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TimB4 (Tennessee)
Posts: 21,059
Posted:
Background - Some of you may recall that my Associations governing documents are very poorly written. Simple example - they didn't allow the Association to enforce the covenants, called the Association a Residents Association vs. a Homeowners association and fixed the annual assessment (which won't keep up with inflation - must change CC&Rs to increase).

The board proposed amendments that will address many of the issues with the covenants. The changes, if adopted, won't take effect until 2031 but at least the foundation will be in place.

Some members have indicated that why should we vote for changes now - we don't know what will happen in 7 years (proverbial kick the can down the road) so wait until then to consider changes.

Other than acknowledging the truth, that we don't know what will happen in seven years, how else can one respond?
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By TimB4 on 07/11/2024 10:41 AM

The board proposed amendments that will address many of the issues with the covenants. The changes, if adopted, won't take effect until 2031 but at least the foundation will be in place.
Does a Board majority continue to believe this is the proper way to interpret the covenants (section 12 in particular)? Is the HOA attorney immovable on an argument that section 12 should be interpreted differently (and if someone does not like it, they can spend the money and go to court)?

Is the HOA attorney immovable on the following appraoch?

I am thinking an approach not unlike the approach your former HOA took is worthwhile here, but with a bit more honesty. For example: Tell folks that courts are divided on how to interpret section 12. The latter is a fact. Tell folks there is no way to guarantee what a court would say. But for the good of the HOA, the board is asking folks to enact these amendments now. Then get as much buy-in and then votes as possible. Pass the amendments, including an amendment to section 12 to add clarity and to make the amendments effective immediately.

Next I might be researching how many years would need to pass before people lose a right to challenge an amendment to CC&Rs, per Tn case law and/or statute.

History on this matter appears at https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/356874/view/topic/Default.aspx
CathyA3 (Ohio)
Posts: 6,299
Posted:
What are their objections to dealing with these changes now? Cost of amendment process? Don't want to address the fixed assessment amount? There are provisions that benefit them personally and they don't want to lose them?

If I remember correctly, I thought that the assessment amount was one of the more serious issues with those CC&Rs. I also think that may be the most difficult one to get people on board with. The facts won't be persuasive because the objectors don't like the facts. The facts are the problem. My suggestion would be trying to reframe the facts to show that what they think is a benefit is actually harming them. For example, delaying maintenance will result in more expensive repairs in the future. Keeping up with maintenance is like regularly changing the oil in your car. If you don't change the oil, you'll save a few bucks on motor oil but you'll damage the engine. Most people drive, so this sort of analogy makes sense.

If I'm wrong about where the objections are coming from, please let us know.

TimB4 (Tennessee)
Posts: 21,059
Posted:
Cathy, good ideas. However, as a reminder, we have zero common areas and zero common amenities.
The only things we take care of are two entrance monuments on private property with easement agreements in place.

Our biggest expense is insurance.
Our total budget is $4,150

The governing documents doesn't allow for increases or special assessments.

Per one of the comments (that summarizes all of them): "Who knows what things are going to be like in seven years!!! My viewpoint is, let’s all live in harmony until the seven years are up and then decide what is best for all of us".

It's a valid point.
It can also have major repercussions in the future if our insurance doubled (like others have) or we have legal challenges.

TimB4 (Tennessee)
Posts: 21,059
Posted:
ElleN,

The attorney is reviewing the documents now. Waiting for their changes and advice.

In reality, I don't care if the changes to the covenants pass or not.
I hope it causes enough angst that we actually get a quorum for the meeting (which we have never met) so we can change the Bylaws (which only requires a simple majority of those present).
A change in the Bylaws would allow for lower quorum to a number we have historically had at meetings.

There is time to have the covenant amendmented later if it fails.

SheliaH (Indiana)
Posts: 6,964
Posted:
It's true you don't know what will happen in the future - which is why you try to prepare as best you can. These aren't the 10 commandments - as the community evolves and people move in and out (or die and someone buys the property), changes should be expected because homeowners 7 years from now may have different priorities than today's homeowners. For example, people may be cool with little or no rules enforcement because most of the homeowners take the time to keep their homes in good order. Seven years from now (and sometimes less) may bring in people who think the rules apply to everyone else but them, and you wind up with junk cars all over the neighborhood, raves in the street at 3 am, or a community where half of the owners don't pay assessments because they don't wanna - but there are no mechanisms to hold them accountable.

For the folks who think you don't have to address things until they happen, remind them that time and circumstance do what they do, and they don't give a damn about your ability or willingness to put off addressing the problem. Better to have plans in place so you can avoid hurry and indecision than having to be forced to make a move quickly because you no longer have a choice. Consider one's health - it's a lot easier to do things like stop smoking (or not starting) when you're young, than decide or be forced to do it when you're middle aged and have been told you have COPD that's so severe, you'll need portable oxygen for the rest of your life. And what do you do if there's a natural disaster - Hurricane Beryl just went through, starting with Mexico and Jamaica. Do you think it considered waiting until the people were better equipped to take precautions, especially it may escalate quickly or peter out by the time it hits the beach?

There are probably other things you can say depending on what else these folks come up with (or not). If they start repeating themselves (and they will), you may have to remind them politely that they just said all that - is there ANOTHER reason they think this should be put off? What are they really concerned about - there are always underlying reasons why people hesitate, and if you can determine what's most bugging people, you may be able to develop ways to address it. Perhaps you can start with smaller changes and work your way up.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
CathyA3 (Ohio)
Posts: 6,299
Posted:
The problem with kicking the can down the road is that it will limit one's options when they've run out of road. I'm sure I'm preaching to the choir here...

The obvious example of this is ElleN's comment about the potential for being unable to make changes after a certain amount of time has passed. If this is true, that should get people's attention even if they think the changes are currently not needed.

Also, I've mentioned in the past that if a state limits the size of annual assessment increases or gives homeowners the final say, then having unrealistically low assessments now can create a financial hole that a community won't be able to climb out of. Couple that with the insurance issues, and I would hope that people would be able to see the implications of sticking their heads in the sand.

Maybe emphasizing that the community risks losing the ability to control its own destiny and that everyone would become personally liable if you can't afford insurance would be an eye-opener.
CathyA3 (Ohio)
Posts: 6,299
Posted:
Last year when we had no board, I made it my mission to scare the cookies out of my neighbors. At the special meeting to try to elect a board, I spelled out what receivership would mean to us: sharp rise in assessments, no say in how the community was run, and we'd have to petition the court to terminate the receivership - they wouldn't automatically turn us loose when we cried "uncle". I invited attendees to imagine what this would mean for them personally.

It worked like a charm.

Many people aren't good at imagining how abstract concepts translate to their daily lives. You have to spell it out for them in concrete details. Your neighbors think they can just live carefree "harmonious" lives until something happens to disturb their peace. Tell them what's happening beneath the surface, right now, what's lurking out of sight, what happens when they knock a hole in the bottom of the boat and they'd neglected to bring along life vests. Ironically the biggest threat to harmony is financial difficulty, as many couples have discovered. The neighbors want to take steps that will damage the thing they claim to value the most. Spell it out for them.
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By TimB4 on 07/11/2024 12:48 PM
Per one of the comments (that summarizes all of them): "Who knows what things are going to be like in seven years!!! My viewpoint is, let’s all live in harmony until the seven years are up and then decide what is best for all of us".

It's a valid point.
Assuming the board/owners do not want to try for amendments effective immediately, then I agree that things can change in seven years. From experience with HOA change, I think this argument easily trumps making changes now.

In CathyA3's second post, I am pretty sure Cathy meant SheliaH above and not myself.
JackS20 (North Carolina)
Posts: 271
Posted:
project inflation 7 years into the futuer to show that the HOA will not be in a good position without dues going up.

Also state that changes often take multiple votes to pass and the HOA is trying to be more democratic.

you are doing your patriotic duty to make sure everyones voice is heard. it would be unpatriotic to not get input. blach blah blah.
KerryL1 (California)
Posts: 14,550
Posted:
To tack on to "Jack": INFLATION. Whatever the attorney is charging now will be much more expensive in 7 years. It also seems that there are plenty of items that will not change once you correct them.

Lenders prefer up-to-date CC&RS and correct CC&Rs.

Sure, there might be "other "changes" to which your HOA must comply, but when they’re statutes from TN, you need not amend your CC&Rs. Here's sample wording form from our related CC&Rs, '22.

Article 16 "General; Provisions" "REFERENCES TO STATE STATUTES"..."In the event that any referenced statute is subsequently amended or superseded, all such references shall thereon mean and refer to the referenced statue as so amended, modified, or superseded, as long as the amended statute continues to regulate or pertain to the same subject matter."

That insurance increases or there are “legal challenges’ possibilities means the language must remain flexible so your HOA Board can craft a budget. I don't see the effects of scubas being a CC&Rs matter?

JackS20 (North Carolina)
Posts: 271
Posted:
I'm jealous of your $4150 annual budget. Ours is a few grand more, but we have a park and 1/4 acre front entrance.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Tim

Where is the restriction that any increase will not apply until 2031 (7 years)?
TimB4 (Tennessee)
Posts: 21,059
Posted:
I thank everyone for their thoughtful answers.

They help.
TimB4 (Tennessee)
Posts: 21,059
Posted:
Quote:
Posted By JohnC46 on 07/12/2024 2:38 PM
Tim

Where is the restriction that any increase will not apply until 2031 (7 years)?

John,

This is not mentioned in the CC&Rs. It is simply how Eastern TN courts few them.
I did a thread on this a few months ago.

See: Subject: Arguments please - amending Covenants

ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By TimB4 on 07/12/2024 3:03 PM
Posted By JohnC46 on 07/12/2024 2:38 PM
Tim

Where is the restriction that any increase will not apply until 2031 (7 years)?


John,

This is not mentioned in the CC&Rs. It is simply how Eastern TN courts few them.
I did a thread on this a few months ago.
I am going to butt in here and say that yes, this is mentioned in the CCRs, but it's a matter of interpretation. Five states' courts (in Oklahoma, New Mexico, Arizona, Utah and Colorado) court see it the way TimB4 indicated in the first post herein. Two states' courts (Alabama and North Carolina) say clauses like that in TimB4's HOA's CCRs do //not// restrict when amendments can be made.

I continue to think his HOA should go with Alabama's and NC's interpretation and then let the chips fall where they may. Why? Because the situation is somewhat dire, in my opinion.

Though at least there is very little that can 'break' at this HOA.

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