Most homeowners associations are governed by a declaration of restrictive covenants (also known as CC&Rs) and bylaws. Both of those documents typically require a vote of the membership in order to amend. Recently, many homeowners associations are contemplating amending their governing documents because the documents are outdated, they don’t address issues particular to the association, or the documents don’t reflect the current state of homeowner association law.
The first step in amending governing documents is to do a thorough assessments of the existing documents. The assessment should include a reading of all governing documents (CC&Rs, Bylaws, Articles of Incorporation, rules and regulations, and the plat) to determine gaps, conflicts or inconsistencies.
The association must then determine the reasons for any proposed amendments. The association must determine whether the amendment is consistent with governing law, what the voting requirements for the amendment are, the likelihood of the ownership voting in favor of the amendment, and, most importantly, why the amendment is necessary.
There are many reasons for amending the governing documents. Some reasons include: 1) provisions do not comply with state or federal law; 2) some provisions are ambiguous or difficult to enforce; 3) the documents do not empower the association with authority to fulfill its obligations; 4) the nature of the community has changed and the documents are out of sync; and 5) the association wants to eliminate declarant provisions which are no longer relevant.
If an association embarks on the process of amending its governing documents, it may want to consider amending its documents to reflect changes in the law. Substantive changes in the law that an association may want to include in its governing documents are: 1) rule-making and enforcement procedures; 2) provisions to allow for mail-in ballots; 3) stronger assessment collection policies; and 4) provisions allowing for special assessments for unforeseen emergencies.
Amending governing documents is often a slow process. The Association should do its best to solicit input from owners and keep the owners informed of the progress. In addition, the association should seek legal counsel to ensure the amendment is adopted and recorded correctly.