CC&R Amendments – Setting the Record Straight

Somersett UnitedUnit owners who did not submit their previous ballots on the proposed CC&R amendments have recently received a new ballot to submit. In these ballot mailings, the BOD chose to include supplemental information understandingly biased toward obtaining an approval vote. In this supplemental information, it is not so much what was said, but what was not said.  Let’s perform a Reality Check on some of the BOD Statements contained therein.

BOD Statements: 1) “The purpose of the proposed changes is to clarify and set limits on the authority of the current and future Boards of Directors”. 2) “This proposed change defines stricter limits on the powers of the Board of Directors than the Current CC&R’s require”. 3) The current CC&R’s have “no limit specified” regarding “Maximum value of property purchase or acquisition before homeowner vote is required”. 4) “Approval of these changes will not change your assessments”.

Reality Check: 1) The current CC&R’s contain no provision granting the BOD the authority to purchase, annex or lease real property into the common area, therefore the real purpose is to grant such authority. 2) The proposed amendments do not change any wording in the Current CC&R’s, rather they simply add provisions related to the purchase, annexation or lease of real property. 3) The no specified limits comment regarding property purchase is a moot point, since the current CC&R’s do not grant the BOD such authority, there is no need to mention limits. 4) The no assessment change is also a misleading statement, whereas approving the amendments in itself will not affect assessments, the downstream purchase, annexation or leasing of expensive property certainly will.

The BOD statements would imply that, to the benefit of homeowners, they simply want to limit the BOD’s authority to enter into purchase. annexation or lease agreements. This is really a stretch as both the current CC&R’s and the proposed amendments do not support this premise.  However, putting all the rhetoric aside, simply put, the proposed amendments (additions) to the CC&R’s clearly grants the following authority to the BOD:

  1. To purchase or annex real property into the SOA up to $500K without homeowner approval.
  2. To purchase or annex real property into the SOA greater than $500K with no upper limit subject to a simple majority vote from at least 20% of all unit owners (Note: currently this would represent 496 unit owners, a simple majority of which would be 249).
  3. To lease real property into the SOA with no upper limit and without homeowner approval.
  4. To increase annual assessments and/or levy special assessments above currently specified limits to fund the purchase, annexation or lease of property subject to a simple majority vote from at least 20% of all unit owners.  (Note: the current CC&R’s limit annual assessment increases to 15% per year and special assessments to 25% of the annual assessment amount. Per the current CC&R’s increases above these limits require the “approval by vote or written consent of Owners holding a majority of the voting rights”).

Bottom line:

If you want to grant the BOD the authority to: 1) purchase, annex or lease property into the association with unspecified dollar limits, 2) increase annual or levy special assessments above currently specified limits to fund such, 3) the preceding based on a unit owner vote representing as little as 20% of total homeowners and 4) you trust that the current and future BOD’s will not abuse such authority, then you may wish to vote to APPROVE.

If however, you: 1) do not wish to grant the proposed purchase, annexation or lease authority parameters, 2) believe that homeowner approval levels are set too low (they could have been set higher if so desired), or 3) do not completely understand the amendment ramifications, then you should vote to DISAPPROVE.