Waiver of Bylaws

Nic

My first blush is if they apply/fit then use them even if a bit different than how you have been running things.

Do you mean reINstate them?

I don't think you need to. Bylaws don't change unless HOA takes steps to modify them, which you have not done. They've been in effect as written all of this time. The only reason to take any action is if you believe that the bylaws are out of date and need to be modified.

If they're OK, I recommend putting copies on your community web site, if you have one, along with copies of the CC&Rs so that any homeowner can see them. You may also want to put something about this in your minutes and note that, now that the text of the bylaws has surfaced, the board will conduct future business in accordance with them.

Im sorry yes, i did mean reinstate them.

My concern for wanting to do so is because they have been out of circulation for so long, and owners come and go, is that we would be changing contractual rights with owners. My initial thought is to have approval from the community, one because they are outdated, and two because it would significantly change the internal operation of business.

Every owner has been supplied with the CCR's but the bylaws have not been circulated within the community for about ten years. Owners come and go, and we have been operating without them and following a more relaxed approach. The reason why I believe they should be reinstated is because it significantly changes the operation of internal business. We haven't had a proper election in years, because our community has always operated "if you want to be on the board, you're on the board." I feel like the approach should be as if we are adopting new bylaws that need to be approved by the community so everyone is aware of the contractual change within the community.

Hahahahah...there are just so many scenarios to think of its hard to keep track. However, I believe that transparency is always the better option when it affects so many people. I am an individual that believes the BOD works for the owners, and if you're not working for them you're in the wrong business. There are also so l little rights for homeowners these days, its nice to give back when you can. Its tough business trying to keep everyone happy, but in democracy majority rules.

To be completely honest I am not happy they turned up at all. I would have liked to start from scratch because sometimes working with a clean slate is easier than a complete remodel. It would be so much easier to adopt new bylaws that fit the communities needs now.

Nicole,

Nice try. While it would be easier (an opinion) it would not reflect the truth that even you accept, which is that the Bylaws have been found.

Make it easy, unassailable and fair ... just start running your community in accordance with your Bylaws and then determine what, if anything, needs to be done.

Btw - please give us a rundown or what would change? Be as specific as possible.

Hi George,

I’m not sure what you mean by “nice try.”

And to tell you the truth I don’t accept them as our governing bylaws because when I bought units in the building the only governing document I received were the CCR’s. Those rules our association do follow.

What I believe in is complete transparency and I think all owners have the right because we have waived our rights to determine the best way our association should be ran to create and promote harmony amongst the members.

By using the actual, original Bylaws, the HOA is not "changing contractual rights with owners." Instead, the HOA is merely observing the correct rights.
BECAUSE THEY WERE NEVER PROPERLY HANDED OVER OWNER TO OWNER AND MANY HAVE COME AND GONE, MOST PEOPLE GET THIS INFORMATION PRIOR TO BUYING. ESSENTIALLY YOU ARE ENTERING INTO AN AGREEMENT WHEN YOU PURCHASE THE PLACE, AND IF YOU'RE TOLD THEY'RE ARE NO BYLAWS, WELL THEN THEY'RE ARE NO BUYLAWS.

Nor can your HOA just "waive" the actual, original (recently found) Bylaws going forward.
BECAUSE WE HAVE NOT OPERATED WITH THEM, I BELIEVE WE MAY HAVE WAIVED OUR RIGHT TO ENFORCE THEM.

There is no legal mechanism to "re-instate" Bylaws that are already, all by themselves in the present, effective, as a matter of law.
WHEN YOU AMEND BYLAWS I BELIEVE YOU'RE REINSTATING THEM, AND SO IT WOULD BE UP TO OUR CCR TO GOVERN THE PROCESS WITH THE AMENDEMNT PROVISION WHICH REQUIRES MEMBERSHIP APPROVAL.

I think you are going to have to elaborate on what would change were the HOA to comply with the present (recently found) Bylaws. As it stands now, if you are not following these Bylaws rules for elections (for one), then it is possible any election you run subsequently will be unlawful.
FOR ONE OUR BYLAWS DO NOT DICTATE HOW MANY HOA MEETING WE SHOULD HAVE. IT WOULD NOT BE IN OUR BEST INTEREST TO HAVE ONLY ONE ANNUAL MEETING.
TWO: OUR VOTING RIGHTS WOULD SIGNIFICANTLY CHANGE BECAUSE CURRENTLY ALL HOMEOWNERS CAN VOTE IN ELECTIONS EVEN IF YOU'RE DELINQUENT IN ASSESSMENT DUES (WHILE I DON'T AGREE WITH THIS ON A GENERAL LEVEL, I THINK FOR CERTAIN REASONS, SUCH AS A REMOVAL OF THE BOD, ALL MEMBERS SHOULD BE ALLOWED TO VOTE.

Someone should check to see what (1) the county clerk has on file for your HOA. It may include the Bylaws. In which case the Bylaws have been "publicly noticed" and are lawful. (2) what the Arizona Secretary of State has on file for the corporation that is your HOA. Sometimes the filings with the Secretary of State include the Bylaws.
I HAVE ONLY CHECKED THE RECORDER'S OFFICE WHICH THEY DO NOT HAVE TO BE RECORDED IN ARIZONA.

THANK YOU FOR THE INSIGHT AND HELP.

I’ll comment on the two specifics you offer:

Annual meeting - once per year is normal. I’ve seen communities with more, and been on the board of one in which we reverted to once per year. More is too hard, and unnecessary. Decisions in between are more rationally left to the board.

Loss of voting rights due to being in arrears is common, as well. For obvious reasons.

If the above represent the core of your issues, then, if I were on your board, I would fight against your intent.

As a point of reference, in Florida it doesn't matter whether or not a buyer is presented with all of the governing documents before buying into an HOA (It's different for condos). The owners are obligated by law to follow them, whether or not they were made aware of them prior to purchase. There is a required disclosure summary that has to be given to the prospective purchaser, but then it's on them to find out what the documents are and obtain copies. If the CC&Rs say "no dogs" and a buyer comes in with a dog and claims "I NEVER KNEW ABOUT THAT!" then guess what? The dog has to go. A verbal claim that "there are no bylaws" is not somthing anyone should rely on to be true.

NpS,

I understand you’re trying to connect the doc dots, but based on what the OP has said, do you really think it will matter?

At this point, I think what I wrote above is wrong. The source of the OP's concern appears to be the Arizona HOA statute. See https://amemanagement.net/css/documents/arizona_planned_community_act_portrait.pdf and
https://www.azleg.gov/ars/33/01806.htm . Section 33-1806 requires a HOA home seller (less than 50 units) or the HOA (50 or more units) to provide, among other things, a copy of the Bylaws to a purchaser. Then the following statement is supposed to be signed by both the seller and the purchaser and returned to the HOA within 14 days of (yada):

[part of Subsection A]
"I hereby acknowledge that the declaration, bylaws and rules of the association constitute a contract between the association and me (the purchaser). By signing this statement, I acknowledge that I have read and understand the association's contract with me (the purchaser). I also understand that as a matter of Arizona law, if I fail to pay my association assessments, the association may foreclose on my property."

The statute goes on to say:

"A purchaser or seller who is damaged by the failure of the member or the association to disclose the information required by subsection A of this section may pursue all remedies at law or in equity against the member or the association, whichever failed to comply with subsection A of this section, including the recovery of reasonable attorney fees."

The OP wrote that the HOA has been allowing members who are delinquent in the payment of their assessments to vote in elections. Evidently the (recently found) Bylaws say otherwise.

Was a contract formed between the HOA (or a seller) and a purchaser, pursuant to Section 33-1806? I think so. Can the HOA (or a seller) now take away voting rights, on account of being behind on assessments, from people who purchased and were not given a copy of the Bylaws? I say, "not lawfully." It seems to me that all the folks who purchased into the HOA and were not given a copy of the Bylaws must be grandfathered, such that they never lose their voting rights on account of delinquency in the payment of the HOA assessment.

Else I cannot think of anything else in Bylaws that might 'damage' a HOA member and so give the HOA member a cause of action in court.

I agree with those who say you must abide by these bylaws. You also need your HOA attorney's advice to restate or amend them. (I don't think "reinstate" is the word you want here.) Your bylaws will say in them the % of voter approval needed to amend/restate them.

Nicole, AZ has a lot of statutes about HOAs. AZ also has corporation codes, which also control your HOA. Your board should be abiding by these regarding, for example, your elections. These also tell you about board meetings. So if your bylaws do not say a how many meetings your board (now the members/homeownrs) must have in a year, you should abide by corporations codes.

I believe AZ HOA statutes say the board must have open meetings and that Owners may comment on every agenda item. Your old bylaws won't say that, but the state statutes overrule your bylaws.

Bylaws usually aren't of much interest to Owners as they're about meetings, elections, officers, number of directors or a range, terms for board members. In other words, bylaws don't usually affect the everyday lives of Owners the way that rules & regs or parts of the CC&Rs do.

It sounds, Nicole, like your boards approach has been indeed very relaxed. sometime this indicates a small HOA. Can you tells the size of yours and the number of directors?

I, like George, also would like to know the specific bylaws that trouble you.

We are a condominium complex of 41 units.

The owners are responsible to pass along the bylaws and ccr's but the BOD is also responsible to maintain records. Our previous three boards were not aware of any bylaws as they oversaw the operations. That being said, our approach has been very relaxed, regarding elections, meaning we never had any (whoever wanted to be on the BOD could be, because most of our owners live out of state and participation was always difficult) and when we did have a vote about something anyone could vote.

I had a previous BOD who is also a real estate agent sell one of my units, along with others in the community and he never provided bylaws and always said we don't have any.

It is my opinion, because we have only been governed by CCR's for so long that we have waived certain provisions, if not all, of our bylaws. In Arizona you are only required to have an annual meeting, which in my opinion is not enough. I would like to see an HOA meeting once a month.

Please let me know if this is enough information or if more is needed. And thank you everyone for the critical thinking.

The most important part of the bylaws that is currently troubling me is the voting eligibility and number of HOA meetings. We also have outdated provisions about unanimous written consent which is overridden by AZ Open Meeting Laws.

We have had a BOD consisting of one to three members throughout my time being an owner in the complex.

More reinforcing (mightily) Nicole's position:
-- https://www.muchlaw.com/insights/article/corporate-bylaws-use-them-or-lose-them

-- As quoted in Schraft v. Leis, Kansas, 1984, https://law.justia.com/cases/kansas/supreme-court/1984/55-954-1.html:

"Corporations have power to waive provisions of their bylaws introduced for the protection of the company, and they may do so expressly or impliedly. Also, corporate bylaws may be waived by a continued disregard thereof by the parties for whose benefit they were enacted." 18 Am.Jur.2d, Corporations § 173, pp. 703-04.

See also 8 Fletcher, Cyclopedia of the law of Private Corporations § 4200, pp. 730-31 (rev. perm. ed. 1982). The use of the bylaws, therefore, was waived by both parties.

-- I googled for some of the phrases above quoted from Am. Jur. 2d Corporations. Only the Kansas case came up. But the Illinois-based web site suggests there is more case law on the point.

-- As far as I am concerned, anything in Nicole's HOA's Bylaws that is different from what the condo has been doing for years is now waived. Members wanting to use certain sections of the Bylaws never before used are estopped from doing so.

-- What to do? See an attorney. Because the procedures for amending the Bylaws were never followed in the past, so the amendment section is now waived. Maybe amend the Declaration to state that, as of such-and-such date, the Bylaws dated ____, 2020 are hereby adopted?

I agree that adopting all or many of these (recently discovered) Bylaws now is legally wrong and invites litigation.

Here's what looks like thee seminal Arizona case law on Boards waiving bylaws through a course of conduct: Hernandez v. Banco De Las Americas, 116 Ariz. 552 (1977), https://law.justia.com/cases/arizona/supreme-court/1977/12946-pr-0.html . Both this 1977 Arizona decision and the 2008 Illinois appeals court decision Kern v. Arlington Ridge Pathology (cited in the link I provided above) cite the Washington Supreme Court decision Bay City Lumber Co. v. Anderson, 8 Wash. 2d 191, 111 P.2d 771 (1941).

Well, Augustin's research & arguments are persuasive. But, does it matter that many perhaps all buyers did sign saying they agree that the bylaws apply to them and that they understand them?

It's good to see Augustine correct earlier statements.

Given Nicole's board's relaxed attitude, I wonder if they are even abiding by AZ corp. codes and AX HOA statutes. It seems to me those need attention also to avoid legal action.

After doing diligent research our HOA has many discrepancies that will need to be addressed. It will require patience and a lot of guidance to get this place in order.

I really appreciate the help I received here today.

Thank you especially to Augustin who was able to look past controversy and go above and beyond answering my questions.

I seem to have quite a different opinion. I'm not buying that bylaws, or parts of the bylaws, go away or can be waived. Condominium bylaws are required by law, and must have provisions for elections and the method for amending the bylaws. Case law for other types of corporations does not apply to the unique characteristics of condominiums.

The correct course of action is to accept the current bylaws, and to use the provisions in the bylaws to amend them if desired.

What percentage of owners are delinquent? The COA should work to get all the owners current and then it won't have an impact on voting (and this discussion becomes moot).

Just wondering if anyone else finds this thread weird like I do.

When I first read the post about an association that hadn't used the recently found bylaws for at least ten years, my first thought was that this was a 30, 40, or 50 year old community. But no. We later learned that it's a condo that was formed in 2006. That would mean that the Association stopped using the bylaws 3 years after formation. Huh.

The OP also believes that the bylaws are no longer in effect. Really? If I spoke with an original owner - (IMO it's reasonable to assume that at least 1 original buyer out of 41 still owns a unit after 13 years) - would that original owner agree that the bylaws didn't exist or were not in effect? I doubt it. Like many associations, the majority of owners don't get involved. Some might still have copies of the original docs they received 13 years ago. Why would they think that the bylaws they received back then had been revoked or whatever? I'm sure that no one informed them otherwise.

The OP thinks that recognizing the recently found bylaws would open the Condo to litigation. Maybe. But it's more likely IMO that claiming the old bylaws don't apply would open the Condo to even more litigation.

As many here have said - Why not just amend what you've got? Any of you who have been able to make changes in your documents already know, change isn't easy - especially when so many people don't want to participate.

When asked what needs to change, the OP said that there should be more than one meeting a year. My guess is that the OP doesn't know the difference between a Board meeting and a Homeowners meeting. That's not someone I would want leading the charge on a community-wide change. Perhaps others would like to speak on the distinction between types of meetings for the OP - But for me, I'll just say that it's a red flag.

As to outdated provisions that are overridden by open meeting laws, those don't need to be revised, rescinded, waived, or anything else. The statute applies no matter what the documents say. On matters of statutory override, the docs get ignored.

As to allowing non-current members to vote - I'm not sure what's going on here. I'll get back to it at the end of this post. But --- If there's nothing critical to vote on, and if no major expenditure is involved, and if anyone who's interested is invited to become a member of the board, and there is no indication of foul play -- then I can see where it might be inconvenient to check and see who's current and only allow them to vote. Certainly on a significant vote where the outcome matters, I can see being more stringent and checking who's current. Like removal of BOD members. But that's the exact circumstance where the OP says that everyone's vote should count. Another red flag for me.

On Augie's finding AZ statutes, I express my gratitude. On Augie's finding AmJur Black Letter Law, I find nothing close to supporting "waiver" under the OP's circumstances. In all of the cited cases, all of them involved commercial enterprises in crisis - a bank, a lumber yard, etc. All of the challenges involved the distribution of funds to individuals - typically in the form or compensation. After the fact, some of the owners wanted to challenge those payments because some bylaw or another should have stopped the distribution of funds. Those challenges lost. But consider the circumstances - Every one of the individuals involved was intimately aware of the events. They were closely held companies. That's nothing like a Condo - where most of the people are in the dark about what goes on. Those unaware owners waived nothing. Why should the rules that they expected to be in place be thrown out because the BOD members happened to be clueless?

Now to my real question -- What's the underlying motivation involved here?

My HOA is more than 90% owner-occupied. No one owns more than 1 unit. But, if things started to change -- Let's say that we went from less than 10% rentals to 50% or more -- I would be concerned because the interests of resident-owners can be so different than the interests of absentee-owner-landlords. Let's say that one person started buying up multiple units, I again would be concerned because I don't want one person to have that much say in what goes on here. There's nothing against this happening, but I would still be concerned.

All I know about the OPs situation is that she owns multiple units. That's a red flag for me personally although it may be perfectly fine in another association. Then again, as I said at the beginning of this post, something seems very weird to me. What is the underlying objective? Is there tension between remote & resident owners or single & multiple unit owners? Just wondering.

I agree. There is some underlying thing going on.

Nicole. What is about the "old" Bylaws you do not like?

Once again thank you to Augustin that has a very clear understanding of my position and why I am here.

I am here to have a conversation and educate myself about the current situation our Association is faced with.

It is very controversial and I didn't want to open pandora's box with all the details. I wanted to stick with a simple approach, because things can get very muddy. However, even here I feel like things are getting a little muddy.

George, I am not sure why you keep trying insult me with your veiled comments? Does it matter if I am on the BOD or an active member in the community? I am here to learn. I read and put together my own conclusions and now I am reaching out to collect the opinion of others. Why do you have a problem with this?

I believe Nicole is hiding her real reason/need.