Over the course of time, there are various factors that may elicit the need to update the governing documents of the HOA. These documents establish policies for the management and operation of the association. Taking on such a task of changing the legal terms that govern the association can feel daunting, but it doesn’t have to be. With the help of your HOA management and legal team, you can ensure your governing docs are in accordance with the law and aligned with your community’s needs.
To help navigate the process, we at Keystone called on attorney James McCormick Jr. Esq., CCAL, a partner of Delphi Law Group, LLP, to lend his expert advice on this issue. His guidance can help boards of directors unpack this complex issue by breaking it down into manageable terms. By better understanding the why, how, and when of changing HOA governing docs, the primary goal of protecting the mutual benefit of homeowners and the community is supported.
First, though, it’s important to delineate the differences between the various HOA governing documents, as terms of each play a specific role. They include:
Articles of Incorporation – For common interest developments (CIDS) that are a corporation, this genesis document establishes the association as a legal, non-profit mutual benefit corporation and must be filed with the Secretary of State.
Declarations of Covenants, Conditions, and Restrictions (CC&Rs) – Often referred to simply as “declarations” or CC&Rs for easy reference, this set of documents are recorded against the parcel generally before anyone purchases. To amend CC&Rs requires a membership vote.
Well-drafted declarations include use restrictions and maintenance provisions; essentially, outlining how homeowners interact, and their rights and responsibilities with reference to the community association.
Bylaws – Bylaws are corporate governance documents that are not recorded but which also require membership vote to amend. Well-drafted bylaws are tailored to the community and generally outline operational procedures of the association including when the annual meetings should take place, how the board is elected, the procedure to establish committees, meeting notice guidelines, and power to enter into contracts, to name a few.
Rules & Regulations and/or Architectural Guidelines: Rules and Regulations are considered the fine-tuning documents of the HOA. They discuss resident conduct and provide operational rules that directly apply to community members. These may include parking regulations, use of common areas, pool rules and operating hours, architectural and front-yard landscape regulations, etc. Revisions to the Rules and Regulations do not require membership vote.
When an HOA determines to update its governing docs, it can use the information here to determine how best to make changes that are accurate, coincide with the current needs of the association, and which follow the necessary member approval process.
Start with the “Why”
Before taking on the process of how or when to change governing docs, first determine the why. Generally, there are two reasons why changes to governing documents may be needed. Either the change is required by law or the board decides that updates are necessary to revise outdated language or clarify regulations that have resulted in recurring issues in the community that need to be resolved or enforced.
Upholding Legal Requirements
Each year, new legislation is passed which may call for an update to your governing documents. For example, at the start of 2022, California AB 1584 implemented new and revised laws regarding zoning and governing docs pertaining to rental restrictions in community associations. As a result, boards are required to amend their governing docs to remove rental prohibitions by July 1, 2022. Changing governing docs for this purpose follows a specific, narrow scope that differs from the general change process.
Resolving Outstanding Issues
The second reason why it may be time to update your governing docs is to remedy recurring issues that have come up in the association. Board members should look to areas where issues cannot currently be resolved due to unclear language in the governing documents. For example, maintenance is a common issue to define because there is often a lack of clarity as to the respective duties of the association and the owner.
A board may also want to change older documents that aren’t relevant or useful to associations today. Board members may inherit old CC&Rs that may have initially been well-written, but which may need revisions to align with the current community objectives. Therefore, rather than focus on when changes were last made, consider the value of the documents and if they reflect what’s necessary for operating successfully today.
Track Ongoing Issues
Because updating governing documents can take considerable time and expense, it’s wise to carefully evaluate the best time to implement the changes. Be thorough and consider incorporating changes for multiple recurring issues all at once versus engaging in the amendment process multiple times for single matters. Create a log describing the occurrences or issues and how they might be resolved. However, if code changes require amendments by a particular date, make the revisions sooner rather than later, regardless of how many there are.
Gain Majority Vote
The board works with legal counsel to review, change, and prepare documents to present them for the community member vote. A supermajority of 67% approval from community members is typically required to initiate change(s) to older CC&Rs, although your association should check the specific amendment provision and voting requirement for your CC&Rs. In California, if an association is unable to obtain the supermajority votes that may be required to amend the CC&Rs but does receive more than a majority, the association can file a “Greenback Petition” with the Superior Court to petition for amendment approval.
Team Up with Your HOA Management
Board members are responsible for many moving parts to preserve the success and value of an association. Whether it’s a first-time appointment or you’ve been on the board for years, making changes to governing docs can be a particularly challenging arena. Turn to your HOA management team to guide you through the process. They will help you gather and prepare the necessary paperwork and language prior to submitting it to legal counsel.
At Keystone, our managers receive ongoing training and education to keep board members informed about new laws taking effect and when documents need to be updated, and we learn from internal discussions regarding problems that often arise within other communities and how they’re resolved. This proactive approach helps prevent issues down the road and provides board members expert guidance to implement change.
Furthermore, your HOA management team can help with strategies for incentivizing community members to submit their ballots during the approval process and avoid the additional cost and delay of petitioning the court. We also continuously share our collective knowledge through blogs, seminars, and other ongoing, educational opportunities.
Change is often a good thing, especially when you have an HOA management team to guide you along the way and make the process more manageable. We’re here to help your association succeed. Contact us today to get the conversation started.