By-Law Gives HOA Power to Developer

From the state of Colorado: I was reviewing our HOA bylaws and was troubled to learn that when the bylaws were written 19 years ago, 60% voting power was given to the developer as long as the developer (corporation) held 20% or more of the property in the subdivision. The devloper still holds over 20% of the lots and therefore renders everyone else's vote useless and it will likely be that way for a few more years. The developer would have to cede his power in order to change the bylaw so that's not likely to happen. We have a Board of Directors but our board is handpicked by the developer people have been reluctant to question the developer for fear of being replaced on the board at the next annual meeting. AND the cherry on top of all of this is that when the bylaws were written the developer was the President of the HOA! Can you say conflict of interest?!

My questions are:

1) Is it legal for a corporation to have voting power for every undeveloped lot within a HOA? It seems that one vote per household would be more fair and that corporations should not be able to vote.

2) Is there a way to change the bylaws such as declaring the initial bylaw invalid? Conflict of interest when written? Just looking for a way to give homeowners the power and not the developer. How would we vote on that?

Any source documents or governing references would be appreciated. There seems to be many guidelines for rules and regulations but little info on bylaws and what constitutes a valid or invalid bylaw and how to change bylaws when the voting portion is what needs to be changed. Thanks for reading.

1) Yes. It is common practice to have one vote per unit for class A members (homeowners) and a higher number of votes per unit for class B members (Developer). The Declaration and By-laws are written in this manner by the Developer is to protect their investment. If you view it that perspective you will see there is no conflict of interest.

2) The way to change the By-laws is by amending them. Your By-laws should state how they can be amended. Often it takes a majority vote of the members present at a duly called members meeting. Since the Developer controls a majority of the votes you would have to convince the Developer to be in favor of the changes.
The By-laws do not apply when they conflict with a higher order document such as the Declaration or Colorado statutes.

I think the problem is the timeframe. Nobody moving in expected the developer to still be in a position to control the association 19+ years later. Only the courts or legislature can change the Covenants (as long as the developer controls the votes (per Roger). Taking the legal process, you would have to show the courts that the developer's prolonged control has substantially harmed the owners, not an easy thing to prove.

You might have more luck legislatively, putting a time limit on transition, which would basically require the developer to develop the property in phases, maintaining control only of the phase that is currently being marketed, but turning over control to the owners when a certain percentage has been sold or a more reasonable time limit expires, and then consolidating it into the owner-controlled association.

Neither answer is going to help in a timely fashion, but it may be all you have. Check with some local groups about the legislative avenue, sometimes legislatures will actually correct these types of issues that they didn't foresee 20 years ago.

Joe