CC&R revision options?

Started by TerriS6 • 60 replies • 1010 views

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TerriS6 (California)
Posts: 3,284

Posted:

Our association is currently updating and revising its CC&Rs. The board has specific changes it wants that expand its power. For two years, it has refused to let members see what specific changes it is contemplating - only in general it is to add restrictions on rentals, pets, etc. My question is: does anyone have experience with offering two versions for a vote? One version would be updated CC&Rs only to comply with current laws. The second version would include all the discretionary changes the board wants. Thank you.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

That is irrelevant. The vote will be for the submitted changes. That is when yes or no to them
. Majority wins.

Former HOA President

TerriS6 (California)
Posts: 3,284

Posted:

Thanks but that's not my question.

ElleN (Idaho)
Posts: 4,420

Posted:

The Davis-Stirling site seems to indicate that no statutory mechanism exists for the owners to force the board to offer, in a vote for approval, the particular amendments an owner or owners might want.

https://www.davis-stirling.com/HOME/C/CC-R-Amendments

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

Replacing the board seems to be the only remedy.

I know you read your governing documents carefully. Do your bylaws or CC&Rs offer any options for owners to take control of amending?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Terri
As I read your question you are asking the BOD to put forward two set of Covenants, the existing and one with revisions then asking members to vote for one or the other?

I have never heard of this being done.

TerriS6 (California)
Posts: 3,284

Posted:

Thank you John and ElleN, this is what I wanted to know - if anyone had seen this done.

TerriS6 (California)
Posts: 3,284

Posted:

I understand that every time a CC&R revision has been proposed in the past, the overwhelming response from homeowners is not just "no," it's "hell no!" So the dilemma presents itself: how to conform CC&Rs to current legal standards without adding a lot of new restrictions that members don't want?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Terri

There are many sets of Covenants and Bylaws that have never been updated, mainly due to cost. Some of them contain illegal things but when push comes to shove the laws are upheld, not the outdated docs. Classic examples are those with race restrictions in them.

DavidG45 (Delaware)
Posts: 994

Posted:

Quote:

Posted By TerriS6 on 05/20/2023 5:59 AM
Our association is currently updating and revising its CC&Rs. The board has specific changes it wants that expand its power. For two years, it has refused to let members see what specific changes it is contemplating - only in general it is to add restrictions on rentals, pets, etc. My question is: does anyone have experience with offering two versions for a vote? One version would be updated CC&Rs only to comply with current laws. The second version would include all the discretionary changes the board wants. Thank you.

I don't understand what you are trying to say. Could you try posting this again with a little more explanation? For instance, when you say the board wants to "expand its power" what are some examples? Because adding rent control is simply changing the CC&Rs, it is not an expansion of the Board's power. It's not even an expansion of the Association's power. It is simply a new restriction.

Also, when you say one version should "comply with current laws" I again don't understand what you mean. Any CC&Rs would have to comply with laws - laws take precedence over covenants.

Bottom line is, the Board is proposing changes to your CC&Rs, and they will have to get approval from the homeowners. I don't understand what the rest of your post is trying to say.

TerriS6 (California)
Posts: 3,284

Posted:

David, my basic question was asking if anyone had experience offering more than one option for revised CC&Rs.

Our articles limit board's power specifically to the roads (our only amenity). It does not extend to rent control.

By current law, an example: the corporations code and our declaration allow a private board meeting if all directors agree but Davis-Stirling Act does not. Updating that would eliminate some confusion. Also, "single family" designation has prompted board to forbid renting a second unit to a non-family member. Also, renting single rooms to a boarder is now OK by law in CA, again not single family. In fact, uou can now build 4 units on a "single family" lot in CA regardless of what the HOA says.

TimB4 (Tennessee)
Posts: 21,059

Posted:

What would be better would be to gather signatures and petition the board to be able to vote on each proposed change individually vs. all or nothing.

KerryL1 (California)
Posts: 14,550

Posted:

Whether or not your board can hav private board meetings, aka, executive session is normally in an HOA's Bylaws not in their declaration. Please cite what your current declaration says about "private" board meetings.

I don't understand this: the board forbids "renting a second unit to a non-family member." I guess your HOA is condos? And you're saying that currently if I own two condo units I cannot rent out one of them???

As you've learned, CA HOAs can have very few limits on rentals. So the actual text of the newish statutes mean that Onwrs don't have any choice. There's not really anything to vote on. Owners must comply with the law. and it is best to have it codified in your CC&Rs.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By TimB4 on 05/20/2023 10:05 AM
What would be better would be to gather signatures and petition the board to be able to vote on each proposed change individually vs. all or nothing.

+100

If they're together, a single unpopular provision can scuttle others that would have been approved easily.

TerriS6 (California)
Posts: 3,284

Posted:

Our declaration states "The board may also act without a meeting by unanimous written consent of its members" which of course is illegal unless consenting in writing to hold an emergency meeting.

Our HOA is large "single family" parcels, not condos. Either way, board can't restrict renters to family members. By second unit, I was referring to accessory dwelling unit in this case.

Another example is fidelity insurance. It is now mandatory but our declaration says it's optional.

TerriS6 (California)
Posts: 3,284

Posted:

Very good idea.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I should also have noted that if the board is being secretive, they're missing an opportunity to educate the membership on why individual provisions are important and what they mean to the membership.

My biggest regret from my last stint on the board was that I didn't talk more about the revised rental restriction amendment. It got a majority of "yes" votes but not the 75% we needed. If I had spelled out what can happen if investors get a toehold in a community, something that most condo owners don't think about, the amendment may have passed.

KerryL1 (California)
Posts: 14,550

Posted:

Sorry I seem to be so dense here, Terri. So far, you seem to have mentioned changes that will simply codify existing statutes. Your Board should be following those existing statutes anyway even though your docs are out of date on those.

As David put it, "...when you say one version should "comply with current laws" I again don't understand what you mean. Any CC&Rs would have to comply with laws - laws take precedence over covenants."

In fact, take a look at Davis-stirling.com. I think your board can vote to have your CC&Rs match current statutes without sending those particular sections out with ballots for Owners' votes.

What are the new sections the Board wants to add that are not simply already statutes?? What in them would give the Board more "power?"

Your Board, under current law can only take action without a meeting in cases of emergency as you know. And then, they must unanimously agree, and the votes must be memorialized in the next open meeting minutes.

KerryL1 (California)
Posts: 14,550

Posted:

Has your board complied with this yet, Terri? "The [CA] statute authorizes boards to amend their CC&Rs without membership approval to remove unreasonable rental restrictions and bring them into conformity with statutory requirements. Notice must be given to the membership at least 28 days before board action. (Civ. Code § 4741(f).)"

I think we've seen you're familiar with this so double check with Davis-stirling.com. Otherwise, your board cannot approve any amendments on its own except dumping developer language and using the updated civil code numbers.

TerriS6 (California)
Posts: 3,284

Posted:

We’ve never had any rental restrictions so it doesn’t apply to us.

TerriS6 (California)
Posts: 3,284

Posted:

The board will not divulge the details of their proposed changes. Working on it for 2 years without a single meeting. We know they want the power to go on private property and clear vegetation then bill/lien homeowner for the work but that is already covered under state fire prevention laws.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Huh ? Or it just me?

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By TerriS6 on 05/20/2023 8:48 PM

We know they want the power to go on private property and clear vegetation then bill/lien homeowner for the work but that is already covered under state fire prevention laws.

I had a similar option in our CC&Rs.
The board was strongly advised by our attorney not to enter another persons property without a court order unless it was an emergency.
Otherwise, those who entered could face trespassing charges.

Additionally, there are very few reputable companies that would enter property and do any work without the property owners permission.

TerriS6 (California)
Posts: 3,284

Posted:

Our association pre-dates Davis-Stirling (1984) but until 3 years ago, the board had never heard of it.

TerriS6 (California)
Posts: 3,284

Posted:

Here is a question: board has executed contract with law firm to revise our CC&Rs. Part of the contract is: attorney will prepare a ballot and write a letter to the membership SOLICITING APPROVAL of the revised CC&Rs. Is this not using association funds to campaign for an election?

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By TerriS6 on 05/21/2023 6:11 AM
Here is a question: board has executed contract with law firm to revise our CC&Rs. Part of the contract is: attorney will prepare a ballot and write a letter to the membership SOLICITING APPROVAL of the revised CC&Rs. Is this not using association funds to campaign for an election?

I agree this appears to be a clear violation of California Civil Code, either section 1363.03, section 5135, or both as further supported by California case law. See https://www.davis-stirling.com/HOME/A/Advocacy-by-the-Board

MelissaP1 (Alabama)
Posts: 13,836

Posted:

No. Not even close. The vote is for a change not an election.

In our HOA we owned the land around the houses. YOU owned the lot and the house it sat on. Everything else is COMMON property owned/maintained/ruled by the HOA. Our rules stated that if you did not fix a violation of the rules, the HOA could pay to fix it. If you did not pay that bill, then we could lien you for the amount owed. The price of the repair or correction was not YOUR choice. It was ours as we hired the contractor.

Example: Someone paints their house Bright Purple. That color is NOT one of the approved colors of the HOA. We will send you a violation notice to repaint to the approved colors. If you do not, then we will hire a painter to paint it to the correct color. We will then send you the bill for that work. If you refuse to pay, then we place a lien for it. We never fined people in our HOA. You corrected it or we sent you our bill for doing so.

Now it is not the most "legal" feeling of things to have the HOA do this method. I agree 100%. However, it is LEGAL and a way to correct violations against the rules. Each HOA is different. They may feel the need to hire legal options. It may be they decide to use fines. That is their choice on how to handle a violation. It is also not unusual or violation of "rights" if your HOA chooses the option of fix it and send you the bill for it. Legally that is considered "Damages" in the eyes of the law. Which is recoverable to the HOA.

Always wanted ask this... If your HOA is doing this all in "secret" then how do you know about it?

Former HOA President

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By ElleN on 05/21/2023 7:58 AM

I agree this appears to be a clear violation of California Civil Code, either section 1363.03

I think section 1363.03 has been replaced by section 5105.

TerriS6 (California)
Posts: 3,284

Posted:

Thank you, ElleN, for all the references. I re-checked our new election rules and they forbid using association funds to campaign for any election.

TerriS6 (California)
Posts: 3,284

Posted:

Our only common areas are the roads and an overgrown greenbelt. We have no commonly owned landscaping, walls, roofs, sidewalks, lighting, plumbing, water or sewer! All our parcels are minimum 5 acres. The state has very strict fire prevention laws that are enforceable. HOA has no authority to pre-empt public policy here.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Not likely.

The law firm that handled our amendments prepared the mailing to the homeowners. It included the text of the amendment, a plain-English version of the amendments, and the ballot for voting. There was no soliciting going on. This stuff all has to comply with the law - you don't want untrained persons messing things up and invalidating the vote.

It would be very improper for any law firm to influence the vote, and I can't imagine what sort of incentive they'd have for doing so. They'd trash their reputations, get themselves sanctioned by the bar, and for what? (She says, adjusting her Conspiracy Theorist hat to a jaunty angle... the only thing I can think of is if there were high stakes shenanigans going on in the community, and the bad actors believed that the lawyers could influence the outcome of the vote (really?), and they threw boatloads of cash at the lawyers. Sounds like the plot of a John Grisham novel...)

Also not sure that this would qualify as "an election" - would have to see some legalese to determine that.

KerryL1 (California)
Posts: 14,550

Posted:

You & ElleN are right, Terri. Our HOA attorney and our Board & PM in '22 were hyper careful to only beg Owners to vote for our restated CC&Rs, not to vote for approval.

Yes, in CA, voting to amend the CC&Rs (& Bylaws & Articles) must be done by secret ballots via USPS mailers to Owners and constitutes an election.

I'm curious too, Terri: If the Board is discussing possible CC&R amendments in secret, presumably with HOA counsel, how do non-directors know what their plans are? Eventually, the board will need let Owners know, when they meet to instruct the PM to send out ballots, etc., and the proposed amendments will be stated at the meeting and will be listed in the open meeting minutes, so what reasons are there for needing to know right now?

It's appearing to me, Terri, that you don't feel the Board can make any additions to the CC&Rs unless they're about the common areas. Is that right? So, I think we need to know what your CC&Rs (and/or Articles & maybe Bylaws ) say are the powers and duties of the Board? What is the stated "purpose" of the Association? This may not be easy to find as in our CC&Rs, there're maybe 3-4 sections that answer that question. Here is a snippet of our Article 1, "recitals," "Declaration." Basically, in the CC&Rs, "... all of which are declared and agreed to be for the purpose of enhancing, maintaining and protecting the value and attractiveness of the Property." This, then, gives the Assoc., i.e, the Board the right to have CC&R and/or rules about our private condos.

Our original CC&Rs forbade commercial signs or anything else in condo windows. BUT, our city permits realtor signs in windows. And CA Civil Code says that HOAs can make rules about them, e.g, size, duration of posting, etc. Civil Code also states residents can have non-commercial banners, signs in our windows, but that HOAs can limit their size. Our restated CC&Rs comply, with the details in our rules & regs. what I'm trying to say is that just because the state, city or Civil Code permit certain activites in HOAs does not mean these should not be repeated in an HOA's CC&Rs or rules.

TerriS6 (California)
Posts: 3,284

Posted:

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It's appearing to me, Terri, that you don't feel the Board can make any additions to the CC&Rs unless they're about the common areas. Is that right? So, I think we need to know what your CC&Rs (and/or Articles & maybe Bylaws ) say are the powers and duties of the Board? What is the stated "purpose" of the Association? This may not be easy to find as in our CC&Rs, there're maybe 3-4 sections that answer that question. Here is a snippet of our Article 1, "recitals," "Declaration." Basically, in the CC&Rs, "... all of which are declared and agreed to be for the purpose of enhancing, maintaining and protecting the value and attractiveness of the Property." This, then, gives the Assoc., i.e, the Board the right to have CC&R and/or rules about our private condos.

Covenants are one thing. The power to enforce them is another.

Articles; Specific purpose of corporation is to maintain roads and greenbelt of subdivision. Association shall not exercise any power outside specific purpose of corporation except to an insignificant degree.

TerriS6 (California)
Posts: 3,284

Posted:

Thank you, Kerry. If the attorney does write to members soliciting approval and any members disapproves, what is the remedy? To request another mailing explaining why some disapprove?

The only plans we know about are what some directors have said in passing, over the past 2 years and the legal contract that refers to new rent restrictions, parking, pets, satellites. Other than approving the legal contract, CC&R revisions has never been on the agenda.

I don't take issue with any law that is repeated in the CC&Rs - only discretionary new restrictions that the board is paying lawyer to persuade members to accept.

KerryL1 (California)
Posts: 14,550

Posted:

Yikes, I need to correct my misstatement. I wrote, our HOA people "...were hyper careful to only beg Owners to vote for our restated CC&Rs..." I should have written "to complete their ballots and submit them to...." or some such. Neither the Board, our HOA counsel or the PM used HOA resources to ask voters to vote to approve the restatement.

I'd wait to see what, if anything, the attorney writes to accompany the ballots. In our HOA and perhaps in most it's the PM on behalf of the Board who mails out the ballots and the accompanying cover letter. You might be worrying too early about what the attorney may or may not send to Owners. IF the Board or the attorney or your PM DO ask owners to approve the amendments, in writing, you & other Owners, if you wish, may ALSO use HOA resources to send a letter to Owners asking them to vote against the amendments and to include your reasoning.

Thanks for summarizing the "purpose" of your HOA. Would you mind citing the exact wording and what document it's in? Are you sure there's no other place that might give the HOA (via the Board) any other powers, e.g., or obligations, i.e, does the HOA pay for trash services?

What is in the "legal Contract" you're referring to about pets, parking, satellites etc.?

TerriS6 (California)
Posts: 3,284

Posted:

It's in the lawyer's contract that he will write to solicit approval of changes. The legal contract to revise the CC&Rs. If you knew this board, you would worry early.

Re articles, what I wrote is pretty much verbatim. I took photos of the sections but the files were too large to post. The articles are very short and unusually narrow, I'm told by an expert.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By TerriS6 on 05/21/2023 11:11 AM
If the attorney does write to members soliciting approval and any members disapproves, what is the remedy? To request another mailing explaining why some disapprove?

I would write a polite letter to the board stating you are concerned that the board's direction to the HOA attorney to send out a letter advising people to vote for the amendments may violate state law (with case law supporting this). Also state your understanding that attorneys can lawfully give legal advice only to their client. The owners en masse are not the attorney's client. Be extremely humble.

If you want a first draft of such a letter, post back.

TerriS6 (California)
Posts: 3,284

Posted:

Thank you, ElleN. I wrote to the board when the contract was signed two years ago stating my concern. Their lawyer wrote me and said that only applies in director elections, not in elections to amend the CC&Rs.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By ElleN on 05/21/2023 2:01 PM

Their client is tve Association, not the board. The Association is made up of Members who vote. Yes, they can advise the Association.

TerriS6 (California)
Posts: 3,284

Posted:

In reality, the board is the client even though technically the attorney represents the association. Only the board can hire the law firm or claim or waive privilege. Clearly, our board is getting bad advice.

ElleN (Idaho)
Posts: 4,420

Posted:

The client is the corporation. The shareholders (members) are not the same as "the corporation."

ElleN (Idaho)
Posts: 4,420

Posted:

Real life example, in play as we speak:

A HOA board wants to amend the Declaration to impose restrictions on play equipment in front yards. The HOA attorney has reviewed the proposed amendment and approved it.

Several of the owners and board members seem to disdain two families in the HOA in particular. Both families have children.

One of the families has lawyered up. The family's lawyer has threatened that, if the amendment passes, then they will name as defendants the HOA and all the owners who supported the amendment, either in a lawsuit pursued under the Fair Housing Act, or using the HUD Fair Housing grievance process.

When the HOA attorney tells the owners that he approved the proposed amendment, should the owners believe the HOA attorney is acting in their best interests?

Should the owners believe that the HOA attorney will defend them when they are sued?

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By ElleN on 05/21/2023 5:57 PM
Real life example, in play as we speak:

A HOA board wants to amend the Declaration to impose restrictions on play equipment in front yards. The HOA attorney has reviewed the proposed amendment and approved it.

Several of the owners and board members seem to disdain two families in the HOA in particular. Both families have children.

One of the families has lawyered up. The family's lawyer has threatened that, if the amendment passes, then they will name as defendants the HOA and all the owners who supported the amendment, either in a lawsuit pursued under the Fair Housing Act, or using the HUD Fair Housing grievance process.

When the HOA attorney tells the owners that he approved the proposed amendment, should the owners believe the HOA attorney is acting in their best interests?

Should the owners believe that the HOA attorney will defend them when they are sued?

Playground equipment, seriously! That's s simple rules addition

TerriS6 (California)
Posts: 3,284

Posted:

I know that.

TerriS6 (California)
Posts: 3,284

Posted:

No and no.

ElleN (Idaho)
Posts: 4,420

Posted:

Responding to my real life FHA-HOA attorney situation:

Quote:

Posted By TerriS6 on 05/21/2023 7:37 PM
No and no.

I agree.

I suppose you can try asking for equal HOA resources to be expended explaining why the proposed amendments are bad in your opinion.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By TerriS6 on 05/20/2023 10:02 AM
David, my basic question was asking if anyone had experience offering more than one option for revised CC&Rs.

Our articles limit board's power specifically to the roads (our only amenity). It does not extend to rent control.

By current law, an example: the corporations code and our declaration allow a private board meeting if all directors agree but Davis-Stirling Act does not. Updating that would eliminate some confusion. Also, "single family" designation has prompted board to forbid renting a second unit to a non-family member. Also, renting single rooms to a boarder is now OK by law in CA, again not single family. In fact, uou can now build 4 units on a "single family" lot in CA regardless of what the HOA says.

In your example, updating CCRs and Bylaws to conform to current Action Without a Meeting language, except in an emergency, does not require membership approval, the Board can do it on their own.

TerriS6 (California)
Posts: 3,284

Posted:

Thank you, Max. I believe they are saving those changes to use as an argument to get their discretionary list passed. "We have to approve this revision to be compliant with current law."

LizD3 (California)
Posts: 200

Posted:

And I though only my Board was a challenge.

Thoughts:
- If you want to offer more than one option, you could offer a ranking vote. Some jurisdictions do this, but there is nothing that I know of that would compel your Board to do this. And I would be concerned that it may be complicated to explain to your neighbors and tricky to tally.
- If possible, it would be preferable to vote on each change, individually, as opposed to all or nothing. I would expect some changes to be sensible and some, less so.
- Members are allowed to request to view Board documentation. Surely something is in writing (that is not client/attorney privilege)? Maybe worth a try so you can see what they are planning? Davis Sterling: 5205 / 5210
- If the attorney is soliciting approval, then it is not an impartial vote. I would think that would invalidate the vote, but no idea what you can do about it.
- It does not sound like it is using funds to campaign for an election (there is no election here), so arguing that might be a bit of a stretch

I doubt I was as helpful to you as you were to me.

TerriS6 (California)
Posts: 3,284

Posted:

Thank you, Liz.
The only record so far is the atty contract to revise. There will be an election when the board has finalized what it wants. There will only be one meeting open to members. No input from members so far. Board refused to survey members to find out if members wanted any changes. It's all the board and the attorney and they will try to shove it down our throats. I will try to find a way for the board to consider presenting discretionary proposed changes separately.

LizD3 (California)
Posts: 200

Posted:

I seem to remember you said the Board has been talking about this for two years. As long as it is not an executive session (and surely you’ve had at least a meeting or two in this time that is not), you are allowed to attend Board and membership meetings (Civ. Code § 4925 and 5000(b)) and can try to discuss the changes.

Of course, if they refuse to discuss the changes, that’s a challenge. Have you asked them why they will not discuss them with the owners?

Did a quick search and found this:
“...the law treats amendment votes like any other election, and issues like “campaign statements,” equal access to association media for opposing positions, and similar rights apply. (Wittenberg v. Beachwalk Homeowners Ass’n, 217 Cal.App.4th 654 (2013).) So, if the Board ENCOURAGES a “yes” vote, rather than simply submitting the documents without particular encouragement, the board must be prepared to extend owners equal access to mailings and the like, even if they decide to campaign against the proposed documents.”

So, at least, you can respond with your own mailing.

Found that, here (they are in southern CA, so what they say should be applicable): https://www.hoaattorneys.com/lawyer/2020/08/14/Articles/A-Step-by-Step-Approach-to-Amending-and-Restating-Governing-Documents_bl40789.htm

You can also call a special meeting once the amendment info is sent out so at least you can have a town hall (Corp Code § 7510(e).

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