appealing and the group of investors are the right age.

Do you have any reason to suspect something like this could be in play?

* Is there any way to break up the board's stranglehold on the non-residents' proxies? An informative Dear Neighbor letter?

This needs some thought. On the one hand, it makes sense for non-residents, who will be less informed about issues, to give their proxies to the board. On the other hand, it's only a good idea if the board has the community's interests at heart, which seems questionable here.

* Legal action!!! Even if the board is "only" trying to do an end run around the members, you could maybe make a good argument that this would be a breach of their fiduciary duty (ie. lowering the barrier could let the investor "invaders" in).


I agree that this is worth fighting over.
ZacheryK
(Florida)

Posts:24


02/13/2020 9:49 AM  
Nice catch Augustin, thanks! Cathy, you're right, I never thought of that. Right now, the once golf course behind the Association in being transformed to a 400 home high end community. That raises a 'take over' possibility higher. Eeeech.
DonaldT4
(Massachusetts)

Posts:9


02/13/2020 9:54 AM  
Mortgage companies don't like it when they can't veto a change in the docs. That makes sense, because some changes could adversely affect a mortgagee's interest. So, if you eliminate Mortgagees' assent, I would expect it to be challenging for any prospective buyer to get a mortgage, which in turn could make the individual properties more difficult to sell and therefore less valuable.
SheliaH
(Indiana)

Posts:3054


02/13/2020 10:52 AM  
I understand kicking down the percentage a bit - getting 75% approval of homeowners is often difficult no matter where you are, so I could see knocking it down to 60% or even 50%. My first question would be what percentage usually comes out to participate in these votes - if you're getting the 60% that's needed, what's the problem?

As for rules, our bylaws allow the board to establish rules, provided they don't conflict with the CCRs. When I was on the board, we used them to flesh out areas where the CCRs were vague, such as amending our collection policy.

I don't know how the mortgage companies would look at this, although I agree most wouldn't be happy if there's a chance this would mess with their money (that seems to be all the mortgage companies in my community care about). The proposed change on the Bylaws doesn't make sense - why not set a specific percentage, regardless of whether you're a board member, mortgage company or a regular homeowner? The proposed change would be voted up or down anyway.

Your homeowners may consist of a lot of snowbirds and absentee owners, but that's all the more reason they need to get more involved in this community. I'm not suggesting attend every meeting if they're unable, but there are 12 months in a year and it seems to me if you own a home in a community like this, you either make an effort to at least plan to attend at the annual meeting or get someone local to attend on your behalf so they can keep track of what's going on. If you use proxies to cast board member votes (for homeowners who don't attend), the person attending for an absentee owner can do that.

If you don't get your written response by the time of the annual meeting (don't be surprised if you don't), be sure you attend that meeting and ask your questions in front of everyone. They might ignore a letter, but when you speak your piece about your concerns, that may prompt additional questions from the audience and slow down or delay this move altogether. You can also hook up with people who feel the same as you and then start your campaign to educate everyone else (and maybe push for a recall to get rid of the would-be power grabbers).
GenoS
(Florida)

Posts:3673


02/13/2020 1:31 PM  
My HOA changed the amendatory threshold for all three of the main governing documents to a simple majority (50% plus 1) back in 2011. It hasn't been a problem. Only one amendment in 2013 has been enacted since.

Note that the "simple majority" is a majority of those members present at a members meeting where there's a quorum, NOT a majority of all the homeowners.
GenoS
(Florida)

Posts:3673


02/13/2020 1:37 PM  
ZacheryK, you could always solicit your own proxies from the other owners. Also, I think the time limit for an amendment to be challenged is 2 years, not 5.
JohnC46
(South Carolina)

Posts:9313


02/13/2020 2:56 PM  
Personally I believe 51% of all owners (note I say all owners) is enough to change a Bylaws and 2/3rds to 76% of all owners (notice I say all owners) to change a Covenant. I believe those numbers are high enough to stop an association from doing something stupid.

The problems I have seen are the % not being of all owners and a BOD try to pass R&R's that countermand Covenants and/or Bylaws.
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