COVENANTS CHANGE, AMEND OR TERMINATE IN WHOLE OR PART

San -

Covenant "renewal" is not the same as changing the CCRs. It is simply a vote of the owners to "renew" their committment to function as an Association.

Our HOA are renewed every 48 years.

I would look up the property codes in Oklahoma as they may also provide some information. For instance in Texas, a group of not less then three people can sign a petition for change of the covenants. Said group then has one year to secure an amendment to the covenants.

To secure said amendment they must distribute the proposed change to 100% of the owners based on address of record. Then they must secure the needed number of votes as indicated by a signed ballot with the proposed change on it.

If you are looking to change your covenants (or do away with them) you are comming to a great time to do so. You need to get the changes in order. Then after the first of the year get the proposed changes out and get people to return their vote. You might have several drives as getting 2/3 is not a small hurdle.

I would focus first on resident owners. Hopefully they represent your number needed to pass. The reason I would focus there is because you might be able to get them ti sign off while you stand there and not have to rely on them getting the thing back in the mail.

Hi there, could someone familiar with Colorado answer the following: We would like to make our HOA voluntary, the covenants currently say "These covenants and restrictions are to run with the land.........unles an instrument signed by a majority of the then owners of the tracts has been recorded, changing said covenants in whole or part." The question is how do we get this done without actually gettin 3 to 4 hundred owners to sign the same document. We can mail the form to each owner, but recording 400 forms is not logical. Also how should the form be worded, we want to do this right the first time, thanks Dan

Dan, I don't agree with the posting by Mary at all.

The language you posted from the covenants do not specify a vote, it specifies, "an instrument signed by a majority of the then owners..." A vote simply is the wrong way to do this.

My guess is that your recorder of deeds charges a fee per page, so it might cost a thousand dollars or more if each owner signed a separate document.

thanks,you all. Once we have the majority of signatures, would we have to get a judge to approve our documents before we record it with the county?

Just something to think about.
I live in Oklahoma. I am currently fighting a corrupt POA in Federal Court. I have also studied all of the Oklahoma statutes and researched the related case laws in depth, on this same issue.

The lawyer that gave the interpretation in 2007 that you stated, is for the most part, correct.

The Covenants will be automatically extended for an additional 10 year period as written unless changed, and here is how and when you can change them.

1: You can change the covenants at any time you want providing 100% of the "Then" Property Owners Agree to the change. The 10 year period means nothing.
2: You can also change them prior to December 31, 2008 by a vote of 2/3 of the members agreeing to the changes, or otherwise they will renew for 10 more years.

Now here is something that has not been mentioned, not even by the lawyers statement above. The word VOTE mentioned above is very important. It has to be by Vote. You can only Vote at a meeting that has been duly called, whether a regular, annual or special membership meeting, with proper notice posted. You can't run around and just obtain signatures on a document agreeing to changes in the covenants. It has to be done by VOTE and VOTES are cast only at membership meetings.
Of course the easiest way would be to get them to sign a special proxy and allow you to vote on their behalf at this meeting. The Board would just keep minutes, prepare a resolution stating that a membership meeting was held on a certain date after proper notice was posted, and a proposal to ammend the covenants was presented to the membership and it was passed by XXX number in favor and XXX number in opposition. Save all documents, proxies, etc. File the resolution along with the new covenants at the courthouse and be done with it.

As far as his 70% figure the attorney states above, he is incorrect.

The Oklahoma Statute that he cites above, 11 OS 42-106.1 was passed for the purpose of giving Oklahoma associations a Percentage of the required number to ammend covenants in case the covenants failed to state an amount. The Statute actually states that it will take 70% or whatever the percentage the covenants state, WHICHEVER IS LESS. In your case it is 2/3 or 67%, so the statute wouldn't apply.

However, this same Statute mentioned does provide for a lessor 60% vote or what ever the percentage stated in the covenants, WHICHEVER IS LESS, if your association has been in existance for 15 years or longer which could make a little difference. Hope this helps and Good Luck

Roger,
I agree it is hard if not impossible to get that percentage at a meeting. We have over 3,000 members in our POA. It will be 2014 before we can change our covenants. Then we have to do it a year in advance of the 10 year renewal term. I personally think it is virtually impossible.
As far as my previous statement goes, I have case law where the 10th circuit, (Denver) overturned a court here for doing just what you said. I can locate it for you if you want to look at it.

The point I was trying to make, which is what the 10th circuit said was, "memberhip votes, can only be taken at a membership meeting that has been properly called. The Court went on to say that Proxies or absentee ballots would be fine, as long as proxies and absentees are not prohibited by the Covenants or Bylaws.
I am going with Oklahoma Law, but Oklahoma is in the 10th Circuit in Denver, just like you are. Membership Votes can only be cast at a Membership Meeting duly called, notice and posting requirements met etc.
The case I am referring to did the same thing, gathered written votes. Enough votes to meet the percentage requirements. 2 members contested, because the VOTE was not done at a membership meeting and appealed.
The 10th circuit court overturned.
They have made some very clear rulings on the 10 year automatic renewal of the covenants and membership voting. Had the developer actually not meant that to be, they wouldn't have stated it in the covenants.
Here is what we have to do to amend ours in 2014. We missed the chance in 2004.
First we formed a covenants committee to determine the changes, keeping in mind that the fewer restrictions we have, the better. It is very simple to just pass a resolution adding some additional restrictions at a latter date. Take the 10 year restriction and the super majority requirement out completely.

We then will go door and do mailouts to get a proxy to vote for the amendments. Again, we have to vote 1 year in advance to the expiration of the 10 year term, so we will have to have a meeting in 2013. If passed, they become effective in 2014, a year later. The Board will sign a Resolution stating it was passed by the required percentage at a Membership meeting on _____. 1 page document to file at the courthouse. No signatures required on the document except board members. I would certainly hang on to the minutes and ballots though.
Oh, One more thing worth mentioning. If the Deed to the property is Joint Tenant, like husband and wife, Make sure that BOTH Parties sign the proxy or absentee, otherwise, it is invalid. It's not like voting at an election of Directors. It also has no bearing whether dues are current or not, or the owner is in good standing in order to be elegible to vote. It's changing the covenants.

Cole,
I would agree that "memberhip votes, can only be taken at a membership meeting that has been properly called. The Court went on to say that Proxies or absentee ballots would be fine, as long as proxies and absentees are not prohibited by the Covenants or Bylaws."

However, members do not vote to amend Covenants; owners vote to amend Covenants. Thus, approval to amend the Covenants can be done without a members meeting. A good example would be a voluntary HOA where all owners are not members. The owners who are not members can not vote at an HOA meeting but must be included when voting on amendments to Covenants. Words can be critical.

Cole:
You can amend your documents at any time.
You can vote to dissolve at any time.

The "renewal" is just a time cycle, an automatic renewal of your group as an HOA - and is automatic UNLESS it is terminated (by a vote of the owners)

Think of it kind of like your gym membership - unless you call them and stop the membership, it automatically renews itself.

One other thing to you response,
Yes you are right in that you can dissolve the Association at any time providing you have the proper votes, but this does nothing to the restrictive covenants, with the excetion of dissolving the association. Square footing building requirements in the covenants would still be in effect. etc.
Cole

I would love to see these court opinions as we currently have letigation in our HOA regarding this very thing. The CCR's say they may not be ammended for x number of years and then are renewed at 10 year increments.
Thanks in advance for the links

Roger,
Of course the court process can work on amending, or voiding covenants. It is very tough to do as I am sure you are aware. Abandonment, Unfair, against State Statutes, etc. It can be done that way, but it is very rare. I have preached until I am Blue in the face to our Board Members about an obsolete recorded covenant that you can't get changed.
I tell them to just put it on the record to the membership that the Board Members feel after much discussion,and in following the "Good Business Judgement Rule", and in the best interest of the association, the Board has chosen NOT to enforce a particular Covenant. At the same time, let every member know that this does NOT prevent them from personally enforcing it should they choose to do so, as they have that right. This should cover the Board Actions. Just leave the selective enforcement outside, and apply it to all.
As far as unenforcable covenants, most of you know about the Landmark Case that holds true today in each and every state, not just here in Oklahoma, Shelley v: Kraemer. Here is a link for a little history on that case.

http://en.wikipedia.org/wiki/Shelley_v._Kraemer

Abandonment of a covenant is also very possible. I have a few Court Case Opinions on what constitutes an abandonment of a covenant that would make it unenforceable if anyone wants.
Cole

Dan,

My question to you is why do you want a voluntary HOA? What are the benefits?

Cole, I tend to agree with your position. There seem to be two divergent approaches to covenant/rule enforcement expressed here. One is "if it is a rule, enforce it or get rid of it." The second is, "the association board is empowered to use its reason, wisdom and judgment."

As long as a board acts in good faith, in the best interests of the association, on an informed basis, not wasteful and avoids self-interest, it is acting properly.

There are times when it is in the best interest of the association not to enforce a rule or covenant. Sometimes the cost of enforcement is greater than the benefit obtained through enforcement.

We elect boards to make such determinations.

George & Cole,

Tell that to the HOA that lost the case in AZ!! Business judgement rule never entered into the case. It was based on the fact that the declaration stated the board had a "duty" to enforce -- period; and that was the only point I was making in my response. I'm only the messenger so don't take me to task. Forewarned is forearmed!!

Let me offer a quote from the text of a document prepared by Hindman Sanchez:

Covenant Enforcement: The Role of the Business Judgment Rule

"The Colorado Court of Appeals has ruled homeowners associations are entitled to broad discretion in the manner and method of pursuing covenant enforcement. A lawsuit challenging those decisions must prove
the association acted unreasonably, in bad faith or in an arbitrary and capricious manner."

"The court will consider the fiduciary duty owed by a homeowners association to the community as a whole, and the fact that a homeowners association has a fiduciary duty to enforce the covenants. Fiduciary duties impose a high legal standard upon homeowner associations and board members. This obligation is tempered by the business judgment rule allowing considerable latitude and discretion to the board’s decisions as long as they are undertaken prudently and in good faith.

"The Cross Creek decision provides a lesson that homeowners associations must carefully investigate and evaluate requests for covenant enforcement. The board must act prudently, in good faith, and with consideration of both the specific covenant violation and the overall interests of the community when making decisions about the strategies, timing and methods for enforcing the covenants."

http://www.hindmansanchez.com/docs/covenant_enforcement._role_of_business_judgement_rule__05287884_.pdf