Can a board of directors change the bylaws? This townhome owner is worried about the board redoing the declaration and bylaws without owner approval.
Q: I live in a townhouse community. Our association’s board of directors is redoing our declaration and by-laws without approval of the owners. They say they are just bringing the language up-to-date, so they don’t need the owners’ and mortgage holders’ approval.
They also are redoing a list of responsibilities, saying a new board may do so. How can they shift costs to owners? When I was on the board, our attorney said that a responsibility list is not worth the paper it is written on.
Can a Board of Directors Change the Bylaws?
A: When an attorney draws up association documents when a condo building is being built or converted, those documents can become out-of-date over time. If your association was created 50 years ago, over that period of time rules and state laws change so the original documents would no longer be valid or, in some cases, even legal.
Rest assured, some state laws and some association documents allow association boards to bring their association documents up to date. When the board says they are bringing the association documents up to date, they probably mean that they need to bring the documents into compliance with state or municipal laws and conform the documents to requirements of Fannie Mae and Freddie Mac, the large mortgage buyers.
We don’t expect associations to change the ownership percentages of the owners; that would and should be prohibited. We also would not expect the association to make major changes to the documents that would affect the ownership interests of the homeowners.
We would expect the board to limit their changes to the association documents necessary to bring those documents into compliance with current laws and into compliance with mortgage lender requirements.
For most other changes to the association documents, we’d expect the board of directors to go to the ownership and ask the owners to approve these changes. Let’s say the board of directors wants to change the association to only allow owners aged 55 or older to live in the development. That is the sort of significant change that should require a vote of the homeowners. There are countless major decisions covered in the governing documents that should require a vote of the owners and not simply a majority of the board of directors.
State and Municipal HOA Voting Rules
However, if your state or municipal law was changed to say that the minimum vote required to sell the association as a whole must be 85 percent (a change recently enacted in the City of Chicago), and your governing documents provide for a simple majority, there would be no need to call for an owners’ vote. The board would be correct to update the governing documents to conform the document to the number set forth by the state or municipal law.
The interesting part of your email is the listing of a set of responsibilities. If these responsibilities are for the officers and directors of the association and they are within the standard of norms for associations, they can probably make this change. It’s unlikely that a change of this type would affect you directly. However, if the changes made are out of the ordinary and consolidate all power with the president, for example, we can see how you and your fellow owners might be upset with this type of change.
Is the Board Acting in the Best Interest of the Association?
It all comes back to voting. As you think about the moves the board is making, please keep in mind that you, the homeowners, voted in these individuals to serve on the board and act in the best interest of the association. If they are acting in the best interest of the owners, they probably can make stylistic and some structural changes to the governing documents. On the other hand, if they are working to undermine the workings of the governing documents and are not acting in the best interest of the association, you might have a bigger problem and may need to hire an attorney to oversee the workings of this association.
Having said that, you haven’t mentioned anything that gives us cause for concern. We suggest you go to the monthly board meetings, and stay in touch with what they’re doing. If you don’t like the direction, run for the board – or vote in another owner who shares your concerns.