Governing documents are the foundation for governing an association. If these documents are out of date or fail to adequately address basic operational problems, an amendment may be in the best interests of the association. For example, with the 2014 changes in the Davis Stirling Common Interest Development Act (“Act”) just around the corner, now may be the best time for boards to consider a rewrite of their governing documents, or, at a minimum, an amendment to change outdated code sections to new sections. Use the following guide to plan in advance how, when, and what type of votes are required for each type of amendment, and transitioning your governing documents into the new year will be as easy as pie!
Amendment by Membership Vote. First, the CC&Rs may be amended pursuant to the terms set forth in the Governing Documents themselves. Most governing documents require a vote of the membership, and typically need between 51 percent (51%) and 75 percent (75%) affirmative votes. As most Board members and managers likely know, it is extremely difficult, and sometimes impossible, to get the votes necessary to meet this requirement.
Second, the Civil Code provides that, if the Governing Documents do not contain provisions pertaining to amendments, the CC&Rs may be amended according to the terms of the statute. See Civ. Code § 1355 [§ 4260, effective January 1, 2014]. Pursuant to Section 1355 of the Davis-Stirling Act [Section 4270, effective January 1, 2014], an amendment is effective after:
- The text of the proposed amendment has been distributed to all of the owners of separate interests not less than 15 days and not more than 60 days prior to any approval being solicited;
- The approval of the owners representing more than 50% (or any higher percentage required by the declaration) has been given;
- The amendment vote is certified in writing by a corporate officer;
- The amendment is recorded; and
- A copy of the amendment is sent by First Class Mail to all owners.
Amendment by Court Petition. Civil Code Section 1356 [Section 4275, effective January 1, 2014] provides a statutory procedure for an association to petition the court to reduce the percentage of affirmative votes required to amend the CC&Rs. If the association cannot obtain the required percentage of votes to pass a CC&R amendment, but has obtained more than fifty percent (50%) membership approval, the association may petition the court to reduce the percentage of votes required to pass the amendment.
Generally, the association must show a reasonably diligent effort was made to permit all eligible members to vote on the proposed amendment. And, the association must show the number of affirmative and negative votes actually received, and any other facts relevant to the amendment. Lastly, the association must have obtained more than 50% approval from all members, not just those that have cast a vote. See Peak Investments v. South Peak Homeowners Ass’n (2006) 140 Cal.App.4th 1363.
Vote of the Members NOT Required–Amending Outdated Code Section Numbers. As you probably already know, the Davis-Stirling Act will be undergoing a complete make-over on January 1, 2014. Besides some substantive changes, the 2014 revision to the Act will reorganize and recodify ever statute of the Act. Assuming your association’s governing documents have not been amended recently, they most likely reference in numerous places sections of the current Davis-Stirling Act. In approximately one month, these references will be outdated and inaccurate. To promote an easy transition, the legislature allows for an amendment to the governing documents substituting references to the old Act with references to the new Act without a membership vote.
Contact Silldorf & Levine, LLP for a limited time only flat fee rate of $150.00 to update your association’s governing documents (including the CC&Rs, Bylaws and Collection Policy) to reference the new Davis-Stirling Act code sections. This special rate includes our review and replacement of all references to the Act in your association’s documents. Again, this amendment does not require a membership vote. This special offer will end January 31, 2014.