Owners should have power to amend HOA ByLaws

By Deborah Goonan, Independent American Communities

 

Do you know the difference between Bylaws and Covenants, Conditions, & Restrictions (CC&Rs, also known as Declarations)?

Based on communication with many owners and residents of Association Governed Housing, it’s clear to me than many people confuse these two types of governing documents.

Here are some basic definitions, taken from nolo.com

Covenants, Conditions, and Restrictions (CC&Rs)
Basically, the CC&Rs are the rules of your neighborhood. They govern what you can, cannot, or must do with respect to your home. For example, the CC&Rs may require you to keep your garage door closed or prohibit certain types of landscaping. It is also typical for the CC&Rs to regulate things such as:

• basketball hoops
• clotheslines
• fences
• TV antennas/satellite dishes, and
• garbage cans.

 

Bylaws
The bylaws govern how the HOA operates and contain the information needed to run the HOA as a business. For example, the bylaws cover matters such as:

• how often the HOA holds meetings
• how the meetings are conducted
• the duties of the various offices of the board of directors
• how many people are on the board, and
• membership voting rights.

 

Sometimes you’ll hear homeowners, board members, and even members of the media use the terms Bylaws and CC&Rs interchangeably. But this is a mistake, because both are separate legal documents for your HOA. One governs your responsibilities as a member and the restrictive covenants you are obligated to follow (CC&Rs). The other explains how your HOA is supposed to conduct the business of the association. (By Laws)

But don’t feel bad. There is a great deal of confusion over the difference between CC&Rs, Bylaws, and Rules and Regulations.

For example, see this online forum on the topic, and take note that there is no national standard for how CC&Rs or Bylaws are amended in Association Governed Communities.

http://www.condoassociation.com/blog/board-changing-bylaws

 

So, here’s a brief summary:

Rules and regulations can be enacted by the Board without a vote of members, however, many state laws or governing documents spell out a process whereby the Board must announce rule changes in writing, and allow 30-60 days for members to review and object if they don’t like the new rules or regulations. At that point, there is often a meeting called, and owners who attend the meeting can force the board to revoke the new rule. Also, Rules and regulations cannot conflict with CC&Rs or By Laws, and the authority to create rules and regulations must be specifically granted by the CC&Rs.

(For example, CC&Rs generally grant your HOA board the right to create rules and architectural standards for appearance of your home and lot. While the HOA can prevent you from taking out a supporting wall in a condo unit, or require you to install carpet or padding on floors to prevent noise for downstairs neighbors, the CC&Rs generally won’t grant your HOA the right to limit your paint color choices for interior walls.)

Members of an Association almost always have the legal right to vote for or against amendments to the CC&Rs, at least after the point where the Declarant (developer) hands over control of the association to owners or shareholders. But the percentage of total ownership interests that must vote in favor of an amendment varies, depending on your Associations original CC&Rs. Typically, at least two-thirds of voting interests (votes allocated to the units or shares, not the person who owns them) is required to amend the CC&Rs. Some documents require a higher percentage.

By contrast, in some cases, although it’s relatively uncommon, the Board of the Association can amend the Bylaws without any vote of the membership. It all depends on what is written into your originally filed By Laws. I once owned property in an HOA that gave the Board sole authority to amend the Bylaws. And I recently read a statute proposal granting the executive board the right to adopt and amend By Laws, with no mention of a vote of membership.

When a membership vote is required to amend Bylaws, it can vary, typically from 51%-75%. Again, it depends on your governing documents and any overriding state laws.

Why By Laws are so important

This brings us to today’s example of why this issue is so crucial to homeowners and residents in HOAs.

Homeowners in The Glen at Tamiment Association (Pike County, PA) are currently embroiled in a lawsuit over who has authority to amend the Bylaws. In fact, they now have two sets of Bylaws that contradict one another. The original Bylaws gave the owners the right to vote on amendments. However, a subsequent real estate developer rewrote the governing documents to grant himself the right to amend Bylaws for certain undefined “purposes.”

Think about it. If the Board – whether led by a developer or fellow owners – has the power to decide who can vote, when meetings are held, and how board members are elected and recalled, that’s a blatant conflict of interest. A Board that controls its Bylaws essentially ensures its perpetual existence and power over members.

If members cannot vote on adoption and amendment of Bylaws, they have little opportunity to rid themselves of an overreaching board and/or vote in a new board.

 

Homeowners sue Tamiment over bylaws

By Bill Cameron, Pocono Record Writer
Four Pike County homeowners say The Glen at Tamiment has enforced an invalid set of bylaws for over a decade. Tamiment residents Jeffrey Godlewski, Martin Gallas, Rick Hoover and Diane Hinson in April filed a lawsuit against the private, gated community, located near Bushkill. The homeowners say the board of directors in 2006 did not have authority to amend bylaws without a homeowner vote.

“They took homeowner rights away,” said Godlewski. “We were not given our right to vote.”

Read more:
http://www.poconorecord.com/news/20170101/homeowners-sue-tamiment-over-bylaws

 

Big difference. This is one case to follow. Let’s see if Pennsylvania courts will uphold and protect the rights of private owners who are members of the Tamiment HOA.