Cost of Updating HOA Governing Documents

The governing documents (CC&R's, Bylaws, Articles of Incorporation) for my HOA need updating. Our HOA is located in Cary, NC (Raleigh/Durham area).

The HOA is aware that it is best to have an attorney involved in this process and before proceeding, made inquiry to Property Manager as to estimated cost. The response from PM is that it will be expensive and we will not know the cost until an attorney begins the process.

This response doesn't seem right to me and does not answer the question. All we want is an estimate...will it be $500, $1000, $2000, or more? If we have the funds in reserve we can do it now, if not we will at least have an idea as to the cost and will be able to plan ahead to allocated funds in the budget.

Would anyone be able to tell me what an estimated cost range would be to have this done?

Thank you all in advance for your time and effort, it is appreciated.

Depends on what you want to do. If you want to update one paragraph, it will probably cost you $75, if you want to update everything it will cost you more. Real estate lawyers charge $250 hour around here, multiplied times as many hours as you want.

My advise, keep the docs just the way they are. No need to spend extra money on something that will be ignored.

Carol,

As Ann said, form a committee. Place people on the committee who are willing to do the research into State and Federal laws. Search the web and/or talk to other Associations similar to yours (condos, single family homes, etc.) that are in your county and look at their documents (your PM should be able to help you with this). Using all of this information, have the committee do a rough draft of how they believe the documents should be. Then have the Board look at them and make any modifications.

After you have done all of this leg work, then have the attorney review the draft. This will minimize the amount of time the attorney spends on the paperwork and thereby minimize your cost for the review. Don't be afraid to use this time to shop around for law firms by calling and asking what their typical hourly rate would be for reviewing and recommending changes to you draft documents (personally, I would recommend that a board member do this since your PM was vague in giving you an answer). Rates do vary a little from firm to firm.

In general, I would suggest that you budget $5-8K for this work. How much time is needed will depend on how through your committee is.

Tim

Our documents were 11 years old and we ask our HOA attorney about the cost. He gave us three options. We took the third option which was a cost of $7,500. The first thing he did was to make sure all of the documents where up to the 2009 Florida Statues. During this time the committee work on making changes. It took about 22 months but it was worth it. I was chairman and i could talk or e-mail the attorney anytime for the $7,500.

Past President

Thanks to all for providing your input and sound advice, it is very informative and practical. Our documents our 13 years old, geared toward the developer. Forming a committee to assist the Board is an excellent suggestion to cut cost. Utilizing other associations governing documents is another great idea.

We do need to record amendments to CC&R’s and Bylaws with the county Register of Deeds. Changes to the Articles of Inc. need to be recorded with NC Secretary of State to be effective. The Articles provide no reference to amending or voting requirements.

I agree that a major obstacle to overcome is receiving homeowner approval. Our community consists of 74 single-family homes. What I find interesting is that we have two different voting requirements for amending documents.
(1) The CC&R’s can be amended with 67% approval (50 homes).
(2) The Bylaws can be amended by a vote of a majority of a quorum of members present in person or by proxy. I’m not sure what would constitute a quorum in this instance. Would it be 50 – 51% (37-38 homes) or 2/3% (50 homes)?

A provision I found within the NC Planned Community Act (47F-3-109-(c) Quorums - is that in the event business cannot be conducted at ANY meeting because a quorum IS NOT present and notwithstanding (or in spite of) any provision to the contrary, the quorum requirement can be reduced by one-half for the next meeting called. This provision will continue to reduce the quorum by 50% until a quorum is present and business can be conducted. I’m thinking this could be applied to reduce percentage needed to approval CC&R and Bylaw amendments. Any thoughts on this?

Attached are excerpts from our CC&R’s, Bylaws & NC Planned Community Act if you would like to review.

Last July, we had our Bylaws restated and then a committee made some customized changes to the document to make sure there were no conflicts with other governing documents, specifically the CCRs.

We eliminated the need for quorum for any meeting of the Members, whether Annual or Special. This only changed how elections for Directors were carried out, in that all ballots cast would be opened. Our requirements to remove a Director(s), grant exclusive use of the common area, changing the Bylaws requires a majority vote of one-third of the membership. To create a Special Assessment or raise the Annual Assessment beyond the 5% and 20% threshold requires a majority vote of 51% and changing the CCRs require a majority vote of 2/3 of the membership. At the Annual meeting, ONLY those items placed on a agenda, mailed to the homeowners prior can be voted upon. Per California Corporate Code, items not listed on the agenda may only be voted on by a quorum of one-third of the membership present in person or by proxy.

The legal cost was about $4300 (way too high) and postage, copies and the election were about $1000. We went door to door and got 76% of the membership to vote.

The quorum number required to hold a duly called meeting has nothing to do with the threshold needed to pass amendments, bylaws, CCRs, etc.

Be aware that such documents are copyrighted and whoever prepared them can charge an Association for use of material.

Is a Special Assessment appropriate and practical for the $5-8k expense?