Process for Board - Amending CC&Rs, Articles, Bylaws, Rules

Started by DanielM12 • 8 replies • 1261 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

DanielM12 (California)
Posts: 21

Posted:

Hi, All --

We are in the process of bringing all of our governing documents current (CA HOA, most 'recent' version of governing documents was amended in 1992). We have received the updated/revised documents from the firm handling the work. My question, for those of you who have gone through this, is what process did you / your board follow to review, gather, collect, catalog the editing process? Did you all gather together with a copy of the existing governing documents, revised copy and go through them section by section? Did you delegate out certain docs to board members? I'm curious to get a sense of your working process and an assessment of how well you think that process worked.

Best,
Daniel

--Daniel

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I wasn't there for the drafting of the changes. However, I was there for the finishing work of approval and filing. Your HOA may want to set up it's own committee of volunteers who are willing to take on the task. It should be open to any member to attend and put in their input as well.

Does your HOA have a special meeting requirement for approval of the changes? We were able to waive this so we could go door to door to collect votes. It was nearly impossible to hold a real special meeting to have the required 90% owners to attend. This process just required that a 2nd document/proxy be signed giving up one's right to attend a special meeting to collect their vote. The lawyer drafted this for us. It was a HUGE time saver.

It does cost money to file the CC&R's and Articles of Incorporation. It's not a small cost either. We paid $750 for filing alone. The by-laws may not need to be filed. However, it's not a bad idea to put them with the CC&R's with the changes. That way those seeking the documents at the courthouse can get them too. Otherwise, by-laws are internal to the HOA as well as ACC documents. CC&R's and Articles of Incorporation are considered PUBLIC documents.

Keep in mind your HOA may also need to find a good way of distribution of the new documents once completed and filed. It costs money to produce copies be it paper or electronic. Your HOA may need to consider charging for these copies if necessary to cover the costs. The documents should be available at the courthouse or online after filing for future owners.

I will tell you that it took us nearly 3 years to get the changes made and filed. The cost was about $3K after all was said and done. That included the legal costs and filing fees. We only did about 5 changes in ours. The biggest one was removing all references the developer.

Good luck on this... It was a highly difficult process will not lie. Get as much help and collobarate as best you all can. It's well worth the effort in the end. It's just getting to the end that is the longest trip...

Former HOA President

KerryL1 (California)
Posts: 14,550

Posted:

We, Daniel, haven't done any except the Rules & Regs, which, in CA as you probably know, do not require a vote by Owners. They just require being sent to all owners for a 30-day comment period after which the Board votes. And I assume the r e axon you sent them to the "fim" is to make sure there's no conflict between them & higher level docs? Or to embed some rules into the CC&Rs instead?

But, please tell us: how many pages are your CC&Rs? Your bylaws? What kind of "firm is handling the work?" An HOA law firm? I take it they didn't give you a red-lined version of each doc so that the changes are really visible to you? And I can see why if they did complete rewrites.

Also, are you detached homes, condos, or??

In case part of Melissa's reply is confusing, you most likely know that in CA, HOAs have absentee balloting so Owners' physical presence at a meeting is not required.

I hope you get helpful replies here and I think we'll give it another rtry in '17.

RichardP13 (California)
Posts: 3,868

Posted:

Daniel

Besides bringing them current, are there any specific objectives you are trying to achieve?

DanielM12 (California)
Posts: 21

Posted:

Hi, Kerry!

Yes, we sent all governing documents to a firm that specializes in HOA governing document work so that a) all documents can be brought current and no conflicts between the various documents exist, b) all documents look and are worded similarly for continuity (this is my biggest pet peeve), c) because it was time.

The CC&Rs do embed Rules and vise versa. For example, where we discuss owner responsibility for pets in the CC&Rs, in the Rules we cite the CC&R.

The CC&rs are 80-something pages in current form, 62 in the revised format. The reason for this page amount discrepancy is because the current CC&Rs were type written on a type writer, the font is slightly larger, margins are wonky and there is a tremendous amount of white space. The only version that exists is the original, which was scanned in as a PDF.

Bylaws are 40 pages.

Articles are 3 pages.

Re a red-lined version - no. The only version of the CC&rs that exist currently is a single PDF version that was converted to PDF when that technology became popular. There is no Word document. The PDF is not even text searchable. This is something I attempted to do for myself, but the quality of the scan is so poor that OCR software does not work without a tremendous amount of review.

At this point, we have not completely re-written the docs. The majority of our docs are useful and relevant; however, we have some disagreement with current CA Civil Code that needs to be addressed. The Board would also like to insert provisions re short term rentals, amendment of rules for pets, and amendment of rules for renovation/remodeling inside a unit. The firm we contracted with has presented us with our existing docs, and have done -- I think -- a tremendous job at inserting recommended updates to bring the documents current with CA Civil Code. They have also pointed out where in the documents they have used the answers to their lengthy questionnaire that we submitted at the beginning of this project.

We are condos. There are 136 units in 12 different buildings.

Best,
Daniel

Quote:

Posted By KerryL1 on 09/01/2016 3:31 PM
We, Daniel, haven't done any except the Rules & Regs, which, in CA as you probably know, do not require a vote by Owners. They just require being sent to all owners for a 30-day comment period after which the Board votes. And I assume the r e axon you sent them to the "fim" is to make sure there's no conflict between them & higher level docs? Or to embed some rules into the CC&Rs instead?

But, please tell us: how many pages are your CC&Rs? Your bylaws? What kind of "firm is handling the work?" An HOA law firm? I take it they didn't give you a red-lined version of each doc so that the changes are really visible to you? And I can see why if they did complete rewrites.

Also, are you detached homes, condos, or??

In case part of Melissa's reply is confusing, you most likely know that in CA, HOAs have absentee balloting so Owners' physical presence at a meeting is not required.

I hope you get helpful replies here and I think we'll give it another rtry in '17.

--Daniel

DanielM12 (California)
Posts: 21

Posted:

Hi, Richard --

We are not looking to introduce any major new rules or major changes to existing rules. We would like to revise responsibility sections re pets, remodeling, short term rentals. We also want to have a text-searchable document (see my reply to Kerry below for a lengthier explanation about that).

Best,
Daniel

Quote:

Posted By RichardP13 on 09/01/2016 4:29 PM
Daniel

Besides bringing them current, are there any specific objectives you are trying to achieve?

--Daniel

DanielM12 (California)
Posts: 21

Posted:

Hi, Melissa --

Yes, we have budgeted for the printing and mailing of the updated documents. We do not have a special meeting requirement, per se. We may send out the new documents with a ballot. We have a super majority requirement for the adoption of any new rules. We also have a quorum requirement so if we do not receive a quorum (and I don't recall that number off the top of my head) of owners returning ballots, we cannot record the vote.

I can see where it could take several years to complete this process given that if you do not meet requirements to record a vote it doesn't happen then you try again the next year. I am confident that this will not take more than one try. Owners have been vocal and responsive to the discussions we have had regarding updating the rules. We are not proposing any major rule changes. I am biased because I live and breath these docs, but I cannot see how or why anyone would oppose them and thus hold us up, but what I've learned in my time as president is that you can never make everyone happy so we have to work extra diligently at ensuring everyone is equally unhappy! (A bit of sarcasm there.)

In terms of the amount, we went with a firm that included two revisions before the final docs are prepared for a flat fee of $5,000. While the process to get to the first draft has taken about 18 months, I'm hopeful it does not take another 18 months. The biggest hurdle was hand typing our docs from scratch.

Thanks for all the great info!

Best,
Daniel

Quote:

Posted By MelissaP1 on 09/01/2016 1:49 PM
I wasn't there for the drafting of the changes. However, I was there for the finishing work of approval and filing. Your HOA may want to set up it's own committee of volunteers who are willing to take on the task. It should be open to any member to attend and put in their input as well.

Does your HOA have a special meeting requirement for approval of the changes? We were able to waive this so we could go door to door to collect votes. It was nearly impossible to hold a real special meeting to have the required 90% owners to attend. This process just required that a 2nd document/proxy be signed giving up one's right to attend a special meeting to collect their vote. The lawyer drafted this for us. It was a HUGE time saver.

It does cost money to file the CC&R's and Articles of Incorporation. It's not a small cost either. We paid $750 for filing alone. The by-laws may not need to be filed. However, it's not a bad idea to put them with the CC&R's with the changes. That way those seeking the documents at the courthouse can get them too. Otherwise, by-laws are internal to the HOA as well as ACC documents. CC&R's and Articles of Incorporation are considered PUBLIC documents.

Keep in mind your HOA may also need to find a good way of distribution of the new documents once completed and filed. It costs money to produce copies be it paper or electronic. Your HOA may need to consider charging for these copies if necessary to cover the costs. The documents should be available at the courthouse or online after filing for future owners.

I will tell you that it took us nearly 3 years to get the changes made and filed. The cost was about $3K after all was said and done. That included the legal costs and filing fees. We only did about 5 changes in ours. The biggest one was removing all references the developer.

Good luck on this... It was a highly difficult process will not lie. Get as much help and collobarate as best you all can. It's well worth the effort in the end. It's just getting to the end that is the longest trip...

--Daniel

SheliaH (Indiana)
Posts: 6,964

Posted:

We tried to do this several years ago and failed - partly because there was a provision regarding a rental cap and since many of our owners live off site and rent, you can imagine they objected to this. It also failed because of general apathy (some people didn't respond to ANYTHING) and we also found the documents required notarized signatures for people who did sign off on them and some folks didn't do that (because the board didn't provide those instructions like it should have).

We haven't tried it again, but I know the time is approaching where we'll need to do this again, so here's what I learned (for what it's worth) to have a better chance of success:

Instead of changing all the CCRs at once, you may want to concentrate on the sections that really need updating, such as the pet policy. People are unlikely to wade through tons of paper (even if posted on a website), so you may want to prioritize what you really want changed vs. the stuff that can wait for a few years.

Committees are a great way to do a lot of the donkey work. Each member could take a section and review it, especially the areas you'd like to revise.

Start by having the association attorney have a look at the documents and make recommendations on what needs to be changed as soon as possible to reflect current law.

Get your homeowners involved - ask for their input on issues like pets, remodeling, short term rentals, etc. Explain what the Board's concerns are (perhaps backed up by stories of previous dustups involving those issues) and ask what they're most concerned about and what should be changed. The committee can look at those comments and incorporate them into any draft CCRs.

As you write the CCRs, keep enforcement in mind - the more rules, the more enforcement needed, so how will this be done and are homeowners willing to pay the cost? How far is the association willing to go if a homeowner decides not to comply for whatever reason (do you want to go to court and duke it out over a roof's paint color?) What about appeal rights - should the CCRs require issues to go through an alternative dispute resolution process as a last resort before a showdown in court?

Once you have your draft CCRs, send them to the homeowners for their comments - give them a deadline to do so (maybe 60-90 days because you may get far more comments on some issues than others). The committee can then tweak the draft and the board can review for final approval before sending them to the owners for a vote

Make sure you read your documents to see how the voting needs to be done - you have to use whatever's current, so you may not be able to use absentee voting, electronic voting, etc.

Plan on having a few special owner meetings to discuss the CCR proposals, perhaps bringing the attorney with you to help explain why certain changes will keep the documents consistent with federal and state law.

Keep everyone advised of the process throughout - you don't want to bring it up and then drop it for a few months and bring it up again. Every newsletter should provide an update and current information should be posted on the community website. Above all, explain and keep explaining how all of this will help ensure you have a livable community and protect property values. People tend to give rules the stink eye (unless they're only enforced against everyone else, of course), so anything you can do to encourage them that these approaches ultimately help THEM, the better your chances of getting them approved.

Oh, yeah, be patient - as Melissa said, this could take a few years, so that's why you may want to break up CCR revisions into smaller chunks with the goal of getting some changes made sooner rather than later. Good luck!

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

RichardP13 (California)
Posts: 3,868

Posted:

Daniel

At one time, I worked for a HOA law firm that also operated a management company. One of their selling points was updating or restating Association's governing documents. Sadly, it wasn't a good fit for them.

There is a couple of good programs I used working with documents, PaperPort Professional and Power PDF Advanced. It will convert PDF document into many formats including a word documents. It will also take any document and make it searchable. I also use it to create fillable documents that can be emailed on the spot after completed.

Couple of suggestions, again based on experience. One, if you have a lot of rentals, make sure you have a section in your CCRs for Assignment of Rents. Another suggestion, sometimes it might be best to have restriction in your Rules and Regulations as long as the CCRs give the Board the authority to do so. It allows the Association to change as times changes without having to re-votes on the CCRs. If it something that might have to go into court, you probably want it in the CCRs lending more credence.

If using a law firm, they should have a process in place to present to the homeowners and getting them approved as quickly as possible. If you don't have the process to get the required votes, IMO, you might be wasting money in restating the documents.

In 2010, my association restated their Bylaws. We started in March 2010 and had them voted on and approved in August 2010. The most we ever had in annual elections was 39 ballots, out of 317 homes. For the Bylaws, we had 240 turned in. We had a game plan and executed it.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here