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How to deal w/ an old Amendment that is fatally flawed?

Started by AdamL1 • 15 replies • 441 views

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AdamL1 (UnitedStates)
Posts: 559
Posted:
Looking for input here on this situation.

I'm dealing with an old Bylaws Amendment to our local (sub) HOA.

The Amendment does many things that seem to me are fatally flawed, conflict with the Master Bylaws/CCR's, conflicts with its own Bylaws, and adds language to sections that do not relate to those terms.

- it changes the date of the Annual Meeting from March to August....but the Master HOA states that the local HOA's must meet in March, before the Master mtg in April.
- it changes the min. days of notice to 90 days for the Annual mtg....but State Law says that notices cannot exceed 60 days, as well as the Master CCR stating notice cannot exceed 30days.
- it changes the Board members from 3 to 5-to-7....ok, no problem here.
- it changes terms from 1 yr to 2 yr terms and removes requirement to elect at each Annual mtg... ok, no problem here, except that means we only have elections every 2 years....and it might conflict with Master.
- it adds many convoluted and complex rules about elections, term limits, voting, nominations, etc....ok, no problem here except its unnecessarily complicated.
- it changes the quorum requirements for board meetings from majority to 3 ... this conflicts with other sections of Local Bylaws and the Master.
- nearly all the new terms and language are stuffed into sections of the bylaws that do not relate to those issues, without editing the actual sections that control that given issue, thus it internally conflicts with itself.

On top of these issues, the Amendment was never filed with the County Recorder and there's no minutes or records of the Amendment (no proposal, no meeting minutes, no vote count, no nothing).

.........................

So here I am now as the President of a new cycle of 5 board members that all were 'elected' to a 2 year term, according to the Amended rules. I and many others are in favor of walking back and abandoning this amendment, given the reasons above (conflicts with Master and its own other sections of Bylaws, conflicts with state law, was never filed with county clerk, no records).

Any advice on this? How to downsize the board from 5 to 3? How to reverse this crappy amendment?
AugustinD
Posts: 3,698
Posted:
Can you please quote what your Bylaws say about amending the Bylaws?
KellyM3 (North Carolina)
Posts: 2,239
Posted:
Quote:
Posted By AdamL1 on 01/10/2022 10:52 AM
Looking for input here on this situation.

I'm dealing with an old Bylaws Amendment to our local (sub) HOA.

The Amendment does many things that seem to me are fatally flawed, conflict with the Master Bylaws/CCR's, conflicts with its own Bylaws, and adds language to sections that do not relate to those terms.

- it changes the date of the Annual Meeting from March to August....but the Master HOA states that the local HOA's must meet in March, before the Master mtg in April.
- it changes the min. days of notice to 90 days for the Annual mtg....but State Law says that notices cannot exceed 60 days, as well as the Master CCR stating notice cannot exceed 30days.
- it changes the Board members from 3 to 5-to-7....ok, no problem here.
- it changes terms from 1 yr to 2 yr terms and removes requirement to elect at each Annual mtg... ok, no problem here, except that means we only have elections every 2 years....and it might conflict with Master.
- it adds many convoluted and complex rules about elections, term limits, voting, nominations, etc....ok, no problem here except its unnecessarily complicated.
- it changes the quorum requirements for board meetings from majority to 3 ... this conflicts with other sections of Local Bylaws and the Master.
- nearly all the new terms and language are stuffed into sections of the bylaws that do not relate to those issues, without editing the actual sections that control that given issue, thus it internally conflicts with itself.

On top of these issues, the Amendment was never filed with the County Recorder and there's no minutes or records of the Amendment (no proposal, no meeting minutes, no vote count, no nothing).

.........................

So here I am now as the President of a new cycle of 5 board members that all were 'elected' to a 2 year term, according to the Amended rules. I and many others are in favor of walking back and abandoning this amendment, given the reasons above (conflicts with Master and its own other sections of Bylaws, conflicts with state law, was never filed with county clerk, no records).

Any advice on this? How to downsize the board from 5 to 3? How to reverse this crappy amendment?

This is worth engaging your HOA attorney on the matter of the Amendment never being filed at the county courthouse. The courthouse filings so very important because it's the final word on the HOA by-laws for new buyers into your community. If it's really never filed, I can see no way the HOA could enforce the amendment rules on new buyers because due diligence by buyer attorneys will not reflect your HOA rules.

The rest of the terms are moot for discussion until you settle whether unrecorded by-laws are binding at all. I argue they are not and with your leadership (and a slowish pivot) you'll restore original operations per the established by-laws.

Also, if you are pushing to shrink your board, you should be willing to be one of the two people who must leave the board in order to meet the original by-law...or at least be willing to lose your seat.

This sounds like an issue that you've rightfully uncovered but that no one else worrying about too much.

AugustinD
Posts: 3,698
Posted:
This is what I am seeing in Idaho, regarding amendment of Bylaws:

These Bylaws may be amended by the Corporation at an annual meeting or at a duly constituted meeting of the Corporation for such purpose as provided in the Articles of Incorporation. No amendment to these Bylaws shall take effect unless approved by at least a Majority of Members or such other percentage as herein otherwise provided.

I say that, if there's no proof of the vote, then the amendment is not legally valid.

HenryS7 (Pennsylvania)
Posts: 336
Posted:
Our law office says that as long as you make decisions at meetings and make decisions that are reasonable, the courts will often back the board.

So I would discuss this as a board and make a reasonable decision, and away you go.
KerryL1 (California)
Posts: 14,550
Posted:
I agree that since there are no minutes of a meeting of the members when these so-called Bylaws were allegedly amended, no amendment exists.

Does ID or your own Gov Docs require that Bylaws be recorded?

AugustinD
Posts: 3,698
Posted:
Quote:
Posted By HenryS7 on 01/10/2022 12:02 PM
Our law office says that as long as you make decisions at meetings and make decisions that are reasonable, the courts will often back the board.
... and case law says the "reasonable" test is applicable only in situations where the covenants or bylaws explicitly give the board discretion.

In other words, a board cannot do anything it wants to do. It has to follow the governing documents. Where the governing documents give the board discretion to do xyz, this discretion must be exercised reasonably (meaning a court would agree the board was reasonable in exercising its bylaw-authorized or CC&R-authorized discretion).
AdamL1 (UnitedStates)
Posts: 559
Posted:
Quote:
Posted By AugustinD on 01/10/2022 11:07 AM
Can you please quote what your Bylaws say about amending the Bylaws?

This is boilerplate stuff. It says that Bylaws may be amended by the Corporation at the annual meeting or special meeting for the purpose of amending. No Amendment shall take effect unless approved by at least a majority of members.

I'm more concerned about:
1. no filing with the county
2. no records of this amendment from 2015 (and most homeowners including the previous president did not even recall this existed).
3. Internally inconsistent with both local and master HOA docs
4. violates state code.
AdamL1 (UnitedStates)
Posts: 559
Posted:
Quote:
Posted By KellyM3 on 01/10/2022 11:20 AM

This is worth engaging your HOA attorney on the matter of the Amendment never being filed at the county courthouse. The courthouse filings so very important because it's the final word on the HOA by-laws for new buyers into your community. If it's really never filed, I can see no way the HOA could enforce the amendment rules on new buyers because due diligence by buyer attorneys will not reflect your HOA rules.

The rest of the terms are moot for discussion until you settle whether unrecorded by-laws are binding at all. I argue they are not and with your leadership (and a slowish pivot) you'll restore original operations per the established by-laws.

Also, if you are pushing to shrink your board, you should be willing to be one of the two people who must leave the board in order to meet the original by-law...or at least be willing to lose your seat.

This sounds like an issue that you've rightfully uncovered but that no one else worrying about too much.


Yea, this is one of the big things I am concerned about. It's not legally recorded, thus can't be found via due diligence for buyers.

Of course, I plan to say that I will stepdown after taking this action to help satisfy the reduced board member count.
AdamL1 (UnitedStates)
Posts: 559
Posted:
Quote:
Posted By AugustinD on 01/10/2022 12:26 PM
Posted By HenryS7 on 01/10/2022 12:02 PM
Our law office says that as long as you make decisions at meetings and make decisions that are reasonable, the courts will often back the board.
... and case law says the "reasonable" test is applicable only in situations where the covenants or bylaws explicitly give the board discretion.

In other words, a board cannot do anything it wants to do. It has to follow the governing documents. Where the governing documents give the board discretion to do xyz, this discretion must be exercised reasonably (meaning a court would agree the board was reasonable in exercising its bylaw-authorized or CC&R-authorized discretion).

I would think one could easily argue that an amendment that conflicts with other sections of the local and master Bylaws, CCR's, and State Law is not reasonable.
KerryL1 (California)
Posts: 14,550
Posted:
I'll try again, Adam: Does ID or a governing doc of your HOA require that Bylaws be recorded?

To me, the so-called Bylaws amendment is not valid because there's no official HOA record of it being approved in meeting minutes.

But I'd like clarification of your elections. Were they held in August? Is that when you were elected to your sub board and a total of five directors were elected to it? Did the ballot for this election referee to the so-called amended Bylaws?

AdamL1 (UnitedStates)
Posts: 559
Posted:
Quote:
Posted By KerryL1 on 01/10/2022 2:33 PM
I'll try again, Adam: Does ID or a governing doc of your HOA require that Bylaws be recorded?

To me, the so-called Bylaws amendment is not valid because there's no official HOA record of it being approved in meeting minutes.

But I'd like clarification of your elections. Were they held in August? Is that when you were elected to your sub board and a total of five directors were elected to it? Did the ballot for this election referee to the so-called amended Bylaws?


Hard to find a statute that says so, but that is general operating practice for these things. I can't find anything specific to bylaws.

https://www.hopb.co/idaho
HOA Documents - The association’s Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Amendments to CC&Rs, Bylaws, Lien Notices, HOA Notices, Plats, Maps, and other community documents can be found by visiting the county recorder’s office website in which the association is located. The association’s CC&Rs must be recorded with the county land records to be enforceable.

https://legislature.idaho.gov/statutesrules/idstat/Title30/T30CH30PT7/
https://legislature.idaho.gov/statutesrules/idstat/Title30/T30CH30/SECT30-30-705/
https://legislature.idaho.gov/statutesrules/idstat/Title30/T30CH30/SECT30-30-710/

---------------
the meeting was going to be held in August, then someone dug up a copy of this amendment that requires 90 days notice, so we were delayed until end of November. Yes, we elected 5 members according to the amendment. Now that I'm on the Board, I can effect change.
KellyM3 (North Carolina)
Posts: 2,239
Posted:
Quote:
Posted By AdamL1 on 01/10/2022 1:51 PM
Posted By AugustinD on 01/10/2022 11:07 AM
Can you please quote what your Bylaws say about amending the Bylaws?


This is boilerplate stuff. It says that Bylaws may be amended by the Corporation at the annual meeting or special meeting for the purpose of amending. No Amendment shall take effect unless approved by at least a majority of members.

I'm more concerned about:
1. no filing with the county
2. no records of this amendment from 2015 (and most homeowners including the previous president did not even recall this existed).
3. Internally inconsistent with both local and master HOA docs
4. violates state code.

Your concerns should focus on #1 and #2.

#3 - The master by-laws should accent but not replace sub-HOA board by-laws.
#4 - state laws would render bylaws moot if there's a conflict.

Sounds like homeowners would back the amendment being ruled invalid and disregarded. But, if you have this support, why not officially make the changes you think need changing and move forward? In this light, you can preserve your board of directors and better align quorum mandates while you're at it.

There is not going to be a lawsuit that I can see....just petition and fix it at a board called board meeting.

AugustinD
Posts: 3,698
Posted:
Quote:
Posted By AdamL1 on 01/10/2022 1:51 PM
Posted By AugustinD on 01/10/2022 11:07 AM
Can you please quote what your Bylaws say about amending the Bylaws?

This is boilerplate stuff.
Some HOAs have bylaws that allow the Board, all by itself, to amend the Bylaws. It is not boilerplate stuff.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By AdamL1 on 01/10/2022 1:55 PM
I would think one could easily argue that an amendment that conflicts with other sections of the local and master Bylaws, CCR's, and State Law is not reasonable.
It depends on the specific conflict.

You're a new HOA president Two suggestions for the archives:

-- First impressions count for a great deal. What do you value in a person designated to lead a group? Are you practicing these things yourself?

-- At board meetings, one of the best responses to anything any director or owner asserts is: "Show me where it says that in the governing documents." Importantly, you have to practice this yourself. Always be open to saying, "I do not know. I am going to research it."

AdamL1 (UnitedStates)
Posts: 559
Posted:
Quote:
Posted By KellyM3 on 01/10/2022 3:51 PM

Your concerns should focus on #1 and #2.

#3 - The master by-laws should accent but not replace sub-HOA board by-laws.
#4 - state laws would render bylaws moot if there's a conflict.

Sounds like homeowners would back the amendment being ruled invalid and disregarded. But, if you have this support, why not officially make the changes you think need changing and move forward? In this light, you can preserve your board of directors and better align quorum mandates while you're at it.

There is not going to be a lawsuit that I can see....just petition and fix it at a board called board meeting.


Assuming amendment had minutes and recorded with county, what to do about all the contradictions and flaws? I'm not sure what you mean about the Master accenting the local. I thought it was the other way around. The local can not write CCR's and Bylaws that conflict with the Master, likewise with state law and city code.

Yes, a turd of an amendment might get voted on and filed with the county, but does that make it legally valid if challenged? Example: If the Master says no boats on driveway, the local can't write an amendment locally to allow boats on driveways.

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