Document Review
Q. I have recently been elected to the Board of Directors of our condominium association. The board has appointed me to a committee to review the legal documents and rules and to update them. The documents and the rules we have now were put in place by the developer. Many of the rules are listed in the bylaws. What is the best approach to take when reviewing the documents?
A. The board of directors is on the right track. The associations governing documents - declaration and bylaws - should be reviewed on a periodic basis. The review should also include any policy resolutions adopted by the board as well as the rules and regulations.
You did not include the age of your association, but we will assume that it is probably 10 years old or older, since most of the newer condominium documents prepared in the last five or ten years in Hampton Roads do not include rules in the bylaws, although the developer provides them as a separate document, which is not recorded. However, there were numerous sets of documents put to record prior to that time that did list rules and regulations in the bylaws. Most contemporary documents empower the Board to amend rules and regulations and enact new rules and regulations for the benefit of all unit owners. Your documents will have to be carefully reviewed to determine if the Board has the specific authority to adopt new rules and make modifications to existing rules or if new rules and regulations require a vote of the unit owners. Rules that are included in the bylaws are, technically, part of the bylaws and would require amending in the manner described in the bylaws. Typically, there is an amendment section that spells out the number of member votes required in order to amend the documents. In most cases, even rules that are set forth in the bylaws will not require a vote of the membership to enhance existing rules, such as modifying the parking rules or tightening up of the rules concerning placement of personal property on decks outside the unit. It is sometimes a fine line that requires a legal opinion.
Provisions in the Declaration that we most often see that need reforming include expanding the details regarding insurance coverage and payment of deductibles, adding the provisions regarding suspension of services and levying charges for violations of the covenants, and leasing rights and restrictions.
In our opinion, having numerous amendments to the association's documents is a very cumbersome, and often confusing, way to go about revising the condominium documents. A much simpler way is to do an "Amendment by Restatement". This simply means you retain only the essential provisions which are particularized for your community and discard the rest. You then insert the retained provisions in new contemporary documents. Such items as percentage of ownership and voting rights can only be changed with 100% agreement of all owners; therefore, these items should be incorporated into the new documents as they are currently stated. With new documents, your association will function far more efficiently. Rather than having piecemeal changes to the documents, such as the rules set forth in your bylaws, it seems preferable to revise the documents in their entirety. Such things as the rules can be removed from the bylaws entirely, and made a separate document that can be changed by the Board of Directors.
Regardless of whether the association elects to only amend parts of the documents or to "Amend by Restatement", an attorney should be retained to assist the association with the drafting of the new documents and rules, since you want them to be clear and enforceable. Additionally, there will have to be an amendment document recorded at the courthouse in order to formally amend the documents.
We hasten to add that any amendment process can be, and often is, time consuming, but it is usually worth the effort to improve the operations of the association. You may wish to form a document revision committee of non-board members and have a general information meeting to educate the members as much as you can after you have arrived at the primary changes you wish to make. The documents of the association should be treated like any other legal document and reviewed and amended as needed to ensure that they are current, tailored for your community, and accomplish the purpose for which they are written.
I am the president of a small condo in Norfolk. Our condo documents are over 20 years old and have never been amended and we would like to revise them to reflect the current buidling conditions and concerns. We have only 12 units, but just 2 units are rented. The building is over 100 years old and we have minimal reserves. Are there resources we can use to help us build the new condo documents efficiently?
RESPONSE: Laura, There are no such resources because it would essentially be promoting the unauthorized practice of law....i.e. drafting legal documents by unlicensed persons. What you should do is go through your documents with a committee of members and make a list of all the areas you would like to see changed, the change requested, and notations of items about which you would like to get advice. Then make an appointment with one of us here who performs document reviews and amendments in order to discuss your needs. We will advise you on what can and cannot be done, and make other suggestions for improvement based on our experience. The cost to do the review, write up proposed changes (or new documents) will be less than you might imagine and can be paid in installments due to your size. We would welcome the opportunity to help you.