What determines if it is a by-law

Started by RobertG • 13 replies • 1392 views

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RobertG (Arizona)
Posts: 505

Posted:

I am considering bringing up an item at the annual meeting and am not sure if should be presented as a change to the by-laws or just a new procedure the board should follow. I am not exactly sure how I want to word this, but it would be something like how to control the amount of spending the board maybe allowed to do over an approved budget without approval by the entire membership. Since the current by-laws or CC&Rs don't mention anything to relative to managing the budget, this would be an addition to the by-laws if were so proposed.

If it is to be approved as by-laws, then to change it in the future, it would take the 50% of members as defined in the by-laws change paragraph. Thus it could only be changed at an annual meeting or special meeting. The board could never change this rule on their own.

Making the motion as just a procedural rule would still require the majority at the annual meeting to approve it, but it would be more flexible in how it would be used in the future as the board could change it at any time.

How should I decide which approach to take? When should something go in the by-laws?

JosephC2 (Florida)
Posts: 23

Posted:

If its in the by-laws, then its a by-law. Simple enough.

RobertG (Arizona)
Posts: 505

Posted:

Quote:

Posted By JosephC2 on 08/12/2007 2:48 PM
If its in the by-laws, then its a by-law. Simple enough.

I must be getting really bad in my communication skills. I thought that if I stated it is an addition to the by-laws then it would mean it is not currently in the by-laws. Are you saying that if it isn't currently in the by-laws it can never go in the by-laws?

JosephC2 (Florida)
Posts: 23

Posted:

sorry I didnt read carefully. It makes no sense to me to make a rule that controls the board that the board can change at will. There is a 10% limit in our by-laws, for example.

RogerB (Colorado)
Posts: 5,067

Posted:

RobertG, depending of the level of authority specified in the CC&Rs a Rule and Regulation could be passed either by the board or the members at a members meeting. Or the By-laws could be amended at a duly called meeting of the members where it is included under the category - Powers of the Board.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

This is a case of being careful of what you wish for. From my own experience, putting a "cap" on spending that would take a Majority vote of homeowners and NOT board members would seriously reduce the ability to get things done. It's hard enough to get a majority board vote never the less a majority of members.

The board IS elected by the Majority of Homeowner's to REPRESENT them in the daily operations of the HOA. So the BOD should already be doing that job for the majority of homeowners. Making the additional rule request kind of redundant.

Plus, By-laws are superceded by the CC&R's if in conflict. So the changes could be overruled if the CC&R's don't allow it. The majority vote could be as high as 75 to 90% and not just 51%. You need to know how many full time participating members you have on hand at all times to be available to cast such a vote for the board to overcede a certain amount of money. Owner apathy is the number 1 issue with HOA's. If you don't have a majority show up on a regular meeting then you can't expect them so much on a special meeting. Althoug a majority of owner's
CAN call a special meeting if they like. Just don't expect a quorom.

If you don't want the board spending a large amount of money on a project that doesn't seem beneficial to the whole membership, then speak up at the meetings. Have a small group with your same ideas attend and express themselves. Put it in writing.

I had to spend several thousands of dollars of the HOA's money on a pool project. The retaining wall at the pool was collapsing. It was old railroad tie wall that seen better days. I got the majority of the board to approve it. I worked hard to get a contractor and the money for the project without raising dues. I was able to replace the wall with a brick one. However, IF I had to wait to a majority of members voted (75%) to approve the money, it may never have gotten done. So there are times where the board has to spend large amount of money for a large project even if there are a million other items that need to be done as well.

In a nutshell, putting a cap on a BOD can be another cog in the wheels of progress. I don't know of any board member who's willing and knowingly going to spend over $5K on any project that isn't going to be approved or discussed first with the BOD or members.

Former HOA President

RobertG (Arizona)
Posts: 505

Posted:

Quote:

Posted By MelissaP1 on 08/12/2007 5:26 PM
This is a case of being careful of what you wish for. From my own experience, putting a "cap" on spending that would take a Majority vote of homeowners and NOT board members would seriously reduce the ability to get things done. It's hard enough to get a majority board vote never the less a majority of members.

The board IS elected by the Majority of Homeowner's to REPRESENT them in the daily operations of the HOA. So the BOD should already be doing that job for the majority of homeowners. Making the additional rule request kind of redundant.

Plus, By-laws are superceded by the CC&R's if in conflict. So the changes could be overruled if the CC&R's don't allow it. The majority vote could be as high as 75 to 90% and not just 51%. You need to know how many full time participating members you have on hand at all times to be available to cast such a vote for the board to overcede a certain amount of money. Owner apathy is the number 1 issue with HOA's. If you don't have a majority show up on a regular meeting then you can't expect them so much on a special meeting. Althoug a majority of owner's
CAN call a special meeting if they like. Just don't expect a quorom.

If you don't want the board spending a large amount of money on a project that doesn't seem beneficial to the whole membership, then speak up at the meetings. Have a small group with your same ideas attend and express themselves. Put it in writing.

I had to spend several thousands of dollars of the HOA's money on a pool project. The retaining wall at the pool was collapsing. It was old railroad tie wall that seen better days. I got the majority of the board to approve it. I worked hard to get a contractor and the money for the project without raising dues. I was able to replace the wall with a brick one. However, IF I had to wait to a majority of members voted (75%) to approve the money, it may never have gotten done. So there are times where the board has to spend large amount of money for a large project even if there are a million other items that need to be done as well.

In a nutshell, putting a cap on a BOD can be another cog in the wheels of progress. I don't know of any board member who's willing and knowingly going to spend over $5K on any project that isn't going to be approved or discussed first with the BOD or members.

As I stated, the CC&Rs don't come into play, there is nothing there that is relevant to the subject budget. Why should 7 people have the power to spend anything they like, even if it is a good idea?

For your example, it is true they represent the voters, but when the voters voted they did not know that a huge expenditure was to come up. Maybe the voters would have rather had the money spent somewhere else or even postponed, how would the board know? If the project is that important and it is as well researched as you did, then why would it be a problem to convince a small number of homeowners?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It's just the way the HOA does business. You can't predict a big bill except if you have a reserve fund. Reserve funds are setup to cover big purchases. Reserve funds are also there to cover projects that may have come up in a study of future maintenance items. A HOA is going to have to spend money on a large project sooner or later. Sometimes that means taking away from smaller projects.

If I hadn't done our pool project, kids were going to get hurt. They'd climb the retaining wall and parts of it were falling off. The expense of the repair was estimated to be $10K. I got it done for $8k. Were there other projects that needed to be done? YES. We had clubhouse painting, extreme flash flooding, landscaping, and a million little issues that needed attention. We needed money for filing liens. I was in the middle of doing a foreclosure which is NOT cheap. We also had to finish updating our by-laws/CC&R's. There wasn't a day that I didn't receive a letter or phone call requesting money for this or that.

Yes, I got grief because I chose to do the pool retaining wall project from a few people. However, a majority of the people were worried about the wall colapsing. especially the woman who lived above the pool area who's yard and sidewalk were collapsing also. Sometimes a HOA has to take the bull by the horns and spend money on projects that may NOT be the most popular amongst everyone.

NO ONE wants the BOD spending a large amount of money whether the project is needed or not. That honestly sounds ridicolous once you get to the meat of the issues. You have property to take care. Sometimes that just requires swallowing a big pill you don't want to take. Preventing someone from taking the pill isn't going to help. It just complicates matters and slows progress down.

I am sure if the BOD tries to spend a large amount of money on an unnecesary project, most people will speak up and attend that meeting. Most people don't attend or care about the HOA's business until it effects them.

Former HOA President

RobertG (Arizona)
Posts: 505

Posted:

MelissaP1, please look at the discussion titled "Budget approval requirement" and you will see a more detailed discussion of what I am asking about. You will find that I have no problem with emerencies, safety issues or reserve fund spending.

RogerB (Colorado)
Posts: 5,067

Posted:

Quote:

Posted By MelissaP1 on 08/12/2007 8:26 PM
It's just the way the HOA does business.

I disagree. An HOA should be run like anyother business. Budgets, good business judgement, and accountablility to the members are key elements. Of course there can be safety issues, emergencies, etc. but some of these can be anticipated and built into the budgets. Major unbudgeted expenses beyond these should not be completed by the Board without calling a special meeting; particularly when a special assessment will be required.

JoeW1 (New York)
Posts: 728

Posted:

RobertG - In answer to your first post, go for an addition to the by-laws that will govern board requirements of a threshold of board spending on capital improvements or whatever category it is you wish to limit. If there is no by-law that contradicts the threshold requirement than you really aren't changing or amending anything specific.

I am all for thresholds but think they should be a realistic percentage of the overall budget.

You are going to have to sell your motion and should do so in a way that shows to everyone there is a benefit to the association in implementing it. Overall, it fosters a fiduciary relationship between the Board and the residents that protects the Board members with the community support/by-in.

LindaC3 (Florida)
Posts: 526

Posted:

RogerB...... I have learned so much from you and your posts , I figured you would be the person to help with this.... All other help will also be greatly appreciated..... I am now co chair of our By Laws Commitee.... We are in the process of updating them and making some badly needed corrections to them..... We will need a 2/3 vote of approval from the membership for all the changes... I dont belive that will be a problem, as I have a " good reputation" here amongst the neighbors for being honest and only doing things in the best interest of our entire community..... But here is my problem ........... As a person NEW to By Laws, I am not sure about all of what should be covered in these bylaws...........CC&R's i got covered.... just need some guideance as to what to cover in the by laws... We are having our first "open" meeting this Saturday 8-18-07 and would love to be able to have a "checklist' of sorts to start this meeting with...... We will have subsequent meetings until Nov. at which time they will be presented to the BOD for their approval then placed before the general membership for the vote at our Annual Meeting in January..... Thanks for any help you can give me............LindaC

RogerB (Colorado)
Posts: 5,067

Posted:

Linda, you can go to website CypressGreensHOA.com and under documents click on By-laws to view an example.

LindaC3 (Florida)
Posts: 526

Posted:

Rogerb.............Thank you so much for that link....There were some things noted in there that i found to be QUITE HELPFUL......... If anyone else out there has their bylaws online so I can do a lookey see at i would certainly appreciate and opportunity to view at them and get some insight..............LindaC

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