Real Estate NewsSuper Majority Voting Requirements May Be Changed When HOA Members Don"t Participate
Those who take an active and responsible part in the affairs of a homeowners" association (HOA) are sometimes frustrated by the lack of involvement on the part of other owners. This is particularly true when it comes to voting. Sometimes, member voter apathy can be as powerful a deterrent to change in a homeowner association"s rules and procedures as can be an organized opposition. This is especially true when there is a super majority (e.g. two-thirds or three-fourths) voting requirement.
Thanks, then, to Harold Justman, successor editor to Bob Bruss for the California Real Estate Law Newsletter, for recently bringing to our attention the California case of Fourth La Costa Condominium Owners Association v. Barbara Seith. The Fourth Appellate District opinion in this matter makes it clear how, in certain situations, an HOA can overcome the burden imposed by a super majority voting requirement.
At stake was the association"s 2005 attempt to amend and update its 1969 CC&R"s and Bylaws. Some of those original provisions had been superseded by changes in the law, others were ambiguous and had caused confusion.
According to the court record, an August 29, 2005 letter from the Association to the unit owners "asked for an affirmative vote on the First Restated CC&R"s, which contain dozens of new provisions and the amendment of numerous original provisions, and on amended Bylaws. The letter notified owners of the existing 75 percent vote requirement [something that would be changed by the amendments] and of an October 1 informational meeting. It requested the return of ballots by October 7."
"In a September 2005 newsletter, the Owners Association reminded owners to vote. Many owners did not return their ballots, and on October 11 the Owners Association sent a memorandum and another ballot to each owner who had not voted, and it extended the deadline for voting to October 21."
The amendments did not pass by the necessary 75 percent. Of those who voted, the amendments were favored by more than a 2:1 margin; but the approving votes only constituted 52% of the total ownership.
In February of 2006 the Association filed a petition in superior court for an order to reduce the percentage of affirmative votes needed to amend the CC&R"s and to approve the results of the vote taken "based upon the number of affirmative votes actually cast constituting at least a majority of owners." The court granted the petition.
Can they do that? Yes, based upon the provisions of California Civil Code 1356, which is found in the portion of the Civil Code that deals with common interest developments.
As the Appellate Court put it, quoting from an earlier case, "Viewed objectively, the purpose of … section 1356 is to give a property owners" association the ability to amend its governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration. In essence, it provides the association with a safety valve for those situations where the need for a supermajority vote would hamstring the association."
For section 1356 to be put into effect, the court must be provided with specified documents such as the text of the amendment(s), copies of any notices and solicitations of owner approval, and an explanation of the reason for the amendment. Then certain tests must be met, for example: Were all members given adequate notice of the court hearing? Was the balloting carried out correctly? Was a reasonably diligent effort made to permit all those eligible to vote? Is the amendment reasonable?
If the tests are met, then the court may, but is not required to, grant the petition.
Civil Code 1356 provides an important tool for California HOAs that find themselves incapacitated by a combination of low voter turnout and a rule requiring a super majority to amend the CC&Rs.