Lerch, Early & Brewer's Legal Update
It’s no secret that many aspects of our lives have changed significantly in recent years. Advances in technology, changes in lifestyle and increasing demands for transportation require a constant adaptation of the laws that govern the various aspects of our lives. Among these are the covenants and bylaws that govern the community associations in which many of us reside. How do associations “keep up with the times” and ensure that their governing documents are relevant to the needs of their residents and in compliance with federal, state or local statutes? This article will look briefly at reasons why an association may need to amend its governing documents, and items that should be considered while doing so.
Why Amend?
For some associations, whether or not their documents need to be amended is not only a question of serving their residents, it is also a question of law. In many areas, lifestyle and technological changes have resulted in federal, state and local legislators enacting various laws that supersede community association documents, when they become outdated.
For example, recent legislation has addressed and restricted prohibitions on satellite dishes, family day care and home-based businesses. Lease restrictions, pet regulations, and items related to indemnification and insurance are other examples that represent a long list of association-sponsored amendments that may require alteration.
Finally, there are sometimes documents that, by their terms or because of operation, automatically expire or renew without review. A thorough review of an association’s governing documents should uncover any laws or covenants that need to be altered or deleted.
Amendment Following Transfer From Developer Control
Associations that have recently transferred from developer control are not immune from the need to review and alter their governing documents, however. These associations may want to consider amending their documents very soon after the community has been transferred to the owners. In addition to removing developer control provisions and other sections no longer relevant, the association may desire to fine-tune the documentation based upon its actual operational needs and experience.
Factors to Consider
Once an association has determined that particular sections of the governing documents need to be amended, certain procedures must be followed to ensure that the documents are amended correctly and lawfully.
The first step is to ascertain what specific items need to be amended and, secondly, to determine what type of vote is required to change the document(s) being amended. The amendment process is sometimes slow and frustrating, requiring logical and clear explanations and, occasionally, door knocking to obtain the necessary number of votes for approval. Typically, the power to amend the bylaws rests with the board of directors or the majority of a quorum, while a vote of a certain percentage of owners is required to amend the covenants. However, this is not always the case, and it thus becomes important to review the actual document, as it will usually state the necessary process for gaining approval for an amendment.
For instance, amendments that prohibit or materially restrict property use, or amendments that change the voting rights or common expense liability allocated to a lot or unit, require unanimous consent unless the declaration gave fair notice that such change could be made over the objection of an affected property owner. Associations should also carefully review the rights of any lender, the Veteran’s Administration, and governmental agencies (such as the Maryland National Park and Planning Commission) prior to enacting any changes that could affect or require the approval of one of these entities.
Prospective Enforcement
Another issue facing communities making amendments to their documents is whether or not to consider “prospective enforcement.” Prospective enforcement— making alterations to the governing documents that affect only future unit owners and the resulting grandfather clause provisions can be very helpful, but should be considered alongside the community’s needs and personality. Prospective enforcement can be helpful in acquiring the needed number of votes necessary to amend the documents and to make regulations that may otherwise be unreasonable now acceptable, because the rights of existing owners are not affected and prospective owners have notice of its requirements.
In sum, it is important for board members to remain up to date not only on federal, state or local laws that may affect their governing documents, but also on the changing technological and lifestyle factors affecting their residents, to ensure that the association covenants and bylaws remain current. Once specific items have been identified, it is the responsibility of the board to ensure that proper measures are followed in amending the documents. Being vigilant in these areas will help make certain that the association’s governing documents remain relevant for the residents they are designed to serve.
is a principal in our Community Associations Group. He can be reached at (301) 657-0159, or via e-mail at jvangrack@lerchearly.com.Jeffrey Van Grack
