Amending Governing Documents

Amending your condominium or homeowners association governing documents is no easy chore. It can be a long and costly process, and even then, you may not receive enough votes to approve the amendments. The process of amending goes like this:

1. Identify the reasons for amendments 2. Determine any statutory requirements 3. Determine voting requirements 4. Decide on the method of voting 5. Solicit owner feedback on proposed amendments 6. Conduct the vote 7. Prepare the amendments for recording 8. Sign and notarize 9. Secure any governmental approvals 10. Record the amendments with the county recorder

Here are some things to consider before embarking on an amendment project:

Identify the Reasons for the Amendments

There are many reasons to amend governing documents. Common reasons include:

1. Legislative changes 2. Ambiguous provisions 3. Outdated provisions 4. Community demographic has changed 5. Removal of “declarant” language 6. Adding or removing restrictions

It’s critical that the reasons for each amendment are conveyed to the owners. After all, most amendments require owner approval. Making a convincing case to the ownership will result in higher voter turnout and more “yes” votes.

Find out What’s Required

Most CC&R amendments require a vote of between 65%-75% of the entire ownership. Bylaw amendments typically require a majority vote of the owners. However, sometimes state law will require different approval requirements. For example, in Oregon condominiums the approval of 75% of all owners is required for any amendment related to pet restrictions or the rental or leasing of units. (ORS 100.410(4)). In Washington, a homeowners association may amend its governing documents to remove discriminatory provisions by a majority vote of just the board of directors (RCW 64.38.028)

Method of Voting

Most associations will find it impossible to approve a governing document amendment at a physical meeting of the owners. For a CC&R amendment requiring 75% approval, the chances of that many owners attending a physical meeting in person or proxy is slim. The most common method is to conduct the vote by written ballot. Better yet, some communities may conduct the vote via online ballot. This often generates the most voter turn out. For an example of an online ballot, click here.

Finalize and Record

Once the required number of votes have been received, the amendment must be prepared for signature and recording. In some cases, approval by the state or a governmental authority must be received and reflected on the amendment. The amendment should contain references to the original documents which are subject to the amendments, and must be signed and notarized. The amendments do not become effective until recorded with the county recorders office.

To learn more, check out our document amendment timeline.

Online Voting for Community Associations

We recently concluded a membership vote to adopt an entirely new set of CC&Rs and Bylaws.  The CC&Rs require 75% of all owners to approve, and the Bylaws require 51%. With nearly 300 lots in the community, it was a high number of "yes" votes to receive.  Surprisingly, within a matter of weeks the necessary votes were received and the documents approved. The Association appointed a committee to oversee and coordinate the "governing document project." After an initial meeting to review the challenges with the original governing documents, CALAW created a first draft of the CC&Rs and Bylaws.  Those drafts were reviewed, comments were solicited, and revisions were made.  After one more round of meetings and revisions, we were ready to present the proposed documents to the owners.

First, we posted drafts of the proposed documents on the internet for owners to review and download. Shortly after the documents were provided to the owners, the first of two townhall-style meetings were held.  At the first meeting, attorney Kevin Harker reviewed each section of the CC&Rs and Bylaws, explaining the meaning of each provision and reasons for inclusion.

For the next several days after the meeting, we collected feedback from the owners. Once the owners' concerns and comments were incorporated into a new draft, a second townhall meeting was held to ensure that owners understood the importance and significance of adopting new CC&Rs and Bylaws.

Then came the voting. Owners voted through an online ballot:

As soon as owners clicked "submit", the vote was recorded in an online spreadsheet:

The spreadsheet contained a separate area which kept a live tally of the votes:

With the required number of votes received, the next step was to sign and record.  Community Association Law Group uses Simplifile to upload and record documents to the county recorder's office:

Thirty minutes later the documents were recorded with the county recorder's office:

Once recorded, the documents were official!

Dealing with Renters in Community Associations

Most individuals in community associations fall into one of three categories:

- Owner/Occupants: motivated to maintain value and foster relationships

- Investor Owners: motivated by financial benefit; less regard for the quality of the community

- Renters: Often view community associations as apartment living

In many homeowner and condominium associations, there exists a stigma against renters.  Often this stigma is unwarranted.  If rental issues arise in your community, ask a few preliminary questions:

1. Do tenants receive governing documents?

2. What communications (if any) do tenants receive from the association?

3. What steps are taken to involve tenants?

4. Is there a record to support the idea that tenants cause more problems in the community?

Communicating and involving renters in the community may resolve rental issues facing the association and the membership.

What Constitutes a “Rental”

Under Oregon law, “rent” means “any payment to be made to the landlord under the rental agreement, periodic or otherwise, in exchange for the right of a tenant and any permitted pet to occupy a dwelling unit to the exclusion of others and to use the premises.”

If the association has a rental restriction and there is a question of whether an owner is in violation, it may be difficult to determine if an owner is actually “renting.” For example, if the owner’s child lives in the home and is not paying any rent, then that arrangement does not likely constitute a “rental.”

But what if someone other than the owner is residing in the property and it is difficult to determine whether the arrangement is a rental? One thing an association can do is have the owner sign a rental affidavit.  The affidavit is a signed and notarized document stating that the owner is not renting their unit.  This satisfies the board’s obligation to inquire whether the property is in violation of any rental restriction. Click here for: Sample Rental Affidavit

Adopting a Rental Restriction

Restricting an owner’s right to rent or lease their lot or unit requires an amendment to the governing documents. There are several things to consider before embarking on a rental amendment.  First, will the association get enough owners to vote “yes” to approve the amendment? Should the rental amendment be retroactive, or should existing owners currently renting be exempt?  Lastly, consider adding a “hardship” clause which gives the board discretion to allow a rental which exceeds the rental cap in the case of extenuating circumstances (military service, overseas job transfer, etc.)

Other Options

There are other options in addition to a blanket rental restriction.  First, the association could adopt an amendment regulating leases or rentals. Requiring, for example, all rentals must be at least 30 or 60 days, all lease agreements must include a provision that the tenants will receive and follow the governing documents (including rules and regulations), and owners who rent their property must provide the association with the tenant’s contact information.

In most cases, the association is better off focusing on the fair and equitable enforcement of the association’s governing documents.  If renters are causing parking issues, enforce the parking restrictions.  If tenants are creating noise complaints, enforce the nuisance or noise provisions.  In other words, deal with the effects of renters rather than attempting to restrict or limit rentals.