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Residential Real Estate
Nov 20, 2019

When And How To Make Changes To Your Association's Governing Documents

Sponsored Content provided by Mike Stonestreet - Co-Owner/President, CAMS (Community Association Management Services)

At CAMS, we’ve seen through the years how positive — and necessary — change can be for homeowner’s associations (HOAs). Generally, we recommend every association do what we would call a governing document audit every 7 to 10 years just as a general rule because laws change, and it’s nice to have things clear for HOA members (property owners).
 
Any time that an HOA is going to make changes to its covenants or any governing documents, there’s a process that needs to be followed, regardless of the changes under consideration. These changes can be anything from increasing or decreasing the number of spots on a board to amending the declaration of covenants (CC&Rs). Let’s say you live in a big boating community on the coast, but the governing documents don’t allow boats to be kept in yards. Members of the community might come together and say this isn’t who we are, let’s change the rules.
 
In terms of the process, any changes require a certain percentage of an affirmative vote of the membership, like 67 percent for example, to put forth an amendment to change declaration of covenants.
 
When changes can and should be made is a question entirely up to an HOA and its membership. You can make changes any time throughout the year with proper notice as required by governing documents. These changes can be voted on at a special meeting of the membership, or it can also be done by mail in ballot.
 
Any member of an HOA can initiate changes by simply going to a board and making a request to discuss it or they can utilize a process laid out in the HOA statutes. The HOA statute states that if 10 percent (20 percent for condo associations) of members sign a petition wanting to amend declarations to allow for boat storage, the board would have to consider it. In such a case, any member can solicit signatures on a petition to be filed with the HOA board secretary, then the board would have not less than 10 nor more than 60 days in advance of any meeting (depending on bylaws) in which to have a meeting and call for a vote.
 
Getting amendments approved can be a difficult process in terms of being time consuming and somewhat expensive. In certain cases, some governing documents require approval by 80 or 90 percent of members to make changes, and many times that’s not achievable.
 
Some changes are more challenging than others. For instance, one of the big challenges that we have seen at CAMS is HOAs attempting to restrict rental properties in their communities. If you have a neighborhood with a lot of investors, chances are close to none to change rules to cut down on rentals. Just like anything else when it comes to decisions HOAs and their boards make, they really should be made in the best interest of the association, not just a few individuals on a platform. Sometimes these individuals get together and cause a little bit of frustration with the membership and its board, with a lot of work being generated through procedural stuff when what they’re proposing may not be a good idea in the first place.

In these situations, just as in many others, you don’t want to make decisions in a vacuum. Any big changes in an HOA should be brought up in front of membership and the board in an open forum. This way, back-and-forth discussion takes place, insights are garnered, ideas and solutions can be identified, and most importantly, the board can vet the proposed changes and perhaps survey attendees to see what the other members think. Details can be shared that maybe weren’t originally considered, such as in the case of members wanting to build a clubhouse. They may not understand the many effects this has like  adding an additional assessment on members’ properties.
 
As previously mentioned, in our opinion it’s a good idea to prepare for potential changes like these by going through a review of governing documents every 7-10 years. When doing so, the one thing we do recommend is taking out ambiguity in documents, especially when it comes to maintenance. An HOA could have language in governing documents where the HOA is responsible for making exterior improvements, but what does that mean? Does this refer to light fixtures and door bells, or roofing and siding? If roofing, does that include flashing and vent pipes or just shingles? If siding, is it just the siding or is it also trim boards, doors and windows?
 
Tightening up governing documents and achieving clarity will benefit all members of the community. Change can be scary, and sometimes even challenging, but in the end change is good

Mike Stonestreet is a 30-year veteran of the professional HOA management industry who has achieved one of the highest education-based designations in the field, that of Professional Community Association Manager (PCAM). Community Association Management Services (CAMS) has been a leading association management company since its inception in 1991. CAMS is a trusted provider of management services, dedicated to holding themselves to a higher standard of service to the community associations they serve throughout North Carolina and South Carolina. To find out how CAMS can benefit your community or visit www.CAMSmgt.com.

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