The Process for Changing Rules

Note:  If you wish to change a rule in the CC&R’s (Declaration), please take the time to read this.  It is a lengthy, costly process.

Every once in a while, the Board receives questions and comments about rules that homeowners want to change. As this is a topic that interests several members of the community, it is a good candidate for a guidance bulletin.

Before diving into the details of how to change rules, it is important to understand the source of the rule.  A rule that is based out of a dedicatory instrument (e.g., the Declaration) requires a different process than one that is implemented by the Board of Directors.  In order of authority:

Rules Established by Federal, State and Local Laws

Rules that are established by applicable laws and regulations can only be changed by the legislative process that created the rule, or by an administrative body that has jurisdiction over that rule.  For example, the U.S. Congress may establish a law, but then give the Secretary of the respective agency that is responsible for its administration the authority to interpret the law or issue regulations.  These rules cannot be changed by the Association.  Another example of these types of laws are City ordinances for zoning, fire and safety codes.

Rules Established by the Declaration of Covenants, Conditions and Restrictions (CC&R’s)

Rules that are established by one or more provisions of the CC&R’s may be modified as follows.  Section 9.03 states that the Declaration may be amended by:

  1. Recording an instrument (document) which must be executed by the President and acknowledged by the Secretary of the Association.
  2. The instrument must set forth the original version of the rule and the amended version.
  3. The President must certify that the proposed rule was put to a vote at an Annual Meeting, and that 67% of Members of the Association (owners) who are eligible to vote, approved the new rule, as proposed.
  4. Members need not be present to cast their votes, but if they are not present, they must vote by proxy.  Quorum requirements must also be met.
  5. Any proposed rule must be consistent with the Declaration and applicable laws.

The Annual Meeting is not the only way to obtain Member’s assent to a rule change.  Section 3.13 of the Bylaws provides that any action that is required or permitted by law to be taken at an Annual Meeting may be taken without notice or vote of the Members if:

  1. Written consent specifically authorizing the proposed action is signed by at least 67% of all Members eligible to vote.
  2. The current and proposed versions of the rule must appear on the consent at the time when the signature is collected.  Any changes made to the proposed version of the rule during the process of collecting signatures requires that all signatures be collected again.
  3. If there appear to be sufficient signatures collected, then the Secretary must verify the authenticity of all signatures to confirm that the consent is proper.  If the verification process passes, then the Secretary will record the amendment and publish in accordance with rules.
  4. Any proposed rule must be consistent with the rest of the Declaration and applicable laws.

Rules Established in the Certificate of Formation

Rules set forth in the Certificate of Formation may be amended, in accordance with Article XIV of the Certificate, by a process similar to that required to change a rule in the Declaration:

  1. A vote of two-thirds (2/3) of total number of votes of the Association, as determined under the Declaration must be cast in favor of changing the rule to the proposed version.  If there is more than one version in circulation, then whichever version receives two-thirds (2/3) of the votes in favor, will be adopted.  If more than one version receives the necessary number of votes, then the one adopted last wins.
  2. Any proposed rules must be consistent with the Declaration and applicable laws.
  3. Upon approval, the Secretary files an amendment of the Certificate of Formation, signed by the President and acknowledged by the Secretary.

Rules Established in the Bylaws, Board Resolutions, Policies and Other Rules

Any rule established by a vote of the majority of the Board can be changed by a vote of the majority of the Board, provided that the change is consistent with the Declaration, Certificate of Formation and applicable laws.  The Board has authority to change the Bylaws, its resolutions, policies and other rules.

Additional Information

In some cases, even with the requisite votes, a rule cannot be put into effect or enforced as written for a variety of reasons.  These reasons include, for example, that the proposed rule violates the law, or is discriminatory or cannot be administered as written.  Rule-writing is an iterative process which usually involves coordination with attorneys and other professionals.  It can be expensive to the Association and its Members.

APPROVED BY THE BOARD OF DIRECTORS:  May 3, 2018.

 

Comments are closed.