BOD CC&R Modification Intent

Posted by Jim Haar

The intent of the Board of Directors with regard to the proposed CC&R Amendments is clear to me.  That is, they want to amend the CC&R’s to make the approval of the Country Club  Lease Agreement  (and other $500K+ purchases) easier to pass.  Approving the proposed amendments (as discussed in the previous “No Choice – Vote No on Proposed CC&R Amendments” post) would allow the BOD to enter into a costly Country Club Lease Agreement with as little as 10% yes vote from homeowners (assuming the minimum quorum vote requirement of 20%).  That is, if the proposed amendments are approved, then this would set the standard for voting approval on the Lease Agreement.   The “Agreement to Stay Investigation” stipulation with the Attorney General’s office simply states that the owners must approve the Lease Agreement without defining what “approval” means.  Therefore, amending the CC&R’s as proposed provides the legal basis for homeowner approval. This is why at the Aspen Lodge meeting, the BOD refused to answer what voting standard would be applied to the Lease Agreement vote.

Do we really want passage of a multi-million dollar SGCC Lease Agreement subject to an approval vote as little as 10% of Somersett homeowners?  Given that SGCC membership (equity, associate and preview), probably equals this amount, passage is certainly guaranteed.

I have always been a proponent on letting the Somersett homeowners vote on whether or not a portion of our assessments should go to funding the SGCC for whatever reason, and we could all live with the results of this decision.  However, I never imagined a BOD proposing CC&R amendments such that this decision could be made by 10% of homeowners.  For a vote of this type 50% homeowner approval should be in effect.

Quite simply – This is an attempt to give the Board more control and the homeowners owners less control.  It comes down to whether or not we believe this to be in the best interests of the association at large and how much trust we would have in both the current and future Boards.  Based on actions to date by both the past and current Boards, I certainly do not!  What about you?

5 thoughts on “BOD CC&R Modification Intent

  1. Actually, Jim, most HOA Boards have the authority to acquire or sell property for their Association. I am rather surprised that this authority was not originally given to this Board. The reason we have a Board with Directors voting for us is that it is too unwieldy to govern with a mass vote each time. Sometimes, as individuals we might not agree, but we need to delegate, and live with the consequences.

    1. Actually, Bruce, I agree with you. We elect BOD’s to govern the association and make decisions for us. To require homeowner vote on all decisions, even significant expenditures, would be folly. This is not the issue here. My issue is with the limits of authority granted to the BOD with regard to the purchase, lease or annexation of real property to the Common Area. Having been associated with three HOA’s in the past, I would disagree that “most” have the authority to add such property in the $500K range without homeowner approval, or in the millions of dollars based a homeowner vote quorum of only 20%. Let’s say the BOD wanted to purchase one of the commercial buildings at the Town Center for $1,000,000 (property only, not including the associated operating and maintenance costs) for future amenity expansion, and that this required an annual assessment increase of 15% plus a special assessment of 25% of the annual assessment. What percentage vote of all homeowners to approve such purchase do you think should be required?

  2. I agree that an amount can be added to the proposed rule-change which would limit the BOD’s discretionary decision-making, above which they would have to go to Membership for approval.

    1. I am well associated with HOAs and their normal CC&Rs. Most larger HOAs with structure have a limit to their BOD’s discretionary spending before requiring Membership approval. We are a larger HOA, and, we have structure; however, the current structure limits our BOD’s discretionary spending, perhaps too much?

  3. I would be interested in reading the ballots. I just received a letter with some budgets included but no ballots or envelopes at all. I’ve call the Management Company and they’re going to “check into it”. Are people being left out of the vote?

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