CHANGING THE GOVERNING DOCUMENTS OF A HOMEOWNERS / CONDO ASSOCIATION

I often get asked by an Association’s Board (the “Board”), how can we change our governing documents, including the Rules and Regulations, By-Laws, and Declaration.

Before I address these questions, let us define what the governing documents are and what they control.  

An Association’s Rules and Regulations establish and articulate the rights and responsibilities of the homeowners, as well as the specific rules that pertain to the land itself that the HOA is developed on. In other words, they outline what the homeowners are permitted to do and what they are not permitted to do on the property.

An Association’s By-Laws define how the community operates. It consists of stipulations such as how many board members can serve at any given time, how often to hold board elections, quorum requirements and the responsibilities of each Board member.

An Association’s Declaration defines the rights and obligations the Association has towards its members and vice versa. The declaration explains what the association and homeowner is responsible for with respect to maintenance in addition to defining use restrictions (what you can and cannot do). Additionally, the declaration notes the process of the enforcement of covenants, dispute resolution and payment of dues.

Amending the By Laws or Declaration

1. Why is an amendment being proposed? Is it to fix a materiel defect to assist in the governance of the community or to stay relevant? This is a good idea if there are changes to state or local laws that affect the By-Laws or Declaration.  Additionally, if there is a demand for a change from the homeowners, this should be considered. Otherwise, there is no reason to make a change.
2. Cost:  It is expensive and time consuming to alter legal documents like By-Laws or the Declaration. Changing the By-laws or Declaration may require re-recording of the document with the township and could cost up to several thousand dollars.
3. Procedures:  If the board chooses to move forward, a meeting of the homeowners must take place to discuss the change and to solicit feedback.
   1. After the discussion, a vote must take place in favor of or against the proposed change(s). To pass and get adopted, the percentage of homeowners required (quorum) to vote for approval will be outlined in the By-Laws.  
   2. Counting of the votes normally will take place during an open meeting to maintain transparency.
   3. The amended document will then have to be recorded with the township and notice of the approved amendment will have to be given to all owners before it is adopted.

Amending the Rules and Regulations

1. Like changing a By Law, the Board must provide notice to the homeowners of the change with an effective date.
2. The main procedural difference is the board can change the rules without a vote of the homeowners, however, a rule cannot be changed if it conflicts with the By-Laws and or the Declaration.
3. Homeowners can request or recommend a rule change, but the authority to change a rule lies solely with the Board.

Be sure to always follow the procedures for making changes to your documents. Failing to do so will make any changes unenforceable and may put the Board in legal jeopardy.

The following are two examples where a Board wanted to amend the By-laws and Declaration.  One needed a vote of the association and one did not.

1. A Board wanted to change from accrual to cash accounting.  The By-Laws had a clause in them that allowed the Board to make a corrective amendment to the By-Laws to cure an ambiguity.  A resolution was drafted by the association’s counsel and signed by the Board, which was then adopted and recorded with the township for a cost of $2500.00.   The amendment was then distributed to all homeowners.  This is an example where a vote of the homeowners was not required.
2. The second example is when a Board wanted to change a use restriction in the Declaration regarding signs.  The Board wanted to limit the type of signs permitted to be displayed in the community.  Since this was a restrictive covenant in the Declaration, the association’s counsel drafted a proposed amendment.  The amendment was mailed to all homeowners for a yes or no vote.  The amendment passed and was adopted as the number of votes in favor met the quorum requirement.  The amendment was then recorded with the township for a cost of $2500 and then distributed to all homeowners.   

Del Val Realty & Property Management has assisted associations through this process and if you wish to discuss this further or have questions, please contact me at: asilverman@delvalproperty.com.

Alan Silverman, As Director of HOA services at Del Val Realty & Property Management (Del Val), Alan has over 25 years of experience in real estate management, including managing large apartment communities as well as numerous condominium associations. 

Mr. Silverman has overseen the HOA portfolio for Del Val for the last six years, managing the substantial growth of the division. 

Alan grew up locally and knows the area well. He brings value to Del Val as he believes that to be a successful property management company, you need to be consistent, reasonable, and respectful to all tenants, owners, and associations.