Unnecessary Bylaw Changes:
It appears there are attorneys and association managers in Maryland that tell people bylaws must be changed to conform to new legislation. This is not the case. Since federal, state and county law supersede anything in association bylaws, there is no need to amend bylaws. Ms. Karen S. Straughn, Assistant Attorney General, Consumer Protection Division, Maryland Attorney General’s office, said “if bylaws contradict with the statutes, the statues control. If they don’t contradict, the bylaws may still control. As a result, there would not be a need to amend the bylaws due to new statutes as the statutes would control whenever there is a difference that would require amendment anyway.”
Still Another Predatory Bylaw Revision Alert!
MHA has become aware of an association that is sending out a bylaw revision proxy that does not include the new bylaw text. Condo and HOA homeowners should never approve any bylaw document that does not give you the proposed bylaw text. Further, you should demand that the reason for the bylaw change be carefully explained to you.
Another Predatory Bylaw Revision Alert!
Homeowners need to carefully examine any proposed association bylaws changes. If the language is not fully explained to you and you are not given adequate time to research the proposed changes, vote no.
For example, some homeowner association (HOA) bylaws state that in any legal action taken by the association against a homeowner, if the association wins, the homeowner must pay all reasonable attorney fees incurred by the association.
MHA has recently received a copy of a proposed HOA bylaws amendment where the phrase “of not less than one thousand dollars” has been added to the standard “reasonable attorney fees.” This proposed amendment now reads the homeowner must pay all reasonable attorney fees of not less than one thousand dollars. This is a bonanza for the attorney. Such a revision should never be approved. It means that no matter how little work the attorney may have done, the attorney will automatically get $1000 of the homeowner’s money. Using the phrase “reasonable attorney fees” protects both the homeowner and the attorney and this phrase should be retained in bylaws.
This same proposed bylaw revision also asks that a practice outlawed in several states, namely, foreclosing for unpaid fines, be added to the association’s bylaws. The proposed revision states “the association may pursue collection of the fine in the same manner and with the same rights as if the fine were an unpaid assessment.” MHA strongly opposes this practice and urges homeowners to reject efforts to equate unpaid fines with unpaid assessments.
Many people don’t realize that “collection of the fine in the same manner as an assessment” means the association can foreclose for unpaid fines. Such language should never be added to bylaws as it gives far to much power to the association.
Predatory Bylaw Revision Alert!
Posted: 12/12/2009 12:00:00 AM, revised 5/14/2011
If you live in an association that is working to revise or amend HOA/Condo governing documents, here are some important tips to keep in mind as you review and prepare to vote on those changes. Homeowners, or a committee of homeowners, should review the new wording thoroughly, comparing existing wording to new wording line-by-line. This works best by having old text and new text in different fonts or colors while reviewing the documents.
1. Beware of boiler plate documents that completely replace old documents with new, and perhaps inappropriate, bylaws. MHA recommends that you never vote for totally new bylaws unless every line is explained to you.
2. Beware of language that states the homeowners should pay “all attorney fees actually incurred by the Board of Directors.” This wording obligates homeowners to pay for the Board’s attorney’s fees, as well as their own attorney’s fees. Such wording sets up a “no-win” situation for homeowners and could lead to bankruptcy and/or foreclosure. California has addressed this issue with Civil Code 1354 which states “in an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.”
3.Beware of wording that gives the Board the ability to file a lien for unpaid fines and then foreclose on the property. Wording such as: “the Board shall have the power to impose reasonable fines which shall constitute a lien upon the property and shall be collected in the same manner as any other assessment levied” or “in the event fines are not paid, such fines shall be collectible in the same manner as assessments” should be avoided. Recently, California and Florida have passed legislation to prohibit associations from including fines in a lien and fines may not be characterized, nor treated in the governing documents, as an assessment which becomes a lien. Arizona has passed legislation that an association can file a lien for unpaid fines, but the lien cannot be collected until the property changes ownership.
MHA recommends that before voting for any amendments to governing documents, homeowners carefully examine changes. If you do not understand the implications of the new wording, vote no. Further, beware of a “Directed Proxy” that gives your vote to someone else. You might be voting for a bylaw change when you never intended to. Arizona has already banned proxy voting. This state uses an “absentee ballot.” The absentee ballot must set forth each proposed action.