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Posted By ParrisG on 07/10/2023 10:44 AM
We have some residents who wish to make significant changes to a common area in our development. They know that the cost could be significant and want to pay for all or a portion of the changes. Of course, the changes must be voted on. But these residents want to help by funding the changes. So, what are the ramifications of allowing residents to fund these changes?
I am glad you understand the owners must vote on the changes as described in the covenants. But if I were you, I would humbly caution the owners: if these changes would increase the assessment beyond what it would be without the changes, and if a vote to make the changes is successful but does not have approval of all owners, then count on it, someone is going to object. This someone may very well sue.
Amendments have to be reasonable. Do not expect a court to approve a majority forcing a minority to accept costs that are not delineated in the current covenants.
Furthermore, whoever is researching this should talk to the insurer. Today insurers are looking for any excuse to drop clients or raise rates and by a lot. If these folks are talking about say a pickleball court, I think the blessing of the insurer will be essential. Why? Because the current covenants likely do not speak of a pickleball court.
I also wonder how this plan would go forward. I think the vote would have to happen first. But the vote is clearly going to be conditioned on the money being available from this sub-group of owners. Formulating an agreement seems perilous.
As an owner or director, I would vote to reject pursuing this. If owners are all upset, have the HOA attorney address them.