Turning Bad Documents into Good Ones
A community association's governing documents - its Articles of Incorporation, Bylaws, and Declaration or covenants - typically fall within three categories: the good, the bad, and the ugly.
Take this quick self-test to determine where your documents fall:
Yes NoQ Q Our association's covenants contain declarant or developer rights which never expire, or provide for two classes of voting.
Q Q Our association's covenants contain use restrictions which are impractical or no longer desirable (shake shingle roofing requirements, for example) or covenants are violated which have never been enforced and which we do not believe should be enforced because they are no longer appropriate for our community (A restriction prohibiting home businesses, for example).
Q Q The Board can only raise assessments to a certain level because of an "assessment cap" based upon a percentage of the previous year's assessments or the consumer price index.
Q Q We have consulted with legal counsel more than three times within the last year for assistance in interpreting our governing documents, including maintenance responsibilities.
Q Q We have not been able to obtain a quorum at our annual meeting.
Q Q Our Articles of Incorporation do not expressly permit us to limit the personal liability of directors.
Q Q Our Bylaws do not contain an indemnification provision.
Q Q One or more of our governing documents are more than fifteen years old.
Q Q Provisions of the various documents conflict with each other. (For example, your Articles authorize 3 directors but you have been operating with 5 directors).
Q Q Our Board and Members are overwhelmed and befuddled by the content of the Articles of Incorporation, Bylaws and Declaration.
If you answered "no" to all of the questions, your documents probably fall within the "Good" category. If you answered "yes" to between 1 and 6 questions, your documents fall within the "Bad" category, and if you answered "yes" to between 6 and 10 of the questions, your documents fall within the "Ugly" category.
So where do you go from here . . .
