conflict between Articles and Bylaws

Started by SusanA4 • 11 replies • 2491 views

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SusanA4 (California)
Posts: 13

Posted:

My HOA was incorporated in 1968 under PA 137, Incorporation of Summer Resort Owners.

There is apparent inconsistency between our Articles of Association and our Bylaws. The Articles specify 5 trustees who serve one-year terms. The Bylaws specify 6 trustees with staggered terms. There are two points of view about this apparent inconsistency:

1. When the Articles and the Bylaws conflict, the Articles take precedent. Therefore, our HOA must go back to 5 trustees who serve one-year terms.

2. The Articles specify the number and term lengths of trustees for the FIRST year only. Therefore, the Bylaws are not inconsistent with the Articles and it is proper to continue to elect trustees to staggered 2-year terms, and 1 trustee-at-large to a 1-year term.

If our HOA operates with trustees elected to 1-year terms with NO overlap, I see a problem with continuity. Excerpts from PA 137, Articles, and Bylaws for reference:

PA 137:
455.202 Articles of association; contents. Fifth: The number of trustees to manage the affairs of said corporation, their terms of office, the names of the trustees for the first year or until the annual meeting of the corporation”

Articles of Association:
“The number of trustees to manage the affairs of said Corporation shall be five (5) and their terms of office shall be from the time of their election at each annual meeting of the Corporation until their successors shall be elected at the following annual meeting, provided, however, that should the time set for the first annual meeting be more or less than one year from the date of incorporation, such trustees shall hold office to such meeting whether it be more or less than one year. The names of the trustees for the first term of office as above states are as follows: [name], [name], [name], [name], [name].”

Bylaws:
Six trustees shall be elected from the membership, five on a geographical basis, one each from [A], [B], [C], [D], and [E]. One member-at-large shall be elected for a period of one year. Two trustees, one from [A] and one from [B] shall be elected in the even years. Three trustees, one from [C], [D] and [E], shall be elected in odd years.”

Fellow forumers, what is your take on this issue?

SheliaH (Indiana)
Posts: 6,964

Posted:

It's my understanding that the Articles set up the association as a non-profit corporation, which sounds like what you have, whereas the Bylaws dictate how the corporation is to be run (e.g. number of board members). Since your association is over 40 years old, I imagine there's been some updates to the Bylaws, which is fine, provided that was done according to its rules (did you read those?)

I see no problem with staggered terms - my association has them and it's a good way to keep a balance of experienced and new people on the board. You also avoid problems if everyone with a one year term decides not to serve and no one else will step up (which creates another set of problems.)

You don't say how long you've lived in this community, but you may want to talk to some of the old-timers and see if they can remember if/when the Bylaws were updated.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MarkM31 (Washington)
Posts: 556

Posted:

Yes, you need to chose your battles.

What is the importance of this battle, beyond that the CC&R are not being followed?

SusanA4 (California)
Posts: 13

Posted:

Thank you so much for the reply. I've lived in my HOA for 13 years and have been a trustee for 10 years. The bylaws have been updated three times since incorporation in the 1960s.

We have always had 2-year staggered terms based on geography (roughly 1 trustee per road).

But it's been pointed out that the Articles specify 5 trustees with 1-year terms.

I am biased and am strongly in favor of staggered 2-year terms, because I feel continuity and transitioning between boards are so important.

SusanA4 (California)
Posts: 13

Posted:

Regardless of how the Articles are worded, I don't think our HOA ever operated under 1-year terms, except for the first year.

My worry is that if we start to operate with 1-year terms, there will be problems with continuity and any sort of transition.

KerryL1 (California)
Posts: 14,550

Posted:

Since you are incorporated, could your state's corporations codes or statutes be of any help, Susan?

KerryL1 (California)
Posts: 14,550

Posted:

Since you are incorporated, could your state's corporations codes or statutes be of any help, Susan?

JeanI (Louisiana)
Posts: 112

Posted:

The Articles of incorporation which are usually filed with the Secretary of State takes precedence over the bylaws which are not filed and can be changed by the membership with the proper number of votes. The Restrictions take precedence over all because they are part of the deed/contract signed when purchasing your property. JeanI

JohnB26 (South Carolina)
Posts: 1,001

Posted:

Simply file a 'restated' Articles of Incorporation over the BOD's signatures.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Hi Susan
Can you explain why this has become an issue now. Obviously, things went along just fine for many years with your staggered terms. What changed all this?

Sikubali jukumu. Read all posts at your own risk.

KerryL1 (California)
Posts: 14,550

Posted:

Good question, imo, NpS. hadn't though of that approach.

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