Owners right to Amend

We are trying to interpret this section in our deed-restrictions. We need to clean up our restrictions and the developer is agreedable (up to a point I'm sure). With over 600 homes we will never get 70% of the homeowner vote. Should we interpret as written and work with developer to clean up the restrictions even through we will get some push back from homeowners as they don't attend meetings, or read minutes. Or go with this this section was not the intent the developer.

The declaration is poorly written and thus open to interpretatioaragraph 6 of the Declarations state, "Owner's Right to Amend: These Covenants and Restrictions may be amended at any time by means of a written, recorded amendment signed by the Owners of no less than seventy percent (70%) of the Tracts with one vote per Tract, except Developer shall have three (3) votes per tract. For the purposes of this paragraph, the Developer shall be considered the Owner of all Tracts where record title is held by Developer." Does this mean that the Developer has three (3) votes per tract regardless of ownership?

In California if an amendment needs a high percentage to approve but the yes vote got at least 51%, you can file a petition in court to lower the percentage to approve if you meet all the conditions. Maybe you have something like that in Texas.

CathyA# - the issue is this one sentence. " except Developer shall have three (3) votes per tract." our lawyer said that because the document is so poorly written that he can't confidently advise you as to what it states. It seems to be what is written vs intent.

While I agree with you that "if the developer supports the changes you want to make, now's the time to make it happen". While we are not looking at radical changes - we want to make the best decision. My experience with the developer is that he does know what it says, however, he may not understand that it left us with having to interpret one sentence.

Our owner appointed BOD worked closely with the Declarant and we had him make 4 changes to our docs prior to turnover. He could do this as he had the voting power to do so.

Concho

What do you not understand? The developer get 3 vote for each site he owns.

400 lots with 250 sold/owned thus 250 votes among them.

150 lots owned by the developer who gets 3 votes per lot thus he gets 450 votes.

70% of 400 needed to amend is 280. In this example the developer can amend as he wishes.

At 3 votes per lot the owner can control the votes requiring 70% until he owns only 94 lots.

ConchoP, first and foremost, I recommend the board hire another attorney. Second, please try to process the following:

-- Nationwide when a developer is still in its "development period," the declaration, always or nearly always, says the developer can amend as it desires, without an owners' vote. The amendments have to be "reasonable," or a court might throw them out. What you quoted so far does not say this. I suspect there is more in this Declaration that will resolve misunderstandings of the section you quoted above.

-- Texas statute TPC 209 has a lot to say about amendment of the Declaration. What it says may or may not be applicable. Your board should try to process the following, from TPC 209, and ask a qualified HOA attorney about TPC 209's application, if any, with regard to amending.

From TPC 209:
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"Development period" means a period stated in a declaration during which a declarant reserves:

(A) a right to facilitate the development, construction, and marketing of the subdivision; or

(B) a right to direct the size, shape, and composition of the subdivision.
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Sec. 209.0041. ADOPTION OR AMENDMENT OF CERTAIN DEDICATORY INSTRUMENTS.
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(d) This section does not apply to the amendment of a declaration during a development period.
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(h) Except as provided by Subsection (h-1) or (h-2), a declaration may be amended only by a vote of 67 percent of the total votes allocated to property owners entitled to vote on the amendment of the declaration, in addition to any governmental approval required by law.

(h-1) If the declaration contains a lower percentage than prescribed by Subsection (h), the percentage in the declaration controls.

(h-2) If the declaration is silent as to voting rights for an amendment, the declaration may be amended by a vote of owners owning 67 percent of the lots subject to the declaration.

-- Be aware that when a section of the Declaration is ambiguous or unclear, the courts will read the Declaration as a whole to see if it clarifies the meaning of the ambiguous section.

-- Your board should also see if the Articles of Incorporation perhaps clarify the situation.

Elle

I have seen docs that said when a COO (Certificate Of Occupancy) is issued the developer loses voting rights for that lot, that is unless he buys it and then he gets one vote like other owners.

Elle

COO and move in ready are the same basic thing though COO is generally issued by the local housing authority thus some legality to it.

I finally see the problem with the wording itself here. The problem (to me) is the phrase "Owners of no less than seventy percent (70%) of the Tracts," followed by verbiage that seems to suggest something else. I say:

Seventy percent of the Owners is 70% of the Owners of the Tracts. It does not say "70% of the votes."

I think this is a bona fide ambiguity. When bona fide ambiguities arise, the courts interpret against whoever wrote the documents. In this case the author is the Declarant.

Any intent not written down is irrelevant. This includes anything the Declarant might say today that he meant here. It's the actual words of the contract that count. Hence I interpret against the Declarant. Per the Declarant, the magic number is 70% of the owners of the Tracts, period. The tracts the declarant owns get the exact same vote as non-declarant owned tracts.

A court could go either way, though I hope it would see things as I do above (per reading a lot of case law).

Someone has to make a command decision here and roll the dice.

The only other thing I question is whether the percentage to pass the amendment is 67% (per statute, when certain conditions are met) or 70% (per the declaration).