Getting changes in CC&Rs may take some prodding (part 2) by Laura V. Kwiatkowski

Q: Our association has determined that it is necessary to amend our CC&Rs (codes, covenants and restrictions).  However, we have heard that it is very difficult for associations to get CC&R amendments approved by the membership.  What do we have to do to solicit the support we need?
 
A: First and foremost, before you attempt to solicit any support for your proposed CC&R amendments, have the proposed amendments reviewed by your association's legal counsel.  

 As we discussed last Sunday, your CC&Rs are a legal document.   

 The last thing you want to do is waste time, energy and money to get the CC&R amendments approved, only to find out that they are not properly drafted or do not meet certain legal criteria.
 
 Second, review your existing CC&Rs to determine the number or percentage of favorable votes you need from your owners to pass the amendments.  This percentage can be as high as 75 percent of the total number of voting members.  

 Be careful to determine if any of your proposed CC&R amendments are considered material amendments.  A material amendment is defined in your CC&Rs and can include amendments that change voting rights or owner percentage interests in the common area.  

 Usually, in older CC&Rs, material amendments require a 75 percent prior written approval vote of the lenders or mortgagees of all first mortgages for homes or condominiums in the association.  

 Determine at the outset whether you will also need to seek lender approval. Because of the obvious difficulties in obtaining lender approval, most associations do not try to pass material amendments.

 Assuming you do not need to seek lender approval because you have no material amendments, there are several options available to increase your chances of successfully soliciting the required number of votes.  

 First, there is a process under California Corporations Code Section 7513  
that allows most associations (unless your governing documents prohibit it) to solicit the vote of its owners on certain issues, like CC&R amendments, by use of a written solicitation statement and written ballot.  

 Thus, the association's Board of Directors, with the assistance of its legal counsel, can prepare a written solicitation statement and ballot, which is mailed to all owners.  

 These documents ask the owners for their approval of the proposed CC&R amendments and request the return of the ballot by a designated date.  In addition, under California law, the association can (and should) in its initial solicitation reserve the right to extend the balloting period on the proposed amendments for two additional 30-day periods. 
 
 Owners return their ballots to the association in a sealed control envelope.  Each owner marks on the outside of the envelope, his or her name and lot or unit number.  

 In this way, without opening the ballots prior to the deadline, the association can create a running list of owners who have not responded.  

 The Association can appoint block captains or volunteers to contact those owners who have not responded.  This can be accomplished by follow-up mailings, in-person visits and telephone calls. 

   The association's Board of Directors should also hold an open meeting with the membership to explain the proposed changes to the CC&Rs and to answer any questions that owners may have on the issues.  

 Utilize all mediums to advertise the association's efforts to amend the CC&Rs, including personal contact with owners reminding them to turn in their ballots, posting notices in the association's  newsletter or on the community association bulletin board.  

 Some of the most successful efforts I have observed have involved volunteer block captains working from lists, updated weekly, with the names of nonresponsive owners.  This allowed personalized follow-up with nonvoters throughout the balloting period.  Such contact is important, since most owners do not respond to mail solicitation because they either do not take the time to read the materials or they do not understand them.  

 Keep a running log of all your association's efforts to gain the approval vote of your owners.  It is also critical to keep copies of all documents you distributed (original written solicitation statement and ballot and follow-up mailings), including copies of your newsletter articles, bulletin board notices and notices of an open meeting to discuss the proposed CC&R amendments.  

 Maintaining this information is important because, if you are still unsuccessful in obtaining the requisite percentage, you still have another option.

   Under California law, an association may petition the Superior Court of California to issue an order reducing the percentage of affirmative votes necessary for an amendment to its  CC&Rs.  

 This is provided, of course, that your association can meet certain statutory criteria including:

• Existing CC&Rs must require at least 50 percent or more of the owners vote in favor of the proposed amendments.  As discussed above, most older CC&Rs require 75 percent approval.
• The association must demonstrate, by statements under oath and written documentation, that it made a reasonably diligent effort to obtain the required vote of owners.
• The association must be able to establish that, although it was unsuccessful in obtaining the required 75 percent approval, for example, at least 50 percent of the owners in the association voted in favor of the proposed amendments.

Generally, judges understand the difficulties that associations encounter with respect to CC&R amendments.  Thus, they are supportive of these types of petitions where the association can demonstrate that it has met the statutory criteria.  However, the assistance of your association's legal counsel should be sought if it becomes necessary to file a court petition.

While amending your CC&Rs involves a number of procedural formalities, it is not an insurmountable task.  Hard work from committed board members and volunteers is the difference that pays off in the long run.

Laura V. Kwiatkowski is a member of the Community Associations Institute (CAI) and is a San Diego attorney.  Readers can visit the CAI website at www.cai-sd.org and can get their condominium or homeowners association questions answered by calling the Community Associations Institute at (619) 299-1376 or e-mail at q&a@cai-sd.org or sending questions to: Condominiums, Homes, San Diego Union-Tribune, P.O. Box 120191, San Diego 92112-0191

Back to S.D. Union Tribune Article List