Condo Media - September 2011 - 16

VERMONT N e w s

by Carl H. Lisman, Esq.

R e g i o n a l

To Amend or Not to Amend?
Vermonters Want to Know!
irectors, officers, owners and managers have been asking the same question for weeks: Must declarations and bylaws be amended to comply with the changes to Vermont’s Common Interest Ownership Act that become effective on Jan. 1, 2012. All of the provisions of the act apply to all condominium and (most) planned community properties created after Dec. 31, 1998; some (like the resale certificate requirements) apply to all condominium and (most) planned community properties without regard to the date of creation.

C A I

notice must be given to all owners of the consent. Example: Some current bylaws do not allow for owners to call a special meeting of the association, others allow it but have different requirements. Beginning Jan. 1, 2012, every association must call a special meeting to address any matter affecting the community if owners having at least 20 percent of the votes in the association request that the secretary call a meeting. • A condominium or planned community created before Jan. 1, 1999 must comply with many of the changes to the act. Example: An undated proxy given by a unit owner is now invalid; if current bylaws allow undated proxies, that is overruled by the act. Example: Meetings of the board must be open to unit owners. Notice of board meetings must be provided to owners. Directors can take action only on matters disclosed in an agenda provided to owners prior to the meeting. Executive sessions are limited to specific topics. No actions can be taken in executive session. Unless bylaws comply with these requirements, the bylaws are inconsistent with — and superceded by — the act.

Example: Whether a board should decide to take enforcement action is always an issue. Concerns about establishing or breaking precedent, the likelihood of success in litigation, cost-benefit analysis and other issues must be weighed. The revisions to the act reinforce the board’s authority not to take action if the facts and circumstances come within the subjects listed in new Section 3-102(g). Example: No one knows what the legal standard of care and loyalty is for a director of an unincorporated association — of which there are many in Vermont. The revisions to the act make clear that those directors have the same duties of care and loyalty as do directors of Vermont nonprofit corporations. Confirming that standard for pre-1999 associations would be beneficial for all; it gives directors an objective standard and it protects associations.

Changes Mandated by Changes in the Law
Most, but not all, of the statutory changes apply to governance of associations. As to those changes, amendments to governing documents are, in some instances, required and, in others, recommended. • A condominium or planned community created after Dec. 31, 1998 must comply with all the changes to the act. Example: Whether or not the association’s governing documents expressly so provide, the association must create and maintain the records mandated by amended Section 3-118 of the act. Example: Boards must have meetings. If bylaws currently provide that directors may act by unanimous written consent without a meeting, the bylaws will conflict with the limitation in the act that restricts unanimous consents to ministerial actions or implementation of actions previously taken at a meeting. When consents are permitted,

When and How
Governing documents should be amended before Jan. 1, 2012. Failure to conform to the changes in the act may give rise to liability to directors, officers and associations. Making revisions will take time. The changes to the act are extensive and significant. Obtain professional assistance before submitting documents for votes by owners and boards. That process, too, can be time consuming. CM Carl H. Lisman, Esq. is a partner in the law firm Lisman, Webster & Leckerling PC in Burlington, Vt.

Changes Encouraged
There are changes in the act that will expressly apply only to associations created after Dec. 31, 1998. Many of those changes would be beneficial to pre-1999 associations, but those associations will not get the benefit without amending their documents.

CONDO MEDIA • SEPTEMBER 2011

Condo Media - September 2011

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