HOA Due's Exemption for BOD - Valid?

DanS26 (California)
Posts: 16

Posted:

Hello all, I have a question regarding the following:

Our HOA Bylaws state the following:

Compensation - No director shall receive compensation for any service he
may render to the Association as a director, except he shall be exempt
from payment on one only lot of Association regularly monthly assessment
while serving as a director on the Board of Directors of the Association.
However, any director may be reimbursed for his actual expenses incurred
in the performance of his duties.

Our CCRs state the following:

8. CREATION OF THE LIEN AND PERSONAL OBLIGATION OF ASSESSMENTS. The Declarant, for each lot owned within the properties, hereby covenants, and each owner of any lot by acceptance of a deed therefor, whether or not it shall be so expressed in any such deed or other conveyance, is deemed to covenant and agree to pay to the Association: (1) Regular assessments or charges, and (2) Special assessments for capital improvements, such assessments to be fixed, established, and collected from time to time as hereinafter provided. The regular and special assessments, together with such interest thereon and costs of collection thereof, as hereinafter provided, shall be a charge on the land and shall be a continuing lien upon the lot against which each such assessment is made. Each such assessment, together with such interest, costs, and reasonable attorney’s fees, shall also be the personal obligation of the person who was the owner of such property at the time when the assessment fell due. The personal obligation shall pass to his successors.
…
12. UNIFORM RATE OF ASSESSMENT. Both regular and special assessments shall be fixed at a uniform rate for all lots and may be collected on a monthly basis.

I have read other threads where this issue was mostly addressed, but in this case the issue is different in the sense that our bylaws specifically exempt HOA dues for persons serving on Board of Directors. (in all of the other threads I saw this was not the case) I’m curious what your thoughts are on this matter – do you believe the exemption of HOA dues is valid for board members? CCR’s were created in 1969 (never updated) and Bylaws in 1973 (never updated). From my understanding - each time the BOD tries to get an update through – a quorum can never be reached. This is in California.

Thanks

MaxB4
Posts: 3,513

Posted:

I would hope you're not on your BOD.

DanS26 (California)
Posts: 16

Posted:

Why would you say that?

KerryL1 (California)
Posts: 14,550

Posted:

At first glance, Dan, it appears that your CC&Rs say all owners must pay assessments. CC&Rs are higher in the hierarchy of governing documents than Bylaws so CC&Rs prevail over the latter. In my quick reading, directors must pay monthly assessments, etc,. like any other owner.

AugustinD
Posts: 3,698

Posted:

DanS26, I think his is the first time I have seen a provision in a HOA's governing documents requiring compensation of directors. Here are my thoughts and concerns:

-- Is there a conflict between what the CC&Rs say and what the Bylaws say? In my opinion, yes.

-- California Civil Code 4205 says that when a conflict arises, the CC&Rs trump the Bylaws. Seehttps://www.davis-stirling.com/HOME/Statutes/Civil-Code-4205

-- If the Bylaws and CC&Rs have no conflict, then other concerns arise, concerning insurability and the extent to which a director may be held liable for mistakes. See discussion at

https://www.davis-stirling.com/HOME/Paying-Directors

https://www.davis-stirling.com/HOME/Volunteer-defined

https://www.davis-stirling.com/HOME/Professional-Directors

https://www.davis-stirling.com/HOME/Statutes/Code-Civ-Proc-42515

Regarding the BoD trying to update/amend the governing documents: In California the Board has the option to petition a California Superior Court for amendment. Success will depend on a number of factors. To learn more, start with

https://www.davis-stirling.com/HOME/Petition-to-Amend-CC-Rs

https://www.davis-stirling.com/HOME/Statutes/Civil-Code-4275

SheliaH (Indiana)
Posts: 6,964

Posted:

Well, this does say directors are exempt from paying assessments on one lot. It also d o says directors can be reimbursed for actual expenses incurred in the performance of those duties, which doesn't make sense. You're already exempt from paying assessments - shouldn't that be enough. And what sort of actual expenses are we talking about? I can understand printing and postage costs if a board member types up a newsletter, goes to a print shop to make copies and then buys envelopes and address labels, to mail them.

Does your board know if they're exempt, this might be considered income by the IRS and therefore they should be getting 1099s from the association and listing this 9n their taxes? Has anyone asked the association's attorney or CPA?

Personally, I think everyone, including board members, should pay assessments equally. When you put together a budget for the association, it's based on caring for 100% of the common areas. If assessments for, say 5 board members, aren't paid, where does that money come from? One could argue this can help attract more people to serve on the board, but it may also prompt reckless spending because the board members' wallets aren't affected.

Since this is in your documents, you'll probably have to have a large percentage of homeowners to approve any changes. If that's what you want, you'll need to see if you have any like-minded neighbors who agree with you and then you might petition for a special homeowner meeting to discuss it. I suspect the current board would to keep things as is,do get your arguments together in pushing for a change.

Or if you think the board is misinterpreting this part of the document, get a private attorney to take a look. Most of us on this website aren't attorneys and what's OK in your state may not be in ours.

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

MaxB4
Posts: 3,513

Posted:

I am going out on a limb and say the Bylaw provision was put in there why the developer was in control. Developers on boards of their projects do get compensated.

If you were to be exempt from dues, then the IRS would treat this as compensation, and a 1099 would be filed and taxes paid on the income.

KerryL1 (California)
Posts: 14,550

Posted:

Thanks for looking this up, Augustin. The CC&Rs do trump the Bylaws so directors being free of assessments on one lot isn't permitted in this HOA. I don't think, Dan, you'd need to amend your Bylaws for this conflict. As old as they are, though, there's probably plenty of reasons to amend them & your CC&Rs.

Dan what is required quorum to amend your CC&Rs? Your Bylaws?

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By DanS26 on 08/15/2021 10:20 AM
Why would you say that?

In order to amend your CCRs and Bylaws, you need a certain percentage of owners to approve them. Being as old as they are, it would take 66 2/3's to 75 approval and for Bylaws, probably 51%. In such case, your governing docs will say they can be changed with the percentage mentioned above, at a meeting where quorum is present. Your governing documents will not mention secret balloting as that didn't come into play until 2006.

Your Election Rules, if you have any, should be based on new state statues, not your governing documents, as most of that language is no longer valid.

KerryL1 (California)
Posts: 14,550

Posted:

I believe you misread Dan, Max. Dan asked, "Why would you say that?" in reply to your insulting sneer: "I hope you're not on your BOD."

See, Dan, Max is compelled by unknown forces to be episodically nasty. The rest of us try to be helpful and stick with the poster's questions or concerns, so stay with us! And welcome to the Forum.

KerryL1 (California)
Posts: 14,550

Posted:

I believe you misread Dan, Max. Dan asked, "Why would you say that?" in reply to your insulting sneer: "I hope you're not on your BOD."

See, Dan, Max is compelled by unknown forces to be episodically nasty. The rest of us try to be helpful and stick with the poster's questions or concerns, so stay with us! And welcome to the Forum.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By KerryL1 on 08/15/2021 4:26 PM
I believe you misread Dan, Max. Dan asked, "Why would you say that?" in reply to your insulting sneer: "I hope you're not on your BOD."

See, Dan, Max is compelled by unknown forces to be episodically nasty. The rest of us try to be helpful and stick with the poster's questions or concerns, so stay with us! And welcome to the Forum.

If you're trying to insult me, don't, you ain't qualified.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

Quote:

Posted By MaxB4 on 08/15/2021 5:02 PM

Posted By KerryL1 on 08/15/2021 4:26 PM
I believe you misread Dan, Max. Dan asked, "Why would you say that?" in reply to your insulting sneer: "I hope you're not on your BOD."

See, Dan, Max is compelled by unknown forces to be episodically nasty. The rest of us try to be helpful and stick with the poster's questions or concerns, so stay with us! And welcome to the Forum.

If you're trying to insult me, don't, you ain't qualified.

Kerry is better than that and doesn't need to insult you. You're perfectly capable of making an ass out of yourself.

MaxB4
Posts: 3,513

Posted:

Was it good for you? What a moron!

MaxB4
Posts: 3,513

Posted:

I'll continue this nonsense tomorrow. Tonight wife and I are spending an evening with Sergio Mendes and Brasil 66 in Hollywood

BillH10 (Texas)
Posts: 1,217

Posted:

Max

Are you serious? Where?

Although I now live in Texas, I lived most of my life near and in Pasadena (CA). Probably not too many nooks and crannies in the LA Basin I do not know.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The logic of board members being exempt from paying dues doesn't exist. A HOA is ONLY funded by it's members for it's members. HOA boards are members of the HOA. Now I will grant that Max did mention that this could be left over from the Developer when they were in control. Which many times HOA's do not update their documents to reflect the new relationship of owners owned versus developer owned. Often times small details get left out like must be an owner to be on the board etc.. This was a left over from when developers controlled things. That way they could have an employee of theirs sit on the board if they wanted.

Board members only "real" benefit is the insurance coverage. Which can kick in during lawsuits. There are some personal protections involved there. Otherwise every and ALL board members should be paying their dues.

Former HOA President

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By BillH10 on 08/15/2021 6:30 PM
Max

Are you serious? Where?

Although I now live in Texas, I lived most of my life near and in Pasadena (CA). Probably not too many nooks and crannies in the LA Basin I do not know.

Hollywood Bowl, starts in 10 minutes.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By BillH10 on 08/15/2021 6:30 PM
Max

Are you serious? Where?

Although I now live in Texas, I lived most of my life near and in Pasadena (CA). Probably not too many nooks and crannies in the LA Basin I do not know.

Live in Chino

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MaxB4 on 08/15/2021 7:00 PM

Posted By BillH10 on 08/15/2021 6:30 PM
Max

Are you serious? Where?

Although I now live in Texas, I lived most of my life near and in Pasadena (CA). Probably not too many nooks and crannies in the LA Basin I do not know.

Hollywood Bowl, starts in 10 minutes.

I was there for the Brazilian dancers: https://www.youtube.com/watch?v=NiyGnLXxsAM

TimB4 (Tennessee)
Posts: 21,062

Posted:

Dan,

The proper way to pay Officers or Directors is with a check from the Association.
The Association should also provide 1099-misc statements at the end of the year (required by the IRS).

All members should pay assessments (not waive them).

If your Association is choosing to waive assessments, this is still income to those who serve and 1099-misc should be filed.
If your board doesn't want to listen to this and start doing things properly, then a simple tip to the IRS will get things moving.

DanS26 (California)
Posts: 16

Posted:

Thanks everyone for chiming in. I’m not on my BOD but will be in a few months so I am trying to do my due diligence and re-read all of our documents and be well versed on what is and is not permitted. To answer some people’s questions:

To amend our CC&Rs, we need 2/3 of members to affirmatively vote in any changes. We have over 700 homes in the community. When a special election was called, after 4 months, only about 140 ballots were received. I imagine a significant number of those ballots were “No’s” due to various social media arguments regarding the motive behind why the Board wants to change the CC&Rs.

To amend Bylaws – it states:

The Bylaws may be amended at the Annual meeting or a special
meeting, notice having been given by mail or at the previous meeting, by
a two-thirds (2/3) vote of the membership of the Association, proxies being
permitted, of those present and voting, except in those matters where the
Declaration, Articles of Incorporation, or Bylaws specify a greater vote for
action, in which case such vote shall be required for amendment. Notice
of each proposed amendment shall be mailed to each owner not less
than fourteen ( 14) days prior to said meeting.

This one I’m a little confused on – if I am reading this correctly – only 2/3 of members present in an annual meeting – can have the ability to amend the bylaws for the HOA? Sometimes there are only 60 people at an annual meeting – meaning if 41 vote in the affirmative bylaws can be changed? CCR and Articles of Incorporation are silent on amending bylaws.

Anyways – I appreciate all of your help. I’m definitely going to continue paying my dues! I’m sure I’ll be asking more questions in the future.

KerryL1 (California)
Posts: 14,550

Posted:

Since your CC&Rs trump your Bylaws, there seems to be no beed to amend the latter re: waiving dues on one lot for directors. Your CC&Rs don't permit it.

Kudos for your due diligence in reding your documents again!

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Dan

A few points of information.

When voting to change an Amendment or Bylaws only the YES votes count to make the required member. NO votes or not voting does not count. Say 120 to make the change. 121 YES, 119 NO, the change is made. Let us say 119 YES, does not matter how many NO, the motion fails.

Typically to change an Amendment or Bylaw, the % required is of ALL MEMBERS not just a % of those at the meeting.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By DanS26 on 08/16/2021 9:06 AM

To amend Bylaws – it states:

The Bylaws may be amended at the Annual meeting or a special
meeting, notice having been given by mail or at the previous meeting, by
a two-thirds (2/3) vote of the membership of the Association, proxies being
permitted, of those present and voting, except in those matters where the
Declaration, Articles of Incorporation, or Bylaws specify a greater vote for
action, in which case such vote shall be required for amendment. Notice
of each proposed amendment shall be mailed to each owner not less
than fourteen ( 14) days prior to said meeting.

This one I’m a little confused on – if I am reading this correctly – only 2/3 of members present in an annual meeting – can have the ability to amend the bylaws for the HOA? Sometimes there are only 60 people at an annual meeting – meaning if 41 vote in the affirmative bylaws can be changed? CCR and Articles of Incorporation are silent on amending bylaws.

A few observations and queries:

-- Nationwide, the requirements for amending bylaws are typically less demanding than the requirements for amending CC&Rs.

-- What do your bylaws say is the quorum requirement for a meeting of the owners? KerryL1 asked this above, and it is an important question.

-- In California, if quorum is not met, then certain California statute sections and Bylaws may come into play, permitting "adjournment of the meeting to a later time." The purpose is to allow quorum to be achieved, and so business to be lawfully transacted, by continuing the meeting at a later date where quorum can be met.

-- What is the smallest number of people, voting in person or by proxy, that could amend the Bylaws? It is 2/3rds of your Bylaws' quorum number.

-- California statutes state that, if the Bylaws are silent with regard to amending, then after quorum is met, a mere majority vote of those present (in person or by proxy or by mailed ballot) can amend the bylaws. See https://www.davis-stirling.com/HOME/HOA-Bylaw-Amendments .

-- Your questions on amending (relating to quorum) come up a lot here. You should get good information and detail in the responses posted.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By DanS26 on 08/16/2021 9:06 AM
Thanks everyone for chiming in. I’m not on my BOD but will be in a few months so I am trying to do my due diligence and re-read all of our documents and be well versed on what is and is not permitted. To answer some people’s questions:

To amend our CC&Rs, we need 2/3 of members to affirmatively vote in any changes. We have over 700 homes in the community. When a special election was called, after 4 months, only about 140 ballots were received. I imagine a significant number of those ballots were “No’s” due to various social media arguments regarding the motive behind why the Board wants to change the CC&Rs.

To amend Bylaws – it states:

The Bylaws may be amended at the Annual meeting or a special
meeting, notice having been given by mail or at the previous meeting, by
a two-thirds (2/3) vote of the membership of the Association, proxies being
permitted, of those present and voting, except in those matters where the
Declaration, Articles of Incorporation, or Bylaws specify a greater vote for
action, in which case such vote shall be required for amendment. Notice
of each proposed amendment shall be mailed to each owner not less
than fourteen ( 14) days prior to said meeting.

This one I’m a little confused on – if I am reading this correctly – only 2/3 of members present in an annual meeting – can have the ability to amend the bylaws for the HOA? Sometimes there are only 60 people at an annual meeting – meaning if 41 vote in the affirmative bylaws can be changed? CCR and Articles of Incorporation are silent on amending bylaws.

Anyways – I appreciate all of your help. I’m definitely going to continue paying my dues! I’m sure I’ll be asking more questions in the future.

In order for a membership meeting to be called to order, for the purposes of counting votes, a quorum must be present, either by a secret ballot cast, a proxy or owners present, if that person hasn't voted. In your case, it is probably at least a majority or 51%, maybe higher. So the first number you have to achieve is quorum of at least 351 souls.

MaxB4
Posts: 3,513

Posted:

Dan

I am curious/ You mention you are currently not on the Board, but will be in a few months. Is there an election, or are you being appointed to a position?

I am shocked that an association of over 700 homes would still be dealing with governing documents from the stone ages. Amending documents is changing a few paragraphs. What your association needs, IMO, is a completely matched restate of both the CCRs and Bylaws. A reputable law firm would draft the new docs after consultation of board and/or committee. More importantly, they should have a plan to get them passed. Restates cost between $5K-$10K. If they don't, they in essence are stealing for the association.

A good law firm, along with a good management company should help achieve the association's goals.

You might want to check out this website to help in your quest: https://findhoalaw.com/

KerryL1 (California)
Posts: 14,550

Posted:

I thought, Dan, your question is if it's OK that directors don't pay assessments on one lot. Your CC&Rs, "8" say all owners must pay assessments. So the Bylaws don't matter because CC&Rs supersede them. (It doesn't matter WHY the Bylaws say what they do on this topic.) So for that reason alone, no need to amend either.

Then I wrote, but with such old ones, your HOA should rewrite or restate both sets of docs. As a soon-to-be director, though, I don't think I'd make that my first priority.

Since you're reading your governing documents, have you yet read your HOA's election rules, which are required in CA? And, Jeff, 1/1/20, they became much more complicated.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MaxB4 on 08/16/2021 11:09 AM
Dan

I am curious/ You mention you are currently not on the Board, but will be in a few months. Is there an election, or are you being appointed to a position?

I am shocked that an association of over 700 homes would still be dealing with governing documents from the stone ages. Amending documents is changing a few paragraphs. What your association needs, IMO, is a completely matched restate of both the CCRs and Bylaws. A reputable law firm would draft the new docs after consultation of board and/or committee. More importantly, they should have a plan to get them passed. Restates cost between $5K-$10K. If they don't, they in essence are stealing for the association.

A good law firm, along with a good management company should help achieve the association's goals.

You might want to check out this website to help in your quest: https://findhoalaw.com/

Max

Yes there is the cost to restate but does the membership then not have to approve? If I remember correctly, someone once posted here that they spent several thousands of dollars on a rewrite and their owners would not vote yes. He said it was a waste and they were sorry they spent the money.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MaxB4 on 08/16/2021 11:09 AM
Dan

I am curious/ You mention you are currently not on the Board, but will be in a few months. Is there an election, or are you being appointed to a position?

I am shocked that an association of over 700 homes would still be dealing with governing documents from the stone ages. Amending documents is changing a few paragraphs. What your association needs, IMO, is a completely matched restate of both the CCRs and Bylaws. A reputable law firm would draft the new docs after consultation of board and/or committee. More importantly, they should have a plan to get them passed. Restates cost between $5K-$10K. If they don't, they in essence are stealing for the association.

A good law firm, along with a good management company should help achieve the association's goals.

You might want to check out this website to help in your quest: https://findhoalaw.com/

Max

Yes there is the cost to restate but does the membership then not have to approve? If I remember correctly, someone once posted here that they spent several thousands of dollars on a rewrite and their owners would not vote yes. He said it was a waste and they were sorry they spent the money.

MaxB4
Posts: 3,513

Posted:

JohnC,

The membership isn't required to approve the expediture of funds to re-state as the Board has the authority to start the process. The membership does have a 28-day comment period, same as when new Rules and Regulations are being instituted by the Board.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By JohnC46 on 08/16/2021 12:49 PM

Posted By MaxB4 on 08/16/2021 11:09 AM
Dan

I am curious/ You mention you are currently not on the Board, but will be in a few months. Is there an election, or are you being appointed to a position?

I am shocked that an association of over 700 homes would still be dealing with governing documents from the stone ages. Amending documents is changing a few paragraphs. What your association needs, IMO, is a completely matched restate of both the CCRs and Bylaws. A reputable law firm would draft the new docs after consultation of board and/or committee. More importantly, they should have a plan to get them passed. Restates cost between $5K-$10K. If they don't, they in essence are stealing for the association.

A good law firm, along with a good management company should help achieve the association's goals.

You might want to check out this website to help in your quest: https://findhoalaw.com/

Max

Yes there is the cost to restate but does the membership then not have to approve? If I remember correctly, someone once posted here that they spent several thousands of dollars on a rewrite and their owners would not vote yes. He said it was a waste and they were sorry they spent the money.

Can it be a waste of money, absolutely! Let's say you want a re-write and one of changes is "Assignment of Rents"? You have 50% renters, how do you think that vote goes?

KerryL1 (California)
Posts: 14,550

Posted:

Hmmmm, Max, I have not seen the 28-day requirement for Owners to review the Draft CC&Rs rewrite and comment on them in writing to the Board if they wish, which might be discussed at the next board meeting. Please direct me to the CA Civil Code requiring that. thanks.

DanS26 (California)
Posts: 16

Posted:

Here is what is said in our BY-LAWS regarding quorum:

Quorum:. a quorum shall consist of members of the Association entitled to cast
fifty percent (50%) of the membership vote, proxies being allowed. If,
however such quorum shall not be present, there shall be an adjourned
meeting to a time not less than forty-eight (48) hours nor more than
thirty (30) days from the time of the original meeting, at which meeting
the quorum requirement shall be members entitled to cast twenty-five
(25%) of the vote of the Association membership. There need be no
notice of the adjourned meeting other than announcement by the
chairman at the meeting.

b. the members present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum.

Other Quorum Requirements - Notwithstanding Section 4, Article V, the
quorum required for any action requiring members' assent under Articles
VII, IX, X and XIII of the Articles of Incorporation shall be not less than the
number or percentage of the entire membership required to take action
under the applicable Article. If, however, such quorum shall not be
present in person, or by proxy at any such meeting, the members entitled
to vote thereat shall have the power to adjourn the meeting and without
notice other than announcement at the meeting by the chairman, to a
time not less than forty-eight (48) hours nor more than thirty (30) days from
the time of the original meeting was called, at which meeting the quorum
requirement shall be only one half ( 1 /2) of such required number or
percentage.

Proxies - At all meetings of the Association each member may vote in
person or by proxy. All proxies shall be in writing and filed with the
Secretary prior to the meeting. · However, no proxy shall be valid eleven
months from date of its execution unless otherwise provided in the proxy.
Except as otherwise provided in the Articles of Incorporation, Declaration
or Bylaws a majority of those present and voting, in person or by proxy,
shall prevail.

DanS26 (California)
Posts: 16

Posted:

There is an election - there are 3 director positions open and 3 candidates (including me) running. But the more I think about it - if a quorum is not reached - then there is a possibility that none of the 3 director positions will be filled? Not too sure.

In regards to your second paragraph - ohhh the BOD has tried to get these CCRs and Bylaws brought up from the stone ages. From my understanding from attending BOD meetings for the last year - the association has spent many thousands of dollars on legal counsel getting CCR and Bylaw amendments ready for the membership. It was almost a 2 year process with multiple town halls. As I stated earlier, once it went out to the members, of the 700+, only about 140 sent back their ballot. And it was not for a lack of trying. Without getting into it further - there was a significant social media push to NOT vote for the amendments. Sitting where I am not - NO amendment will ever pass this HOA with the current state of things. I believe at this moment the only way to at least get the CCRs to be brought up to a current legal document is to petition the court.

DanS26 (California)
Posts: 16

Posted:

Quote:

Posted By AugustinD on 08/16/2021 9:55 AM

Posted By DanS26 on 08/16/2021 9:06 AM

To amend Bylaws – it states:

The Bylaws may be amended at the Annual meeting or a special
meeting, notice having been given by mail or at the previous meeting, by
a two-thirds (2/3) vote of the membership of the Association, proxies being
permitted, of those present and voting, except in those matters where the
Declaration, Articles of Incorporation, or Bylaws specify a greater vote for
action, in which case such vote shall be required for amendment. Notice
of each proposed amendment shall be mailed to each owner not less
than fourteen ( 14) days prior to said meeting.

This one I’m a little confused on – if I am reading this correctly – only 2/3 of members present in an annual meeting – can have the ability to amend the bylaws for the HOA? Sometimes there are only 60 people at an annual meeting – meaning if 41 vote in the affirmative bylaws can be changed? CCR and Articles of Incorporation are silent on amending bylaws.

A few observations and queries:

-- Nationwide, the requirements for amending bylaws are typically less demanding than the requirements for amending CC&Rs.

-- What do your bylaws say is the quorum requirement for a meeting of the owners? KerryL1 asked this above, and it is an important question.

-- In California, if quorum is not met, then certain California statute sections and Bylaws may come into play, permitting "adjournment of the meeting to a later time." The purpose is to allow quorum to be achieved, and so business to be lawfully transacted, by continuing the meeting at a later date where quorum can be met.

-- What is the smallest number of people, voting in person or by proxy, that could amend the Bylaws? It is 2/3rds of your Bylaws' quorum number.

-- California statutes state that, if the Bylaws are silent with regard to amending, then after quorum is met, a mere majority vote of those present (in person or by proxy or by mailed ballot) can amend the bylaws. See https://www.davis-stirling.com/HOME/HOA-Bylaw-Amendments .

-- Your questions on amending (relating to quorum) come up a lot here. You should get good information and detail in the responses posted.

Clicked reply instead of quote - so restating what I just said:

Here is what is said in our BY-LAWS regarding quorum:

Quorum:. a quorum shall consist of members of the Association entitled to cast
fifty percent (50%) of the membership vote, proxies being allowed. If,
however such quorum shall not be present, there shall be an adjourned
meeting to a time not less than forty-eight (48) hours nor more than
thirty (30) days from the time of the original meeting, at which meeting
the quorum requirement shall be members entitled to cast twenty-five
(25%) of the vote of the Association membership. There need be no
notice of the adjourned meeting other than announcement by the
chairman at the meeting.

b. the members present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum.

Other Quorum Requirements - Notwithstanding Section 4, Article V, the
quorum required for any action requiring members' assent under Articles
VII, IX, X and XIII of the Articles of Incorporation shall be not less than the
number or percentage of the entire membership required to take action
under the applicable Article. If, however, such quorum shall not be
present in person, or by proxy at any such meeting, the members entitled
to vote thereat shall have the power to adjourn the meeting and without
notice other than announcement at the meeting by the chairman, to a
time not less than forty-eight (48) hours nor more than thirty (30) days from
the time of the original meeting was called, at which meeting the quorum
requirement shall be only one half ( 1 /2) of such required number or
percentage.

Proxies - At all meetings of the Association each member may vote in
person or by proxy. All proxies shall be in writing and filed with the
Secretary prior to the meeting. · However, no proxy shall be valid eleven
months from date of its execution unless otherwise provided in the proxy.
Except as otherwise provided in the Articles of Incorporation, Declaration
or Bylaws a majority of those present and voting, in person or by proxy,
shall prevail.

DanS26 (California)
Posts: 16

Posted:

Quote:

Posted By MaxB4 on 08/16/2021 11:09 AM
Dan

I am curious/ You mention you are currently not on the Board, but will be in a few months. Is there an election, or are you being appointed to a position?

I am shocked that an association of over 700 homes would still be dealing with governing documents from the stone ages. Amending documents is changing a few paragraphs. What your association needs, IMO, is a completely matched restate of both the CCRs and Bylaws. A reputable law firm would draft the new docs after consultation of board and/or committee. More importantly, they should have a plan to get them passed. Restates cost between $5K-$10K. If they don't, they in essence are stealing for the association.

A good law firm, along with a good management company should help achieve the association's goals.

You might want to check out this website to help in your quest: https://findhoalaw.com/

Clicked reply instead of quote - so going to restate what I just posted:

There is an election - there are 3 director positions open and 3 candidates (including me) running. But the more I think about it - if a quorum is not reached - then there is a possibility that none of the 3 director positions will be filled? Not too sure.

In regards to your second paragraph - ohhh the BOD has tried to get these CCRs and Bylaws brought up from the stone ages. From my understanding from attending BOD meetings for the last year - the association has spent many thousands of dollars on legal counsel getting CCR and Bylaw amendments ready for the membership. It was almost a 2 year process with multiple town halls. As I stated earlier, once it went out to the members, of the 700+, only about 140 sent back their ballot. And it was not for a lack of trying. Without getting into it further - there was a significant social media push to NOT vote for the amendments. Sitting where I am not - NO amendment will ever pass this HOA with the current state of things. I believe at this moment the only way to at least get the CCRs to be brought up to a current legal document is to petition the court.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By DanS26 on 08/16/2021 9:19 PM
There is an election - there are 3 director positions open and 3 candidates (including me) running. But the more I think about it - if a quorum is not reached - then there is a possibility that none of the 3 director positions will be filled? Not too sure.

In regards to your second paragraph - ohhh the BOD has tried to get these CCRs and Bylaws brought up from the stone ages. From my understanding from attending BOD meetings for the last year - the association has spent many thousands of dollars on legal counsel getting CCR and Bylaw amendments ready for the membership. It was almost a 2 year process with multiple town halls. As I stated earlier, once it went out to the members, of the 700+, only about 140 sent back their ballot. And it was not for a lack of trying. Without getting into it further - there was a significant social media push to NOT vote for the amendments. Sitting where I am not - NO amendment will ever pass this HOA with the current state of things. I believe at this moment the only way to at least get the CCRs to be brought up to a current legal document is to petition the court.

This might be helpful, https://www.davis-stirling.com/HOME/No-Quorum

In regards to bringing your docs to current code, that can be done by your legal council with no vote of the membership required.

DanS26 (California)
Posts: 16

Posted:

Quote:

Posted By KerryL1 on 08/16/2021 11:57 AM
I thought, Dan, your question is if it's OK that directors don't pay assessments on one lot. Your CC&Rs, "8" say all owners must pay assessments. So the Bylaws don't matter because CC&Rs supersede them. (It doesn't matter WHY the Bylaws say what they do on this topic.) So for that reason alone, no need to amend either.

Then I wrote, but with such old ones, your HOA should rewrite or restate both sets of docs. As a soon-to-be director, though, I don't think I'd make that my first priority.

Since you're reading your governing documents, have you yet read your HOA's election rules, which are required in CA? And, Jeff, 1/1/20, they became much more complicated.

I have read the election rules - but would appreciate further understanding - I'm sure it relates to CA Legislature passing of laws that changed HOA Election rules - can you give me specifics so I can study further? Our current elections rules reference California Civil Code Section 5100 which I think may be what you are talking about.

Thank you

DanS26 (California)
Posts: 16

Posted:

Quote:

Posted By MaxB4 on 08/16/2021 9:28 PM

Posted By DanS26 on 08/16/2021 9:19 PM
There is an election - there are 3 director positions open and 3 candidates (including me) running. But the more I think about it - if a quorum is not reached - then there is a possibility that none of the 3 director positions will be filled? Not too sure.

In regards to your second paragraph - ohhh the BOD has tried to get these CCRs and Bylaws brought up from the stone ages. From my understanding from attending BOD meetings for the last year - the association has spent many thousands of dollars on legal counsel getting CCR and Bylaw amendments ready for the membership. It was almost a 2 year process with multiple town halls. As I stated earlier, once it went out to the members, of the 700+, only about 140 sent back their ballot. And it was not for a lack of trying. Without getting into it further - there was a significant social media push to NOT vote for the amendments. Sitting where I am not - NO amendment will ever pass this HOA with the current state of things. I believe at this moment the only way to at least get the CCRs to be brought up to a current legal document is to petition the court.

This might be helpful, https://www.davis-stirling.com/HOME/No-Quorum

In regards to bringing your docs to current code, that can be done by your legal council with no vote of the membership required.

Max I appreciate your input - and would be grateful if you could expand further on the following:

In regards to bringing your docs to current code, that can be done by your legal council with no vote of the membership required

MaxB4
Posts: 3,513

Posted:

https://www.davis-stirling.com/HOME/Authority-to-Amend

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By DanS26 on 08/16/2021 9:10 PM
Here is what is said in our BY-LAWS regarding quorum:

Quorum:. a quorum shall consist of members of the Association entitled to cast
fifty percent (50%) of the membership vote, proxies being allowed. If,
however such quorum shall not be present, there shall be an adjourned
meeting to a time not less than forty-eight (48) hours nor more than
thirty (30) days from the time of the original meeting, at which meeting
the quorum requirement shall be members entitled to cast twenty-five
(25%) of the vote of the Association membership. There need be no
notice of the adjourned meeting other than announcement by the
chairman at the meeting.

b. the members present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum.

Other Quorum Requirements - Notwithstanding Section 4, Article V, the
quorum required for any action requiring members' assent under Articles
VII, IX, X and XIII of the Articles of Incorporation shall be not less than the
number or percentage of the entire membership required to take action
under the applicable Article. If, however, such quorum shall not be
present in person, or by proxy at any such meeting, the members entitled
to vote thereat shall have the power to adjourn the meeting and without
notice other than announcement at the meeting by the chairman, to a
time not less than forty-eight (48) hours nor more than thirty (30) days from
the time of the original meeting was called, at which meeting the quorum
requirement shall be only one half ( 1 /2) of such required number or
percentage.

Proxies - At all meetings of the Association each member may vote in
person or by proxy. All proxies shall be in writing and filed with the
Secretary prior to the meeting. · However, no proxy shall be valid eleven
months from date of its execution unless otherwise provided in the proxy.
Except as otherwise provided in the Articles of Incorporation, Declaration
or Bylaws a majority of those present and voting, in person or by proxy,
shall prevail.

Quote:

Posted By DanS26 on 08/16/2021 9:19 PM
There is an election - there are 3 director positions open and 3 candidates (including me) running. But the more I think about it - if a quorum is not reached - then there is a possibility that none of the 3 director positions will be filled? Not too sure.

-- I would want to review the Articles of Incorporation VII, IX, X and XIII. If these say nothing relevant regarding quorum and the election of directors, then per the Bylaws, I hope you see that the quorum requirement falls to 25%. If at this second meeting a quorum is still not met, then owners may motion to adjourn again to a later time, as described here: https://www.davis-stirling.com/HOME/No-Quorum . But doing the latter does not change the quorum requirement of 25%.

Note that https://www.davis-stirling.com/HOME/No-Quorum also describes how a HOA may petition a court to lower the quorum.

Your Board should consider consulting a HOA attorney about its quorum problems.

Depending on what the Articles of Incorporation say, many motions put before the HOA owners may be passed by a mere 2/3rds of 25% of the owners. If your HOA has 800 owners, then some lament that as few as 0.25 * 2 /3 * 800 = 134 with rounding up, could be making large decisions. Bylaw et cetera provisions like this are not uncommon nationwide. Attorneys have given a lot of thought to this. I actually see it a little differently: Many chose not to attend a meeting in person or by proxy. Ergo they made the decision to let others make a large decision. They had plenty of notice of this. No harm no foul.

AugustinD
Posts: 3,698

Posted:

DanS26, also, if a quorum cannot be achieved, then it's perfectly lawful (per statute and often bylaws) for the incumbent board to have one incumbent resign, and the remaining two incumbents appoint one of the candidates to the board. Then a second incumbent resigns, and the remaining directors appoint another candidate to the board.

Generally directors serve until they either resign or a replacement is elected. If quorum is not met, the incumbents remain directors until... and so on.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By AugustinD on 08/17/2021 11:47 AM
DanS26, also, if a quorum cannot be achieved, then it's perfectly lawful (per statute and often bylaws) for the incumbent board to have one incumbent resign, and the remaining two incumbents appoint one of the candidates to the board. Then a second incumbent resigns, and the remaining directors appoint another candidate to the board.

Generally directors serve until they either resign or a replacement is elected. If quorum is not met, the incumbents remain directors until... and so on.

I am going to take a wild guess that an association of over 700 owners probably has a board of 5 or 7.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By AugustinD on 08/17/2021 11:44 AM

Posted By DanS26 on 08/16/2021 9:10 PM
Here is what is said in our BY-LAWS regarding quorum:

Quorum:. a quorum shall consist of members of the Association entitled to cast
fifty percent (50%) of the membership vote, proxies being allowed. If,
however such quorum shall not be present, there shall be an adjourned
meeting to a time not less than forty-eight (48) hours nor more than
thirty (30) days from the time of the original meeting, at which meeting
the quorum requirement shall be members entitled to cast twenty-five
(25%) of the vote of the Association membership. There need be no
notice of the adjourned meeting other than announcement by the
chairman at the meeting.

b. the members present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum.

Other Quorum Requirements - Notwithstanding Section 4, Article V, the
quorum required for any action requiring members' assent under Articles
VII, IX, X and XIII of the Articles of Incorporation shall be not less than the
number or percentage of the entire membership required to take action
under the applicable Article. If, however, such quorum shall not be
present in person, or by proxy at any such meeting, the members entitled
to vote thereat shall have the power to adjourn the meeting and without
notice other than announcement at the meeting by the chairman, to a
time not less than forty-eight (48) hours nor more than thirty (30) days from
the time of the original meeting was called, at which meeting the quorum
requirement shall be only one half ( 1 /2) of such required number or
percentage.

Proxies - At all meetings of the Association each member may vote in
person or by proxy. All proxies shall be in writing and filed with the
Secretary prior to the meeting. · However, no proxy shall be valid eleven
months from date of its execution unless otherwise provided in the proxy.
Except as otherwise provided in the Articles of Incorporation, Declaration
or Bylaws a majority of those present and voting, in person or by proxy,
shall prevail.

Quote:

Posted By DanS26 on 08/16/2021 9:19 PM
There is an election - there are 3 director positions open and 3 candidates (including me) running. But the more I think about it - if a quorum is not reached - then there is a possibility that none of the 3 director positions will be filled? Not too sure.

-- I would want to review the Articles of Incorporation VII, IX, X and XIII. If these say nothing relevant regarding quorum and the election of directors, then per the Bylaws, I hope you see that the quorum requirement falls to 25%. If at this second meeting a quorum is still not met, then owners may motion to adjourn again to a later time, as described here: https://www.davis-stirling.com/HOME/No-Quorum . But doing the latter does not change the quorum requirement of 25%.

Note that https://www.davis-stirling.com/HOME/No-Quorum also describes how a HOA may petition a court to lower the quorum.

Your Board should consider consulting a HOA attorney about its quorum problems.

Depending on what the Articles of Incorporation say, many motions put before the HOA owners may be passed by a mere 2/3rds of 25% of the owners. If your HOA has 800 owners, then some lament that as few as 0.25 * 2 /3 * 800 = 134 with rounding up, could be making large decisions. Bylaw et cetera provisions like this are not uncommon nationwide. Attorneys have given a lot of thought to this. I actually see it a little differently: Many chose not to attend a meeting in person or by proxy. Ergo they made the decision to let others make a large decision. They had plenty of notice of this. No harm no foul.

I've conducted HOA elections for 13 years in California and never once have I had a motion made outside of adjourning a meeting if quorum was not achieved.

Also, of the people who turned in a ballot, how many attended the meeting, because if you don't show up, you can't vote. I have also never had a proxy used after elections were changed in 2006.

In order to make change at the meeting, it would have to be on the agenda and notice given to homeowners. If all the governing documents are protected, and they are special rules for adjusting assessments and speial assessments, what could a few really do?

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By MaxB4 on 08/17/2021 12:11 PM

I've conducted HOA elections for 13 years in California and never once have I had a motion made outside of adjourning a meeting if quorum was not achieved.

This is not relevant.

The point is that Dan or another who attends the meeting, where a quorum is not achieved, may motion to adjourn to a later date, per Ca Corp Code 7512, https://www.davis-stirling.com/HOME/Statutes/Corp-Code-7512, and so on.

Quote:

Also, of the people who turned in a ballot, how many attended the meeting, because if you don't show up, you can't vote.

Civil Code 5115 is clear that ballots (whether mailed in or otherwise submitted) count towards quorum.

Quote:

I have also never had a proxy used after elections were changed in 2006.

Obviously California statutes and many California HOAs still allow proxies.

(Redacted stuff that seems irrelevant or has headed off to a related topic.)

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By AugustinD on 08/17/2021 12:27 PM

Posted By MaxB4 on 08/17/2021 12:11 PM

I've conducted HOA elections for 13 years in California and never once have I had a motion made outside of adjourning a meeting if quorum was not achieved.

This is not relevant.

The point is that Dan or another who attends the meeting, where a quorum is not achieved, may motion to adjourn to a later date, per Ca Corp Code 7512, https://www.davis-stirling.com/HOME/Statutes/Corp-Code-7512, and so on.

Quote:

Also, of the people who turned in a ballot, how many attended the meeting, because if you don't show up, you can't vote.

Civil Code 5115 is clear that ballots (whether mailed in or otherwise submitted) count towards quorum.

Quote:

I have also never had a proxy used after elections were changed in 2006.

Obviously California statutes and many California HOAs still allow proxies.

(Redacted stuff that seems irrelevant or has headed off to a related topic.)

I actually stated that a member could make a motion to adjourn to a later where quorum may or may not be lower.

I also know that ballots count twoard quorum, but the fact of the matter is, the person who cast a ballot but doesn't attend the meeting, can't vote on any motion, especially the one to adjourm=n to a later date.

Because proxies are allowed, that doesn't mean they are used.

How many HOA elections in California have you personally conducted and when was the last one?

MaxB4
Posts: 3,513

Posted:

Dan

To go back to your original question, have someone look at the three governing documents they have from their inception, The Articles of Incorporation, the CCRs and the Bylaws and put all the piece together. A lot of things change when transiioned from devloper to homeowners.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By MaxB4 on 08/17/2021 12:37 PM
How many HOA elections in California have you personally conducted and when was the last one?

Pay me you cheapskate and I will respond.

I bet my $1500 bicycle goes from 0 to 25 mph more quickly than your buzillion dollar, gas guzzling, climate destroying, wildfire causing 45 foot RV.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By AugustinD on 08/17/2021 12:51 PM

Posted By MaxB4 on 08/17/2021 12:37 PM
How many HOA elections in California have you personally conducted and when was the last one?

I bet my $1500 bicycle goes from 0 to 25 mph more quickly than your buzillion dollar, gas guzzling, climate destroying, wildfire causing 45 foot RV.

You might be right on this one, BUT then, I ain't in any hurry.