Housing Counsel: Amending Community Association Documents Is Not Always Easy

Written by Posted On Sunday, 27 February 2005 16:00

Question:     I have been a member of the Board of Directors of my condominium association for about five years. We have some issues that we're unable to resolve because the governing documents would need to be amended in order for us to take action. For example, we'd like to amend the provisions regarding leasing units and pets. Everyone says it's nearly impossible to amend the documents; so they don't even try. I would like to hear your opinion on this matter as I've talked to others who say it's not impossible!

Answer:     It's not impossible, but definitely, not easy to amend your association documents.

There are three ways to make changes in a community association: the right way, the wrong way, and the devious way.

I once asked a property manager how he took a particular action when it was not specifically authorized in the legal documents. His response, "we use the Texas method; we take the action in the middle of the night when no-one is looking."

Obviously, I'm not recommending this method to my readers, but legal documents are not always clear, and Boards -- as well as property managers -- must be able to have some flexibility (and some creativity) in order to properly manage and operate the association.

There's a hierarchy of legal authority for all community associations. At the top is the applicable State (or local) law. If the law spells out certain requirements, it's mandatory that the association adhere to the law.

But drafters of community association laws -- and the legislators who enact these laws -- recognize that this is an evolving area of the law, and accordingly do not impose too many restrictions or burdens in the law. Instead, the law defers to the second level of authority, namely the association's governing documents. In your case, it starts with the condominium Declaration. This is the legal document which is recorded among the land records in the jurisdiction where the property is located. It is the document that actually creates the condominium. The Declaration describes with specificity the property which is being submitted to a condominium regime, the boundaries of the units, the elements that will comprise the Common Elements, including Limited Common Elements, if any, a determination of the unit owner's percentage interest in the Common Elements, the purposes and restrictions on the use of the property, provisions for easements, and provisions concerning assessments and liens against the units and the liability of the unit Owner for payment of the common expenses.

The third level of authority are the Bylaws. This document, for all practical purposes, is the constitution of the association. The Bylaws contain the rules for self-government of your association and, directs the affairs of the association, administers policies outlined in the Bylaws, and generally oversees the upkeep and administration of the association. The Bylaws also cover such matters as requirements for meetings, voting, the manner in which the association's budget should be prepared, the determination and handling of assessments, including special assessments and the filing of assessment liens, the nature of insurance coverage, and restrictions on the use of the units and the common areas.

Finally, the lowest level of authority are the rules and regulations adopted from time to time by the Board of Directors of the association.

Your Board wants to make changes regarding leasing and pets, let's look at each issue separately:

PETS:     What do your Bylaws say about this issue? If there is language permitting pets in the complex, the Board cannot adopt a rule which would prohibit pets in the future. In order to make any such change, a Bylaw amendment is required. Generally, in order to amend association Bylaws, a super-majority vote of the entire membership (ranging from 2/3 to 3/4) is required. As you have suggested, obtaining an amendment is not easy.

However, if your Bylaws permit owners to have pets, the Board can adopt rules and regulations governing the ownership and maintenance of pets. For example:

the Board can require that all pets be registered with the Association

the Board can require that all pets be on a leash anywhere on community property

the Board can impose monetary fines against the owner if the pet is noisy, unruly, or disturbs other owners

But the Board cannot -- by rule or regulation -- prohibit pets, this change would require a Bylaw amendment.

LEASING:     This is an area of significant controversy for many community associations. Boards of Directors, as well as mortgage lenders -- don't want too many renters in any one association. Indeed, the secondary mortgage market imposes percentage limits on the number of investor owners, ranging from 40 to 60 percent of the entire membership.

Once again, a Board of Directors must be guided by the Bylaws. If renting is permitted in the Bylaws, the Board cannot -- by rule -- absolutely prohibit owners from leasing out their unit. However, the Board can impose reasonable restrictions. For example:

the Board can require that all owners and tenants sign an addendum to the lease which states that the tenant has been provided a copy of the association documents, and that the tenant agrees to honor and abide by those documents

the Board can require that the landlord and tenant acknowledge that the Board of Directors can take legal action directly against the tenant for violations of the association legal documents

the Board can require that the landlord and tenant agree that if the landlord is not paying the condominium fee, that upon demand, the tenant will pay his/her rent directly to the Association, instead of to the landlord

Fortunately, the Board would have to obtain a Bylaw amendment in order to put restrictions on the number of tenants that can live in the complex, or to completely prohibit all leasing.

Yes, it is difficult -- but not impossible -- to amend your legal documents. The process is similar to amending the United States Constitution; it takes time, a lot of work, and dedicated owners who are willing to canvas and lobby the owners on the merits of the proposed amendment.

Typically, the Board of Directors initiates the process. They draft the language, and after conferring with legal counsel, circulate the proposal to all owners. The Board should hold an informational meeting whereby interested owners, can be given the rationale for the proposal, and have a full and open discussion on whether such an amendment is really needed.

Only after such a meeting should the Board call for a vote. Some associations prefer to have the vote taken at the annual meeting, while other Boards call a special meeting for the sole purpose of voting on the proposed amendment. This is really a political decision, which is best left to the discretion of the Board. Also, some Bylaws require that each owner's mortgage lender receive a copy of the proposed amendment, and in some cases, that some percentage of those lenders consent to the amendment.

Some amendments are non-controversial. Often, errors are found in the original documents which the Board wants to correct, but they can only be done through an amendment.

However, many proposed amendments will stir up the membership, pets and leasing fall into this category. Accordingly, the Board should first consider what it can do legally by rule and regulation before tackling this difficult hot potato.

Rate this item
(0 votes)
Benny L Kass

Author of the weekly Housing Counsel column with The Washington Post for nearly 30 years, Benny Kass is the senior partner with the Washington, DC law firm of KASS LEGAL GROUP, PLLC and a specialist in such real estate legal areas as commercial and residential financing, closings, foreclosures and workouts.

Mr. Kass is a Charter Member of the College of Community Association Attorneys, and has written extensively about community association issues. In addition, he is a life member of the National Conference of Commissioners on Uniform State Laws. In this capacity, he has been involved in the development of almost all of the Commission’s real estate laws, including the Uniform Common Interest Ownership Act which has been adopted in many states.

kasslegalgroup.com

Agent Resource

Limited time offer - 50% off - click here

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.