Issues To Consider When Updating Governing Documents

The governing documents are essential to the successful management and financial health of an association. As a Board grows more familiar with the governing documents, it may find that some of the provisions of the documents are either too vague or too restrictive. For many older associations, some provisions may be archaic and no longer workable.

The Board should review the governing documents on a regular basis to ensure functionality. Our firm can review an association’s documents to ensure compliance with law. We can also recommend relevant changes to consider. Whether governing documents are out of date or poorly drafted, correcting any problems on the front end will save the association from dealing with tougher issues down the road.

Deciding whether that the documents need to be amended can be difficult for a Board. For many associations, attempting to pass an amendment with the consent of the membership is a challenge.

Most governing documents provide a method and voting requirements by which each governing document may be amended. Usually, a document requires a 75% affirmative vote of the membership. Votes can generally be collected in a written ballot form. However, some documents provide that an amendment must be voted on at a meeting of the owners. If your documents are silent on amendment procedures, the condominium statute or the planned unit development statute will dictate the process.

There are two ways to get started on the process. First, sit down as a board, and come up with a “laundry list” of changes that the board would like to make. It might help to ask for input from other members so that you can ensure you are only making major revisions once. Second, contact our office for a full document review and we can provide the board with an opinion on the items that the board might want to consider.

As a practical pointer, if the board wants an Amended and Restated Document (an entirely new set of governing documents), the board MUST TRACK THE CHANGES FROM THE ORIGINAL for ballot purposes. Often times, boards will ask that we look at the Amended and Restated document that they want to file, and there is no way to decipher which changes were made from the original. While the intent is usually to save legal costs by just asking to review the final version, it often takes longer for us to go back, track changes, and make suggestions, than it would have if our office had made the changes the first time around. We have to check the work to ensure all the changes were legally done.

Once the board is ready to put an amendment out for a vote, the best time to start the process is at the annual meeting. Place the topic in the notice of meeting and on the agenda education members about the changes and to possibly vote on the amendment at the annual meeting. Keep a spreadsheet to track who received ballots and who voted. If the members insist on taking the information home to sleep on it, then provide them with a self-addressed, stamped envelope to return the ballot. Paper ballots can be mailed to the rest of the non-attending members.

Hopefully, this will get most of the members to respond. If not, there is always the option of going door-to-door in an attempt to get the votes you need.

Also, based on the type of association you have, you could do something such as provide a copy of the ballot when you distribute your pool tags or provide a copy with the monthly/annual statement.

Keep in mind that although you obtain the necessary member vote, many of the governing documents require that a lender must be notified of the proposed amendment, and it may required that the lenders of record consent to the amendment.

If the board is considering amending several provisions of the governing documents, consider doing a separate ballot for each section. The membership may find one section controversial and another acceptable, so the board doesn’t want a member to vote “no” on a whole ballot, if, for example, the member only disagrees with one out of five provisions.

Although this process of amending your governing documents may seem like a tedious process that may take several months, or in some cases, over a year, it is important that the proper attempts are made to get the vote to better your community. It is especially important that these votes are accurate (are signed by the titled owner(s)) who are in good standing.

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