There Hasn't Been An Issue Before

Unfortunately, some people are just lazy and not deep thinkers at all (which explains a lot about this country these days) so the best you can do us make sure the process is as transparent as possible.

To begin, note many many many things have changed in the 20 years since the community was established - we really didn't have RING doorbells or Airbnb houses. If any organization wants to function effectively, it's important to put policies and procedures in place to make it easier and faster.

You also want the documents to stand up in court, so this wasn't something that could be done without an attorney. You want this done right and at a fsur price so the board picked the best attorney they could find. Attorneys aren't cheap,, but now that we have proposed amendments, the process will go faster once we get these approved. We can do this every 5, 7 or 10 years and vhange a few things instead of everything all at once.

I have a few more thoughts but am working late so if this conversation gets any traction, I'll be back with more random thoughts. Until then, I'd ignore #4 altogether- sone people get intimidated when someone comes along that really dies know what they're talking about and after all these years, they don't have tge first clue as to what their documents say or how tge community is supposed to be run.

With others, my first question is how do you know your association is a corporation? In most states, perhaps all, corporations must have bylaws. In bylaws we've seen on this forum, Such corprtions must have directors. Such operations early must have, um, Aritcles of Coroperation. perhaps by a different tittle.

Re: d" "The Association shall be formed by all residents who are members of the Association (not owners)." We often see this confused language on this forum. Assuming you ARE a corporation, TN corp.code should state "who" "members are.

My HOA is occupied by about 25% renters and 75% Owners. OWNERS in Calif are Members. Only members may vote and may serve as directors. Renters, tho' "residents" are NOT. Owners who live off the premises, however, are also MEMBERS.

In many states, to bring documents into complinece with the state statutes needs NO owners votes. The Board simply corrects the relevant doc and notes the date of the new (or original ) leglistion. But this makes a sloppy confusing mess over the years.

Lenders like clean current governing documents.

Given your association has few or no amenities, just how long are your CC&Rs??

Just how long are your Bylaws?

I do think your board needs to get prices for rewritng (vs simply amending) the two docs since they both seem to need a lot of repair. How much per owner would this cost?

"living in harmony" is NOT the duty of an HOA. Managing its assets and common areas is. Avoiding liability is one of its tasks. Out of date, inadequate, incorrect governing focus can lead to liability issues some day,

The anon PM, Jackie, is completely wrong: Updating Rule & Regs via Board vote, iS NOT a legal way to correct or amend CC&
Rs. And certainly not bylaws since they do not contain "Rule & Regs."

Are you saying you have quote form an HOA lawyer that it'd be 10-15k to rewrite your Bylaws & CC&Rs? It cost us about $5,000 to a rewrite our 20+pe Bylaws AND our 100+ CC&rs for a. vey complicated 20 y.o high rise.

The anon PM, Jackie, is completely wrong: Updating Rule & Regs via Board vote, iS NOT a legal way to correct or amend CC&
Rs in Cali or most states, I believe.. And certainly not bylaws since they do not contain "Rule & Regs."

Are you saying a quote from an HOA lawyer that it'd be 10-15k to rewrite your Bylaws & CC&Rs? It cost us about $5,000 to a rewrite our 20+pe Bylaws AND our 100+ CC&rs for a. vey complicated 20 y.o high rise.

The CC&Rs are 5 legal pages long.
They mainly deal with restrictions (what can and can not be done on the lots).
The section about an Association is two short paragraphs.
The initial set failed to give the Association the authority to enforce (only gave it to the individual owners).
There is an amendment that does give the Association the authority to enforce - however there is also a legal opinion in our files that says the amendment might not withstand a legal challenge.


5 articles on 3 letter size pages.

There is an amendment to the Bylaws allowing Officers to serve more than 3 consecutive terms (the Bylaws do not mention Directors at all) that I concluded is invalid because the vote happened at a meeting where a quorum was not present and the proposed amendment was only announced to those present vs. the whole membership (a fly by night decision because two individuals had served 3 years and nobody would step forward but the bylaws would have prevented them from continuing to serve).


The Proposed Bylaws are a full rewrite and is titled the restated and amended bylaws.

A legal firm told the Association in 2008 that the documents needed to be rewritten and quoted a price. The board at that time concluded that they could not afford the rewrite at that time and never revisited the issue.

Update:

The storm helena has forced us to delay the membership meeting.
Technically, we will start the meeting then agree to adjourn and reconvene to another date keeping us in compliance with the applicable statutes.

The board had an emergency meeting last night to make that decision and we also agreed, due to members concerns, to have an attorney review and bless the proposed bylaws with the hope that this will resolve issues for some of the members.

I still have to deal with the main question asked - it's been fine for 20 years and worked well, then you came along and upset the apple cart (so to speak).

Side note: Yep, I fully understand that as President I am the face and voice of the Board to the membership and as such receive all the blame.
Not an issue for me. However, it is something anyone who wants to be the President should be aware of.

Actually, the existing, current Bylaws that are deficient.

The proposed set of Bylaws correct that.


The CC&Rs definitely need to be rewritten and, I agree, by a knowledgeable attorney.

Unfortunately, in Eastern TN we are told that the current CC&Rs can only be amended at their next renewal in 2031 (and can not be voted on until one month prior) or, if challenged, the amendment/rewrite would not withstand a legal challenge (that is the issue with the current amendment to the CC&Rs).

The Bylaws do not have such a time restriction. Therefore, the Board is attempting to rewrite the Bylaws to bring them into compliance with current statutes, and clear up some grey area of the CC&Rs through definitions.

As you can see by my update, we are getting the proposed Bylaws reviewed and modified, if needed, by a knowledgeable attorney.

Whether or not your docs are updated to current laws, the association still has to follow the law.
Only the board has power to hire lawyer; members have no authority here.
No matter who is on the board, all are subject to the same docs and laws. This is a protection for the association.
Lawyers' advice is not always correct; otherwise there would never be lawsuits.
If the docs disagree with law, the docs don't apply.
Usually the members can call a special meeting with a percentage, say 5%, of the membership.
Only owners are members.

The bylaws have to be consistent with the Declaration. They don't stand alone.

That has been discussed on this forum before.

Most of the US concurs that even though covenants renew, they may be amended at anytime.

Unfortunately, I live in one of the few areas of the County that courts do not think that way and have made rulings that the Covenants can only be amended at the renewal date.

I had never heard of it before either. However, that is the case in some areas of the Country (including my area).

I mentioned this in the above post, but I don't want it to get lost in the crowd.

I just had a phone call from an individual who told me that they have lived in the development for the past 20 years and everything has been fine.
Therefore, the documents should be grandfathered and no changes are needed. He then said that he believes I should resign immediately.
When asked if he would be willing to serve on as President, he had reasons why it wouldn't be a good idea for him to be on the board because he is a Realtor.
He then asked who is on the board. I told him. He said "so three people make the decisions for the Association?" I replied, "yes, just as it has been done for the past 20 years." He repeated that things didn't need to change and threatened legal action if they do. The call ended.

My concern, the reason I started the thread, is how to respond so the individuals at least consider what is being said. It's possible that they hold the deciding votes on if the proposed bylaws pass or not.

Eastern TN courts say you can only amend the CC&Rs at the renewal date.
Western TN Courts say you can amend the CC&Rs at anytime.

Yes, an attorney is advising us of this.
I also did research, with the help of others on this forum, that confirmed this.
In fact, the attorney who advises us of this keeps reminding us that they won a case because the covenants were renewed too early.

I've been answering questions and realized I haven't taken the time to thank everyone who has provided ideas and methods to address such questions.

I appreciate it!

Tim

Greg,

Thank you for the link. One thing they mention on that site is that the TN Legislator is considering SB-405 to create a homeowners association act. What they don't say is that that bill was introduced in 2015 and died in committee.

You Asked what we are changing, I'm willing to share:

Minor Housekeeping:
Current Bylaws Article 1 is titled definitions but also includes the purpose of the Association, the statement that the Association shall be formed with all residents and states that the Association is to be governed by the CC&Rs. The proposed bylaws expands the definitions as the current bylaws only define "Association" and "Properties". The proposed bylaws will also split identifing the purpose of the association and defining members into their own articles. The Proposed Bylaws will also expand the governing section to include the corporate charter and applicable TN statutes.

Current Bylaws Article II, Meeting of members - Housekeeping. Currently they specify annual meetings shall be held within 10 days of the first meeting. The proposed bylaws identify the month to hold the meeting. Current Bylaws do not mention members may call a special meeting - adding that option under the law to the bylaws. Notice of meetings specify 6 days required, changing to no less than 10 and no more than 60 to be in compliance with TN statute. Currently Quorum is set at 2/3. Statute allows for a minimum of 10% we looked at historical numbers and the proposed bylaws changes quorum to 15%.

Article III, Officers - Specifies that officers are elected by the membership. This is allowed in TN law. TN law also says that the officers (appointed or elected) serve at the pleasure of the board. We are changing this section to say officers are appointed by the Board.

Article IV assessments - Housekeeping. Current Bylaws echos word for word what is in the CC&Rs (which actually specified an amount). This means if the membership ever amends the CC&Rs to increase assessments, the Bylaws must also be amended or a conflict would exist. The proposed bylaws change this to "the board shall set the annual assessment in accordance with the CC&Rs. This way, if the CC&Rs are amended, the Bylaws do not need to be amended. The CC&Rs specify that assessments are considered late if not paid by March 1. The proposed Bylaws clarify that the assessments are due on Jan 1 and considered late if not received by March 1.

Article V - Amendments - No change other than changing the number of the Article (article XV in the proposed documents).

That is the entirety of our current Bylaws.

In addition to the above changes, and to bring things into compliance with TN law, we are also adding the following sections in the proposed Bylaws:

Voting Rights - clarifying it's one vote per lot

Board of Directors - sets a sliding scale of no less than 3 and no more than 5 (just in case we actually get volunteers), identifies term of office, specifies that directors are not compensated for their service but may be reimbursed for expenses.

Nomination and Election of the Board of Directors

Meetings of the Board of Directors (normal stuff - notice, regular and special meetings, quorum, action without a meeting)

Powers and Duties of the Board (straight from the statutes) This is done in an effort to show transparency to the membership on the authority the law gives directors when elected by the members.

Indemnification of Directors, Officers and Committee Members

Identifies the architectural committee and (if there are not volunteers) in the absence of a committee the board serves as such

Books and Records - Directors shall keep and members can inspect

Miscellaneous - identifies the fiscal year. specifies what controls in case of conflict

That is all the Board is proposing.

Tim,

I need some to review and do some poking around. This is a very good topic.

I think your neighbor is an ass and you handled the call with grace. It's OK to disagree, but why do prople live their lives with a "we've always done it this way and haven't had a problem, so why change now?" Life IS change- you don't look, act or think as you did when you were a child, and if this man is a halfway decent realtor,he knows or should people update homes all the time to make it more attractive and liveable so it'll one day sell at a higher price. Maybe it's best that he stay away from the board in fact, i wonder what he does when people ask HIM about the HOA where he's showing house he wants to sell?

Back to the topic - I assume the board kept people updated on the entire process from the beginning - I say that because you're on the board and know what you're talking about (which is why you scare the realtor and a few more so they want you out). However, even that may have been too much because they have to read and actually think about what the proposals will do.

Would it be possible to cut this in smaller bites? Prioritize what really needs to be done right now and get that done, then present a few more over the next year and repeat. This could be do n e with a series of special meetings where everyone would be strongly encouraged to bring their documents because wehen they object, they will be asked to be specific in showing how the current documents are better than the proposal. This isn't about embarrassing people, but they may need to be reminded this is a non profit corporation that exists to manage community assets (which they all own) effectively so it's vital that you have to know how the community is supposed to run (how else do you evaluate how well the board does its job?)

To make things more interesting, come up with a few modern scenarios where homeowners have to CITE the current documents that show what should /shouldn't happen documents vs. the proposals. Answers like "that'll NEVER happen or "thats the way we've always done it" aren't acceptable.

This approach is from a values clarification segment from one of my high school religion classes. Our teacher started with a scenario, divide us into groups and wed discuss and make a decision. However, he'd add additional information at different points throughout the period that might alter our original recommendation. More conversation (sometimes loud and a little angry) would ensue) to get to a different result, but the class made you think, which was the point.

Another point for the naysayers - Today's homeowners won't always live here and what you did 5, 10 or 20 years ago may not be relevant or useful. Why not make some changes now so future homeowners can build on it?

Hi Tim,

Some good suggestions coming in.

You are cool under fire. If the broker neighbor called me I think I will give him a choice of pounding sand or breaking rocks.

I think you are handcuffed by a lack of HOA laws in your state.

"Current Bylaws Article II, Meeting of members - Housekeeping. Current Bylaws do not mention members may call a special meeting - adding that option under the law to the bylaws. Notice of meetings specify 6 days required, changing to no less than 10 and no more than 60 to be in compliance with TN statute. Currently Quorum is set at 2/3. Statute allows for a minimum of 10% we looked at historical numbers and the proposed bylaws changes quorum to 15%.

Article III, Officers - Specifies that officers are elected by the membership. This is allowed in TN law. TN law also says that the officers (appointed or elected) serve at the pleasure of the board. We are changing this section to say officers are appointed by the Board.

In addition to the above changes, and to bring things into compliance with TN law, we are also adding the following sections in the proposed Bylaws:

Voting Rights - clarifying it's one vote per lot

Board of Directors - sets a sliding scale of no less than 3 and no more than 5 (just in case we actually get volunteers), identifies term of office, specifies that directors are not compensated for their service but may be reimbursed for expenses."

If you are looking to bring up the current docs with the things you mentioned and the cost is an additional 25% of what your annual budget is then my feeling these folks will scream. It looks like they are. I took a lot out of your excellent summary of the changes and wanted to ask some questions on what is left and it caught my eye.

Members calling special meeting is excellent. What will they be allowed to make decisions on? Great you are looking at historical numbers. How many special meetings were done if at all in the past?
Are you saying both directors and officers are elected to today by the members?

Voting rights one vote one lot. What is happening today?

What expenses does the board need to be reimbursed on?

HOA Tennessee relies heavily as you know the business non-profit corporation act. All the things you want to tidy up and if the docs do not get passed what does it prevent you and the board from doing what in terms of governance?

I am specifically interested in this topic since I am dealing with a governance item right now in my condo.

Hi John and all.

I think what Tim is saying making the small change and all the changes will incur the same cost potentially.

Tim what I am saying do you need to make any changes at all? Work with what you have. If there is no changes what does that prevent you from doing that is just big issue? I learned from Dean that this is a business venture. I am saying it's more of political business entity. The politics looks like this is not worth the time to fight. Pick your battles. What is the number one issue with this HOA? This is tying back to Cathy's earlier post.

Unless the law or governing documents grant other authority to members, members vote for the following:

Election of Directors
Recall of Directors
Amending governing documents
Perhaps electing officer (depends on governing documents and laws)
Perhaps ratifying/approving a budget (depends on governing documents and laws).

That is all the authority members of an HOA/COA typically have.
For my association they only have:

Election of Directors (per law, not in the current bylaws)
Recall of Directors (per law, not in the current bylaws)
Amending governing documents
electing officer (in the bylaws, allowed by law)

Members may also call a special meeting for any purpose but only have binding votes at them for the above items unless the governing documents give them additional authority.


None on record.


In my Association, the members had the authority by law to elect directors and authority in the Bylaws to elect officers.
In the past 20 years, only officers were elected.
Per records, and contrary to TN law, the Association was ran by a board of officers (vs. a board of directors).

The people running the show didn't understand how it was supposed to work.
The people running the show told the membership how it worked (as they understood it).

The membership rarely questions those running the show and the few who did question (from what I'm told) became so frustrated they just quit participating in the Association meetings/votes - after all, it's only $50 per year and that is likely not going to change while they live here.

SO, in the past 20 years, the membership only voted for officers (even though a quorum was never present at the meetings).


I can't say for sure. Records indicate it could be a mix.
The board used to send out ballots to everyone without tracking them and members mail them back to the board. The board would also have ballots at the meeting handing them out to anyone that asked for one. It's possible that some owners voted with one vote per lot and some had both husband and wife cast ballots.
I can't say for sure one way or the other.

I can say that meeting records have some meetings with more ballots than the numbers that signed in and some meetings have less ballots than what was signed in.
NOTE: The board only had those in attendance sign in and did not have any indication of proxies or who might have also voted.


Board approved association expenses that a Director/officer paid for out of their own pocket.
Example: Making copies for the notice of the annual meeting.
Example: Buying mulch for the entrance monuments planting beds.

The Association does not have a credit card (too much potential for misuse either by accident or on purpose)
I expect most Associations have board members (with the approval of their board) purchase items for the association and get reimbursed for it.


Honestly, the biggest issue is the quorum requirement.
TN law defers to the Bylaws for the quorum amount.
Ours is set at 2/3 of the membership. In the past 20 years there has never been a quorum and members should have never voted for anything.

Additionally, in the past 20 years nobody (even those running the show) bothered to look up, read and try to understand the corporate code.
The State told the board when they issued the corporate charter (incorporating the association) that they had to comply with the nonprofit corporation act (it's says it on the charter). Those running the show would only be concerned with what was in the bylaws and they didn't understand them fully (as example, they told me that they didn't know what a quorum was when I pointed things out to them).

Therefore, with (what I think is) a realistic expectation that future boards won't look up applicable statutes and only rely on what is in the governing documents, if the documents don't get changed - the Association could be in this whole thing again.

From what I'm seeing in the records and talking with those that have served, the Association was ran like a church group rather than a business. This is why there are no reserves, no reserve study, poor records, etc.

As you can see from above posts, there are a lot of little issues.

Your question truly had me think (and it's the same question I've posed to many on this site - goes to show when you are wrapped up in the issues it's good to have an outside perspective).

If I change nothing and simply comply with the statutes and bylaws as written - little would change.
By that, I mean:

The membership meetings would likely not reach a quorum, so, per statute, I and my fellow board members would stay in office until we resign (be it tomorrow or 10 years down the road). So, some changes could occur.

Even though our current board would do what is required, those that follow would be an unknown. They may continue with what we would have started or they may revert to how it was before this board was in office.

The membership may or may not become educated in how things should ran.

Members may still become upset because if no quorum is reached, I would not allow a vote and in the past they have always voted because they didn't understand the quorum requirement.

Really thinking about it, I suppose the problems with this Association (in order) would be:

1) Lack of quorum at membership meetings so members are not legally allowed to make their vote count.
To change this, the Bylaws need to be changed.

2) Membership education in HOAs

3) Finances (not an issue right now, but will be in the future). By this I mean:
Assessments are $50 per year as stated in the CC&Rs.
To raise assessments, CC&Rs must be amended.
Per attorney, CC&Rs may only be amended one or two months before their renewal date (next one being in 2031)
Our total annual budget is only $4,150 and I'm not sure it will keep up with inflation.
No reserve study and no reserves (previous boards saw it as one pot of money)
To correct and allow for the board to raise for inflation, requires amending the CC&Rs.

4) The need to develop policies and procedures so membership, the board and committees have a standardized process in place and written decisions published to all vs. personal opinions making those decisions.

5) Associations right to enforce (because of current documents and how things were done in the past). This authority is being questioned by some now and, if a legal challenge occurs, I don't think I could defend it based on Association records and past practices. A legal opinion echos this concern. However, this is a separate issue - lets not get into it on this thread

I can see why it's easier to deal with this all at once - too bad others don't realize the "little things have a nasty habit into growing into monsters that will require more time and money to address.

Nonetheless, it may best to do this as a line item type of vote. Give people the option of accepting of it, none of it or take some and not others. That may make the vote count a little more time consuming but you may have a better chance at getting some of what's needed now and revisit everything else later.

The attorney's already done the hard part, so it may be a matter of reintroducing them, explaining the advantages and allowing people to vote as before. You say there are several naysayers, but that doesn't mean everyone thinks the same way. We're also nearing the end of the year and folks may have more on the brain, especially with the big election coming up.

Meanwhile, that'll give the board more time to make its case. You can read older conversations on this website for ideas that could work in your community. The trick is to keep it detailed in a way that's easy to read and understand. Go ahead and let the naysayers say net, but make it difficult. You show what the current documents say or not, how the proposals will make it clearer, but they say...what? Is "we've always done it this way"the best they can do?

Encourage other board members to help- if they also feel this is necessary, they should be willing to stand up and say so. If people are ticked enough to try and vote you out, so what? At least you tried. If they succeed, time will tell if you're right. Even if these new amendments don't work at first, they can always be tweaked - these aren't the 10 commandments. Good luck!

Six votes? How many people are in your community?? Better to focus on the folks who are still listening or who may be undecided. The naysayers already know what they want and why, and may be a lost cause no matter what you do.

I don't know if I'd have this on the annual meeting agenda - this is too important to mix in with board elections or a discussion of what reserve projects will be tackled next year. Are you sure the board can't hold a special meeting to address this subject? As it stands, people may get so busy discussing this that you won't get anything else done.

Regarding #C, it would be great if you could find people from those communities who were involved with the drafting of their documents to attend your meeting and talk about their experiences. They may have heard some of the same things you're hearing and found novel ways to respond to them.

HI Tim,

I don't think I would be able to help in the short term of getting the amendment passed. The horse already left the barn. You do have folks who have given great advice. If it does pass it's a VICTORY!!!!!!!!!! You deserve a celebration.

I can discuss alternatives on the whole item in case it doesn't and the future.

When we do research on the internet and read items on the discussion board we are drinking the kool-aid on what a well run condo is and what things we have to do to get it right. The important part of the equation is the people part of the association. It's the political and people part that is the burn out at least for me.

In the past I quietly fumed how pathetic everything is at "Little shop of horrors" but I got educated and more importantly the more I understood the docs and the state laws (with everyone's help on this discussion board) that I realize you don't build a Super Bowl team in one season. Either you have poor players or good players who don't fit the system. Over time it's building the team. You eventually in your assn you have to sometimes wait for turnover of folks. That is correct you need doorknobs to move out and hope new ones are better than the old ones.

You had an insightful comment that the assn was run like a church. Well a pastor told me once you have to meet people where they are. This is back to what things are preventing your team (the board) from getting stuff done.

I hear

a) quorum - I don't know how many units but if you need the assn to show up to make quorum. Is it by percentage? Ballpark are you 1-30 units 30+ to 100 units. 100+. How many of these folks need to show up or is the problem it is not defined? Then if they need to make things stick is the participation percentage too high? I think the problem depends on what makes quorum. I think you are worried that they don't even have enough folks to have proper elections. When they need to make a decision they do not satisfy the quorum requirement for things to stick. Did I get it right?

b) membership education (if they are not in school then they won't get educated.) There will not be a HOA truant officer. Is there a school night that needs to be done about condo education?

c) Finances (reserves). I think the finances is one of the easiest and most difficult. The easy part is basic bookkeeping 101 and having all the transparency with the financials. The tough part is the reserves. That will be a several year process to get that going. Over here it took a change of ownership and the state coming down like a ton of bricks just to get the conversation moving.

d) standardization of process. Over here it took a lot little steps to have the nature of the assn change. No meetings no decisions for years on end. Sad but true. I think you already started the ball rolling and doing the things that you can control.

If it was me I would have not pursued the rewrite due to the big expense but try to tackle one of your top four items and try to get that in the done column. You climb a mountain with winding roads. Not straightforward but a bit meandering.

No. Increase or decrease in assessments require an amendment to the CC&Rs.

The only issue of money would be, as explained earlier, the cost to do it all at once vs. the cost of doing it piece meal.


Thanks Bill. Personally, I underestimated the memberships understanding of HOAs and corporate law.
For 20 years the Association was ran as a social club and not as a business.
One big pot of money. Parties, a meal at the annual meeting, no thought of reserves or the need for them.

Tim you are a scholar and a gentleman.

We are all pulling for you.

You changed my mind when there is a published set in stone amount for dues you got some crappy docs. I think I will be doing exactly the same thing as you in focusing on a rewrite.

In any case just tell me the day of the meeting. Myself, three finger Louie and some of the boys from Jersey will make a road trip and give the members some friendly persuasion.

Great thing about this forum the amount help everyone gives!

We have your back.