At almost every Board Director Success Seminar we host, one of the first questions from a board member is “We don’t like some of the stuff that is in our CC&Rs, and we would like to change them and update the governing documents, how difficult is that?” The answer is, very difficult. Here are the reasons why:
- Hard to Herd the Cats: Unless stated otherwise in your governing documents, state law requires of super majority of all the owners to approve any change in the governing documents. If you have 100 owners in your community, that means 66 or more must approve the change. There is no quorum or reduction in that number, you must get 66 owners to vote in favor of the change. Most boards struggle to get 50% of their members to participate in the annual election. Since the typical community that is 20 or more years old has 20% to 30% of their properties as rentals, many of these owners are out of area or out of state and don’t pay attention to the politics and issues of that community. If they lived at the unit they could be lobbied by the board to approve the change, but if they are out of area, they can’t be cornered. You have to ask yourself before you even start, “How likely is it for us to get enough owners to act on this issue?” If you can’t more than 10% of your owners to participate in election, how likely will they vote on this matter?
- Some Owners Don’t Want the Change: Let’s say an owner has been a resident in an association for 5 years and they bought their unit with the understanding that it was the association’s responsibility to replace their garage door. The door is in good condition now but will need to be replaced in about 3 years. During their 5 years, the association has replaced several other owners’ doors. The board does not like this expense and wants to change the CC&Rs to state that garage doors are now the responsibility of the owners. But the association has previously used a portion of this owner’s dues to pay for other garage door issues, and this owner expects the association to pay for theirs. They may not vote to allow this change. What seems reasonable to the board may seem completely unreasonable to an owner.
- Attorneys Are Not Cheap: Any change to the CC&Rs must be made by a qualified party, usually an attorney who specializes in Davis-Stirling and common interest development (CID) laws. The hourly rate for such a person is $400 to $600 and depending on the number of changes and how many pages of the original document need to be updated, this may cost $5,000 to $15,000. This money must be spent before the vote of the owners and if the proposed changes fail to pass, this money has been wasted. No board should even consider amending the CC&Rs without polling the community and determining the likelihood of it passing.
- The Legislature is Doing It for You: Every time the California legislature passes a new law telling an association what to do, it overrides whatever language is in your CC&Rs. State law has already weighed in on pets (reasonable number and type must be allowed), flags (can fly the US flag), rentals (can’t have fewer than 25%), elections (very complicated rules) and more. It could be in a matter of years, much of the CC&Rs will be unnecessary as the government decides how an association should be run and what is allowed in every association.
What is the lesson here? Don’t even start the process of amending your governing documents and spending money to do so without first polling your entire community. Do the super majority want the change? Can you even secure a super majority to pass the change? Is it worth the time, effort and expense? If you have the support of your community and it will make a positive difference in your association, you should not be deterred in changing your CC&Rs, just do so aware of the potential pitfalls.
