Court Order and Amending the By-Laws

What does the Association's attorney say?

First off, we are a 60 unit complex of which 22 are time-share units. The court order came about because of an issue of the IOA withholding HOA Dues, and the HOA restricting their voting right.

The court order was hammered out between both the HOA and the IOA Associations. The HOA documents are primary, the IOA is secondary as their association falls under all HOA rules and regulations.

The issues were settled through mediation. Neither association was 100% happy with the agreement but the outcome from 2006 through 2014 has been extremely beneficial to both associations. It has put both associations in a very good working relationship. Prominent SC attorneys were used by each association and the mediator was also well established. There was never any mention by either attorney that the Master Deed and/or By-Laws needed to be amended. It never came up ...

Three of the current board members were original signatories of the agreement. One of the three owners creating havoc was also a signator of the mediation agreement. He and another prior board member are part of the three that have hired an attorney. Their attorney agrees with them that the docs should have been amended. Our current attorney has reviewed all the relating documents and have come to their own legal opinion that amending the Master Docs and/or By-Laws was not necessary therefore does not require 51% of the ownership's approval. We are operating under the court order as to do otherwise would put us in contempt of court.

The issue came up during the 2014 elections when the sister of one board member was not elected. This is the same board member who is now in opposition to the court order. This same board member lost his seat on the board in the 2015 Election along with the 2nd board member who is also in opposition.

So basically we have a Court Order to follow; we have two legal opinions supporting the board's actions, and the attorney representing the three owners disagreeing. It's a can of worms ...

Hi Margaret.

If I understand you correctly, you have a mediated agreement signed by both factions that was approved by the court system. Have you recorded this document at the Recorder of Deeds? If yes, I expect that no amendment would be needed. If no, I expect you could record it now. Or am I missing something?

I agree with NPS and Larry, it seems like it's the same concept as the state enacting a new law that is in direct opposition to the governing docs, we don't have to actually amend the docs to state the new law we just have to follow it. In your case, the court order would be the same it seems.

If they want to start a fight, let them actually start it with hiring the attorney etc, although I am not an attorney, it would seem that if the court order is indeed above the docs, then they would be hard pressed to find one, at least one of any ethical value.

Recording it should have the same legal effect as an amendment would. Cost is dirt cheap.

Personally, I don't think you need to record it with the Recorder of Deeds for 2 reasons:

1. It is already recorded with the Clerk of Court - and any title search should include searching the Clerk of Court filing system if proper references are made.

2. The recording systems act as notice to the public at large. The parties to the agreement aren't the public. They're the parties. They don't need public notice because by being parties they already have notice.

Now you can argue the legal merits of what I said and get legal opinions all you want. But IMO, that would be wasting money. It'll probably cost you less than $30 to have the docs recorded and be done with it. That same $30 would buy you less than 6 minutes of a lawyer's time.

Thanks all and LarryB13 ... I am of the opinion to "Let it Break" and have expressed that. Currently both sitting boards are in agreement with the Court Order which, to me, is fair to both associations. Other than threatening letters from their attorney, no 'Legal Action' has come about yet ... but according to the latest letter from one of the three and just received, it appears to be in the works. They themselves put out a few letters prior to hiring their attorney. I don't know if their attorney vetted this latest letter or if he's even cognizant of it. We're very much aware of the 'three' owners who originally signed on with the attorney and a fourth (possibly the 'sister') may have joined them.

One of the three, who owns two units, gave one of his proxies to the attorney they hired so he could attend our Annual Meeting. Talk about a very interesting meeting. That isn't illegal to my understanding but certainly raised some eyebrows. Fortunately the board found out about that the day before the meeting and was prepared. After the annual meeting, they put out a letter to the owners they feel are in support of their actions, requesting money for a 'Legal Fund'.

I'm absolutely floored that two sitting board members with many years on the BOD could put out such mis-information, half truths, and some very bald faced lies. Actually, many parts of their letters are quite inflammatory and slam the character of the other board members ... just nasty. The sad part is that things are uncomfortable between those who believe that 'mis-information, half truths, and bald faced lies', and those who don't.

We will get through this but I believe we should just 'Let it Break' and then deal with it.

Not necessarily a good sign. The less knowledge their atty has, the more it's going to cost you.