Condo Media - January 2016 - 36

TIME TO
CHANGE
WHEN CHANGES ARE NEEDED
Your governing documents should
reflect the needs and priorities of
the community and its residents. As
those needs and priorities change, the
documents should change as well. There
are many reasons you may want to
revise the association's rules or amend
its governing documents:
n To correct errors or clarify fuzzy

language.

n To address shifts in the community's

makeup resulting from changes in
its demographics-a community that
consisted largely of families with
young children may now be dominated
by older empty-nesters, or vice versa.

n To address changes in economic

conditions.

n To address issues the existing

documents don't cover-electronic
voting, email, and concerns about
second-hand smoke, short-term
rentals, and drones are just a few
examples. Diﬃculty achieving a
quorum for annual meetings is another.

n To resolve inconsistencies with laws

or court decisions. Bylaws prohibiting
the display of flags conflict with court
rulings aﬃrming the right of owners
to fly them; regulations prohibiting
children from playing in common
areas or barring occupancy of units by
unrelated individuals may violate Fair
Housing laws.

n To revise requirements or restrictions

no longer in sync with common
practices. If the documents say
"tomato" and the owners are regularly
saying "tomaaato," you need to review
the documents.

DON'T SKIP ANY STEPS
The first step if you're going to amend
your documents is to review the procedures you must follow, and make sure
you follow them precisely. Fail to dot an
"i" or cross a "t" and any changes you ap-

36

CONDOMEDIA

prove will be subject to challenge. If the
documents require owners to vote on the
proposed amendments at a "duly called
meeting," you can't skip the meeting and
you can't simply ask owners to sign a
petition approving the change.
There are some ways to work around
the inconvenience of having owners
vote at a meeting if that is required. For
example, owners could sign a directed
proxy instructing the board to vote on
their behalf for or against the proposed
change, but you have to hold a meeting
and count the proxies there or continue
the meeting to a later date in order to
collect them. If the documents require
owners to sign the amendment, they
have to do that in some way. Owners
could submit a signed consent form,
but it should specify that the board
has permission to attach the form to
the amendment with the same force
and effect as if their signature actually
appeared on the amendment.
This isn't just an attorney being
unduly picky or overly cautious. In
considering the validity of an action,
courts often focus narrowly on whether
the procedures followed to enact it
conform to the requirements of the
governing documents. In one of many
examples, a Florida cooperative board
ran into trouble when it counted 53
absentee ballots plus the votes of 20
members who attended a meeting and
six proxies toward the approval of a
bylaw change limiting the rental of units.
When an owner challenged the
amendment (in Berkovich v. Casa
Peradiso North, Inc.), a court ruled the
bylaws required a quorum at the meeting, and required owners to be present or
represented by proxy, and that absentee
ballots were not suﬃcient to count
toward the quorum requirement.
Even 100 percent approval may not
be suﬃcient if the approval isn't given
in the form the documents require. In
a 2006 Massachusetts case (Morris v.
Tewksbury Junction Condominium
Association), all of the owners attending
the annual meeting of the Tewksbury
Junction Condominium Association
approved an amendment to the master

deed establishing a right of first refusal
for the association. But the amendment
provisions required that owners holding
67 percent of the undivided interests
sign the amendment and that it be
recorded within six months after the
first owner signed. Because neither
of those requirements was met, the
Massachusetts Land Court invalidated
the amendment.
LENDER APPROVAL REQUIRED?
One potential procedural landmine for
which boards should be alert is the approval of lenders holding mortgages on
units in the community. Documents vary
widely on this: Some require lenders to
approve all amendments; some require
the approval only of "material" changes.
Some documents define these material
changes (typically those affecting voting
requirements, insurance, the allocation
of assessments, and the like), but many
do not. Some documents also require
approval only of "eligible" mortgage
holders, defined as those who have filed
notice indicating they want to be notified
of amendments. Even if amendments to
the bylaws or declaration don't require
lender approval, check the master deed,
and vice versa, as one document may
specify that approval is required for
amendments to any documents.
Obtaining lender approval isn't easy
to say the least. With loans often sold
and resold multiple times, it is often difficult to figure out who owns a mortgage,
let alone identify the individual in a
far-off institution with the authority to
approve a document change. Recently
drafted documents typically specify that
a lender's failure to respond to notice
of an amendment within a stated time
may be interpreted as approval. Older
documents don't contain that provision,
but a newly enacted amendment to the
Massachusetts Condominium Statute
now provides much-needed relief.
The revised provision allows associations to deem a lender's consent
to an amendment to have been granted
if notice is sent to the lenders via first
class and certified mail with returnreceipt requested and the lender fails to
Condo Media - January 2016

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