Change in CC&R's requiring 75% majority vote

ScottT5
Posts: 63

Posted:

All,

I am a homeowner and considering servicing on an HOA board. you all helped me tremendously on a issue with an incorrect estoppel cert for a covenant violation that was grandfathered. The HOA attorney sided with me.

So we were able to sell our home and have now moved to our new home in Michigan.

we are in a large (area) development with only around 8-10 homes, although many lots are owned and just not built as of yet.

There is no Property Management company and the President is the founder and still owns close to 25 lots. There are published Declaration CC&Rs and Bylaws and it is fairly simple in nature.

There are some founding members who are pushing the limits of what I think would be unenforceable. The Declaration may be changed but require a majority vote of 75%, per the published CC&Rs. There was a letter sent to residents, from aboard member requesting a change to the Declarations.

In the letter, it stated a Yes or No vote, but had a caveat stating "Any resident not responding, would automatically be considered a Yes Vote"

Thoughts? is that enforceable? and thanks in advance for your knowledge.

ValK2 (Tennessee)
Posts: 65

Posted:

Our HOA....100 homes...is in the process of trying to subvert our 50% plus one requirement of "yes" votes necessary to change our Covenants. We have not seen the new proposals yet, but they are heading towards a watered down version of what we currently have. The new theme seems to be "my property; i can do with what i please." The situation is further aggravated by the failure of our Board to enforceany , even the most simple of things like placing trash cans out of sight, for a several years now.

The idea of the Board seems to be that they can change the Covenants one by one with Board actions and not turn the CCR's over to the members for a vote. Just as they do with, for example, a change in the HOA Fee, they will say "we abolish Covenant such and such which says you must keep your trash cans out of sight".

The person who previously worked to get our Covenants changed, en masse, is on the committee and his view is that the committee is being silly if they think they can just go ahead and change things willy-nilly. But if they change the by-laws (with a member vote), then it becomes a free for all. And i believe it will degrade our community. Stay tuned. The next meeting is in the middle of July.

As regards the "if you don't vote it is a "yes" vote", we apparently had a similar event where our tennis courts were approved (and money borrowed to build them) by setting up the vote exactly as you suggest: If you don't vote, it is a yes. The "yes" vote carried the day and people are still pizzed about it. But being a southern community, we "all just get along". Blah.

I will update when we hear the new proposals from the Covenant Committee, and the Boards attempts at making the changes without taking it to a membership vote. The current president seems to be hell bent on simply changing things one at a time. Maybe people won't notice? Maybe because we don't enforce already the argument will be that it really isn't a change from the general practice? I am unsure, but anxiously watching.

ScottT5
Posts: 63

Posted:

Thank ValK2

Our HOA was around 800 members and we had a Property Management company. they attempted to change fence requirements for years and never were able to gather enough votes to reach a majority.

I suggested Docusign instead of mailout communication and it was shot down stating Docusign is not legally binding

Hmmm Mortgages, Cars, Insurance... I guess property management is different.

It finally happened but did require a majority vote and was registered with the county. someone suggested "if you don't vote it is a yes vote and it was shot down hard... the argument was a vote not cast has zero value. but it never made it to counsel. hence my ask.

I do not think it legally binding... let me know what you find and good luck

TerriS6 (California)
Posts: 3,284

Posted:

In your CC&Rs, it probably says each lot gets one vote or similar. That means nobody can vote for you unless there is a proxy or power of attorney, right?
Do your election rules or bylaws say anything about automatic yes votes? I'm guessing no.
Is there a written limit anywhere to the number of votes cast by an owner with multiple lots?

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By ScottT5 on 06/18/2024 10:24 AM

In the letter, it stated a Yes or No vote, but had a caveat stating "Any resident not responding, would automatically be considered a Yes Vote"

Thoughts? is that enforceable? and thanks in advance for your knowledge.

My guess is that if gets in front of a judge, this caveat would not hold up. What that means in real life is that unless somebody challenges it legally, it could happen.

Escaped former treasurer and director of a self managed association.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Scott

The developer/declarant is probably acting as the PM and will do so until turnover to owners. The 75% is probably of all owners and it sounds like your BOD is saying 75% of existing owners which is wrong. Also, a vote not returned is not a YES vote nor a NO vote and should not be considered as such.

You say many lots have yet to be built on, might well mean they get a vote.

KerryL1 (California)
Posts: 14,550

Posted:

Your own documents will tell you, Scott. You didn't mention your Articles of Incorporation (or similar title), which might have something about elections in them. Look for them assuming your HOA is a corporation.

Based on what you wrote, 75% of all Lots must vote yes to approve any amendment to your CC&Rs (declaration).

A "board member" cannot send a letter asking for votes. The Board as a whole votes to send ballots out to owners for amendments. How to vote, how much notice for a meeting to count votes, etc., is IN your gov. docs., probably in your Bylaws to which we have no access.

Please read your CC&rs on owners voting and amending it. also read your Bylaws on how. where, etc ownrs must vote. Also read Mich. corporations codes on elections & voting. Some kind-hearted soul here may do this legwork for you, but I Ould at all count on it.

I don't understand JohnC's statement: "The 75% is probably of all owners and it sounds like your BOD is saying 75% of existing owners which is wrong." What is the difference between existing owners and all owners??? In addition, the "Board"" did not send a letter, a board ember did. Huge difference.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By ScottT5 on 06/18/2024 10:24 AM
The Declaration may be changed but require a majority vote of 75%, per the published CC&Rs. There was a letter sent to residents, from aboard member requesting a change to the Declarations.

In the letter, it stated a Yes or No vote, but had a caveat stating "Any resident not responding, would automatically be considered a Yes Vote"

Thoughts? is that enforceable?

-- Are you aware that unlike Florida, Michigan does not have a HOA statute?

-- Since Michigan lacks a HOA statute, the Michigan case law here would pertain to covenants.

-- If you took this to an attorney, then the attorney would spend some time looking up case law in Michigan. You could look up nearly all the case law yourself and probably do about as good a job as an attorney, assuming you have the savvy to figure out the correct key words. See https://law.justia.com/cases/michigan/

-- If the case law in Michigan does not say much about this, then you would continue to pay the attorney to see what other states say. What other states say is not binding in Michigan.

-- From my experience with the case law and several actual HOA lawsuits, what a court would say here is a roll of the dice.

-- If I were the judge here, I would not see this as a slam dunk unless an attorney coughed up some case law (from any state) whose reasoning made a lot of sense.

-- I advise owners to deal in reality. Suppose this amendment passes (using the assumption of the board/president/whatever that a non-vote is a legal yes vote). Suppose it passes with 50% of owners having not voted being counted as yes votes. How important is it to you to stop it from passing? Is it important enough to explain the above to the HOA president and say you think he is treading on thin ice here? Do you think the President will hold a grudge if you start talking legalese to him?

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By ElleN on 06/18/2024 7:10 PM

-- Since Michigan lacks a HOA statute, the Michigan case law here would pertain to covenants.

Case law speaking to the bylaws of Michigan corporations would also be pertinent.

KerryL1 (California)
Posts: 14,550

Posted:

Yes, indeed, Scott. non-profit Corpotions Code should help you a lot as I pointed out way above.

You write you're thinking of serving on your HOA's Board, Scott. Good! In my opinion, you need to make it your task to learn your gov. docs and your state's non-profit corps code. If your town and state statutes do not help--but I believe they wlll-- then ,dig through case law.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By KerryL1 on 06/18/2024 7:59 PM
Yes, indeed, Scott. non-profit Corpotions Code should help you a lot as I pointed out way above.

Chances appear to be high that KerryL1 nailed it. The Michigan non-profit corporation statute has express verbiage that speaks to prohibiting counting non-votes as yes votes. Google to find the statute. Keyword search the statute for "abstain."

Per the statute section, the only question remaining (for me anyway) is if perhaps the Articles of Incorporation (AoI) say otherwise. Since the typical Board is not that clever, maybe the AoI do allow non-votes to count as yes votes, and the notice of which the OP spoke was simply consistent with the AoI. We shall see.

CathyA3 (Ohio)
Posts: 6,299

Posted:

My thoughts:

Having been through a few amendments in my community, I believe that "no vote" equals a "no" vote. Just the opposite of what you were told.

Also, I assume that the person you refer to as the Founder is actually the developer and that your community is still under developer control. Typically the developer also votes since they own the lots that haven't been sold to buyers, and a developer's vote usually carries more weight - ie., a developer gets 3 votes for every vote cast by a homeowner. This means that a developer controls the association until the time when it's turned over to the homeowners (this usually happens when a certain percentage of lots have been sold to buyers). Your Declaration/CC&Rs should spell out all of this.

So even if the developer is wrong in how to handle missing votes, they'll probably still have enough votes to get whatever they want. The only exception to this would be if the proposed amendment required unanimous approval. In this case a single dissenting homeowner can stop the amendment from passing.

Bottom line: how important is this change and how much are you willing to pay (in time, money, aggravation, and getting on the developer's bad side) to correct it? That's always going to be the deciding factor on whether to fight something or to let it go.

ScottT5
Posts: 63

Posted:

Hey ElleN... good to speak again.. you were very helpful for us!!!

so interesting politics.. the President owns 23+ lots. there is a volunteer that is working with another lot owner and they crafted this letter. The President is 100% against this change. He did not even get the letter, from what I am told. The lots are all around 1.5 acres and this new declaration change is for the ability to camp on owner lots.

The current CC&Rs allow for owner to camp on lots. "Camping, including the use of recreational vehicles for dwelling purposes, is permitted on a unit for not more than 4 consecutive weeks, or more than 8 weeks in a calendar year. Camping may require a permit from the county."

The letter sent, stated the the new declaration will prohibit all camping on vacant lots. It stated that the lots are overrun with campers during the summer. The change requires a yes or no vote and any vote not cast is automatically considered a Yes vote.

I saw the president and a new owner last week. he was upset that this even went out for consideration as the new out of state owner would like to be able to put her spritner van on the lot during construction of the new home. She would not be able to do so.

The declaration states, changes require an affirmative vote of more than 75% of all co-owners.

as much as I do not want to... I may volunteer. sounds like one person is overriding the president and the owners. I am told of other issues. I am really not even sure what the person does... I think he is part of the committe and the sold ACC member.

TerriS6 (California)
Posts: 3,284

Posted:

There goes the neighborhood.
All our parcels are min 5 acres. Someone bought a parcel and built an industrial shed. Then they said they ran out of money to build the house - they already have another house that they live in. Now apparently they have it rented out

TerriS6 (California)
Posts: 3,284

Posted:

To finish - while I don't like intrusive rules, it should be a basic that you have to build a house. That's what our declaration says. Because now it's just trashy and turns the residential atmosphere into a junkyard.

ElleN (Idaho)
Posts: 4,420

Posted:

ScottT5,

I want to focus on the legality of counting a non-vote as a "yes" vote. Why? Because the Michigan Nonprofit Corp statute speaks specifically to this.

Per the statute, I need you to go find a HOA "governing document" called the "Articles of Incorporation." Nonprofits like your HOA file the Articles of Incorporation with the Michigan Secretary of State. You most likely (but not definitely) received a copy in your closing documents. If a copy is not with your closing documents, go to https://cofs.lara.state.mi.us/SearchApi/Search/Search. Attempt to look up your HOA in the latter. See if maybe the Articles of Incorporation can be downloaded.

Please focus on and prioritize answering this request. Nothing else matters at this time. There's like two of us at this forum who will consistently get into the legal nitty gritty at this forum, because hoatalk.com is mostly a social forum. As luck would have it, the "nitty gritty" here has an exact answer for you as long as you (1) have a copy of the Articles of Incorporation and (2) as long as you look to see what the Articles of Inc say about voting.

KerryL1 (California)
Posts: 14,550

Posted:

I'm glad Elle repeated my above advice. If, however, your HOA is not incorporated, Scott, there won't be an A of Inc.

What does it or your Bylaws say about a board of directors? I assume that state nonprofit corps code require that there BE a Board..

The way I'm seeing it so far is that there is no election happening because state or your own doc's requirements for elections are not being followed. At minimum, the Board, as a whole acting (voting) at a board meeting, must approve any ballot measures to amend the declaration.

I've lost track: Is the developer the president (whom you call "the founder") of the Board?

Scott wrote: "The letter sent, stated the new declaration will prohibit all camping on vacant lots." This make it sound like the entire declaration would be amended. But isn't it just one section of the declaration?

KerryL1 (California)
Posts: 14,550

Posted:

I'm glad Elle repeated my above advice. If, however, your HOA is not incorporated, Scott, there won't be an A of Inc.

What does it or your Bylaws say about a board of directors? I assume that state nonprofit corps code require that there BE a Board..

The way I'm seeing it so far is that there is no election happening because state or your own doc's requirements for elections are not being followed. At minimum, the Board, as a whole acting (voting) at a board meeting, must approve any ballot measures to amend the declaration.

I've lost track: Is the developer the president (whom you call "the founder") of the Board?

Scott wrote: "The letter sent, stated the new declaration will prohibit all camping on vacant lots." This make it sound like the entire declaration would be amended. But isn't it just one section of the declaration?

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By KerryL1 on 06/20/2024 10:29 AM
I'm glad Elle repeated my above advice.

No. I researched and repeated exactly one of your suggestions. I do not support your other suggestions at this time. Why not? If you read the statute, you would know why.

KerryL1 (California)
Posts: 14,550

Posted:

All right; all right. I m sooooo slow in reading some corps. code and Michigan's, at least for me, is especially tough. But, as Elle points out, and as is no surprise, in 450.2408, no abstention "... constitute[s] a vote on that action."

And it does seem possible--per corps. code, that one director could send out a ballot of his own making, but only under many conditions & with many caveats that I do not know were handled legally

ScottT5
Posts: 63

Posted:

Thank you CathyA3.

your point is valid... How important is this to me? well this in particular is not that important to me but is to others. I think the goal would be to let these rogue players understand that they simply can't make up rules without consequence.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By CathyA3 on 06/19/2024 4:34 AM
Bottom line: how important is this change and how much are you willing to pay (in time, money, aggravation, and getting on the developer's bad side) to correct it? That's always going to be the deciding factor on whether to fight something or to let it go.

If you read the relevant non-profit corporation statute section (expressly addressing the counting of non-votes as yes votes), I believe your bottom line would change instantly.

KerryL1 (California)
Posts: 14,550

Posted:

I'm still trying ti understand just who these " rogue players " are, Scott. Are they on the Board?

Have you read yet Elle's citation about abstentions?

WendyM5 (North Carolina)
Posts: 1,522

Posted:

Quote:

Posted By TerriS6 on 06/20/2024 7:33 AM
There goes the neighborhood.
All our parcels are min 5 acres. Someone bought a parcel and built an industrial shed. Then they said they ran out of money to build the house - they already have another house that they live in. Now apparently they have it rented out

5 acre lots and people are still so dang nosy they have to see what other neighbors are doing on their land. Give me a break. I have a 2.5 acre house and I can't even see my neighbors, could care less what they do, but some a$$$ still calls code enforcement on me when my grass gets too tall. good ness

vis ta vie

WendyM5 (North Carolina)
Posts: 1,522

Posted:

how many total lots?
if the president is aganst it and owns 25 lots, most bylaws/ccrs state a small percentage of lots can call for a special meeting and then you can vote off the jerk who is trying to shove this B$ down everyone's throat.
and yes get on the board asap. dont' broadcast any agenda. just be that happy blank slate /poker face member wanting to help out.

get a copy of a MI HOA law book like Hirzel's Handbook: How to Operate a Michigan Condo or HOA (2nd Edition) Paperback – March 21, 2023
if you are not a reader get the audio book copy and listen in yoru car while driving.

good luck.

vis ta vie

TerriS6 (California)
Posts: 3,284

Posted:

Quote:

Posted By WendyM5 on 06/23/2024 9:58 AM

Posted By TerriS6 on 06/20/2024 7:33 AM
There goes the neighborhood.
All our parcels are min 5 acres. Someone bought a parcel and built an industrial shed. Then they said they ran out of money to build the house - they already have another house that they live in. Now apparently they have it rented out

5 acre lots and people are still so dang nosy they have to see what other neighbors are doing on their land. Give me a break. I have a 2.5 acre house and I can't even see my neighbors, could care less what they do, but some a$$$ still calls code enforcement on me when my grass gets too tall. good ness

The import is that the nosy board will not be able to enforce anything because they enforce nothing.

WendyM5 (North Carolina)
Posts: 1,522

Posted:

Quote:

Posted By TerriS6 on 06/23/2024 11:00 AM

Posted By WendyM5 on 06/23/2024 9:58 AM

Posted By TerriS6 on 06/20/2024 7:33 AM
There goes the neighborhood.
All our parcels are min 5 acres. Someone bought a parcel and built an industrial shed. Then they said they ran out of money to build the house - they already have another house that they live in. Now apparently they have it rented out

5 acre lots and people are still so dang nosy they have to see what other neighbors are doing on their land. Give me a break. I have a 2.5 acre house and I can't even see my neighbors, could care less what they do, but some a$$$ still calls code enforcement on me when my grass gets too tall. good ness

The import is that the nosy board will not be able to enforce anything because they enforce nothing.

as it should be. an HOA for 5 acre lots is insane. Leave your neighbors alone.

vis ta vie

TerriS6 (California)
Posts: 3,284

Posted:

I meant their inability to enforce as a positive.

ElleN (Idaho)
Posts: 4,420

Posted:

The OP recently provided evidence that this subdivision is subject to the Michigan Condominium Act. See https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/373127/view/topic/Default.aspx

(Once in awhile subdivisions of single family homes are in fact legally subject to a state's condominium act.)

In the latter thread, the OP asserted:

Quote:

Posted By ScottT5 on 07/14/2024 10:04 AM
He is the one who, if you recall, sent a letter for a vote, stating that no reply is considered a yes vote. thanks to you all I looked it up in State condo law and that is illegal.

So far, I see nothing that says what he claims. One section of the Michigan Condo Act does indicate that, where the statute or governing documents require a vote of mortgagees on amendments, mortgagees (lenders on homes) may not have a non-vote counted as a yes vote.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By WendyM5 on 06/24/2024 4:40 PM

Posted By TerriS6 on 06/23/2024 11:00 AM

Posted By WendyM5 on 06/23/2024 9:58 AM

Posted By TerriS6 on 06/20/2024 7:33 AM
There goes the neighborhood.
All our parcels are min 5 acres. Someone bought a parcel and built an industrial shed. Then they said they ran out of money to build the house - they already have another house that they live in. Now apparently they have it rented out

5 acre lots and people are still so dang nosy they have to see what other neighbors are doing on their land. Give me a break. I have a 2.5 acre house and I can't even see my neighbors, could care less what they do, but some a$$$ still calls code enforcement on me when my grass gets too tall. good ness

The import is that the nosy board will not be able to enforce anything because they enforce nothing.

as it should be. an HOA for 5 acre lots is insane. Leave your neighbors alone.

It's possible that the local municipality (city, township, whatever) requires all new communities to be in HOAs. That way it can pass costs normally paid for out of taxes onto the buyers in the new community (eg. road maintenance, electrical and other utility lines, etc.). Developers who want to develop land have no choice about this.

This is certainly true in my area. If you want to buy new construction, you're going to be in an HOA - take it or leave it.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I'll also note that 5 acres is remarkably small when your next door neighbor creates a shooting range in his back yard. Or raises goats or chickens. Or plays his bagpipes. (A college friend did exactly that and stampeded the cows at a nearby farm. We thought this was hugely entertaining. We were jerks.)