The Four Ws of Changing the Governing Documents

Sooner or later, every community association is faced with an issue that was never contemplated by its declaration, articles of incorporation, bylaws or rules and regulations. This may be the result of new statutes or case law, or it could be a new property trend that no one saw coming (e.g., solar panels, Airbnb, etc.). Whatever the issue, it is important for community associations to stay on top of the changes.

Why Should the Governing Documents be Changed?

There is no law that requires an association to update its governing documents as statutes, case law or property trends evolve over time. Not doing so, however, will be risky for the association’s overall operations. For example, outdated governing documents could misled board members on their duties and responsibilities, they may give the incorrect timeframes for sending out meeting notices, or they could even prohibit activities within the community that have been unofficially liberalized and accepted by previous boards. Conflicts between the association’s governing documents and these new items will eventually undermine the actions taken by the board. In other words, conflicts will create conflicts.

What Governing Documents Should be Changed?

Although the articles of incorporation are considered part of an association’s governing documents, changes are most commonly made to the declaration, bylaws and rules and regulations. First, the declaration lays out the guidelines for the community. This typically includes, for example, provisions on assessments, modification requests, use restrictions, and insurance. So, if the legislature passes a new law that negatively impacts collection efforts for an association, there is a good chance that its declaration may need to be amended to comply with the new law.

The bylaws, on the other hand, set forth how the association is supposed to run. This usually includes provisions on meetings and quorum, the board of directors, officer positions and community notices. A community’s general consensus on how the association should run can just as easily evolve as the underlying guidelines contained in the declaration. It is therefore just as important to review the bylaws when considering updates or changes to the governing documents. This is because a new idea is useless if the association is shackled by outdated bylaws.

Finally, the rules and regulations are typically the last set of governing documents that should change over time. For many community associations, rules and regulations can be unilaterally adopted and changed from time to time by the board of directors (i.e., without a membership vote). This means, compared to the declaration and bylaws, they should be the most amorphous of all the governing documents. And like the declaration, the rules and regulations are guidelines for the community; however, they are meant to provide additional support or explanation of the provisions already in place. This implies that the board cannot create any rule or regulation that conflicts with the declaration. For example, if the declaration allows the board to adopt rules and regulations governing the use of the common areas, the board can easily tailor them as community trends change over time (e.g., policies on fireworks, pool supervision, pet waste, etc.).

When Should the Governing Documents Be Changed?

Reviewing the governing documents can be a tedious and expensive process, but it should be done every few years-at the very least. As alluded to above, statutes can often change, and there is constantly new case law being published from the court systems. It is the combination of changes in the law and changes in values that should dictate the frequency of a governing document review. It is practically guaranteed that at least one important item is outdated if there have been no changes to any of the governing documents in the last five to ten years.

Who Should Make the Changes to the Governing Documents?

Given the increased complexity of association governing documents, it is recommended that the association’s attorney prepare any amendments or proposed changes to them. At the end of the day, governing documents are legal documents, which means the same professionals who are often called upon to interpret them should be the same ones advising a board on how to change them.

Article provided by Coulter & Sierra