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Bylaws Lost and Found

I have a question regarding missing or lost bylaws. Our hoa is composed of 41 units and we have been operating without bylaws. No bylaws have ever been produced to buyers in the community for years. I sued our BOD to have them removed with majority of members signing a petition to have the BOD removed. It was established in court that no bylaws exist, and all homeowners could vote in the removal delinquent or not. After the court order one homeowner supplied the signed bylaws by the declarant so the defendants filed a motion to reconsider the ruling that the BOD was removed. Are the bylaws legally binding on our association or do they need to be readopted with membership approval?

5 Responses

  1. dennisl

    Nicole;

    This is clearly an unusual situation. When a community is formed by the developer, he/she first must establish and record the Declaration or CC&R’s as they are commonly called. Then the developer applies to the Arizona Corporations Commission to establish a non-profit corporation, in that application the developer must provide the Articles of incorporation and Bylaws for the requested corporation for the commissions review and approval. While those original documents should always be available from the Corporations Commission only the Articles must be maintained current with the Corporations Commission. Changes to the bylaws are not recorded with the county recorder and need not be transmitted to the corporations commission. The most current version of the bylaws are binding on the corporation that is the association. Some bylaws prescribe that they can only be changed by a vote of the membership and others prescribe that they can be changed by vote of the board. While I would say that a majority require member approval for any change.

    Having said all of this, state law in most cases supersedes the community documents including the bylaws. If the bylaws contradict state law then the state law prevails. Since I believe that your question is related to the fact that you removed the BOD by vote of the members. Most CC&R’s define the voting rights for members, so irrespective of what ever was stated in the bylaws the CC&R’s would prevail and even if the bylaws did not exist or were lost the CC&R’s are always available. State law describes the process for removing board members so no matter what the governing documents including the CC&R’s say about how to remove a member of the board after the period of declarant control ends the state law prevails. If you are a Planned Community (HOA) that ARS 33-1813 applies. It describes the process for establishing a petition to remove one or all board members, The numbers of eligible members required to sign that petition for the meeting and that a simple majority of the eligible members voting at that meeting decides the issue. The key is eligible voters and state law does not determine who is eligible or not (at least yet) the community documents establish that.
    Without seeing what your community documents CC&R’s and bylaws say about voting eligibility there is nothing more that I can address more specifically.

    To your specific question yes bylaws are binding on the association, even if the association board is so incompetent that it loses it’s own governing document. If the association failed to provide new home buyers a copy of the governing documents they violated the law (ARS 33-1806) and can be held accountable for that failure even if they were so incompetent to have actually lost the documents.
    If I’ve not answered your question adequately please fee free to follow up.

    Dennis

  2. Nicole Crown

    Thank you for the quick reply. A unique situation is an understament about what is going on in this small community.

    I would like to give some more factual background surrounding the case.

    Myself along with 22 owners, in a complex of 41 units filed a petition to remove all of the BOD. The BOD and their council say that all unit owners who signed the petition are delinquent in their assessment dues and do not call the special meeting. I file a lawsuit. The court sets up a briefing schedule. The court rules in my favor stating that the only governing documents proven to be in existence are the CCR’s , we do not have adopted bylaws, and they are required to have a removal.
    Our CCR’s state that all homeowners are entitled to cast one vote as long as they are a homeowner. There is also a clause for non-payment of assessment dues that does not include language that your vote is dependent on your paying/non-paying of dues.
    While we are waiting for them to call the removal meeting the BOD adopts the initial bylaws of the association by unanimous written consent. They send ballots stating delinquent homeowners can not vote because of the newly adopted bylaws containing a suspension of voting rights clause if you are delinquent in your assessments. We vote anyway and I take them back to court and the court once again rules in my favor. The court rules that the BOD is removed, and that the bylaws were not adopted properly. They were ordered to host a new election in compliance with state statute.
    They did not have any intention of hosting the new election and so through 22 signatures, the membership has called an election.
    This is where it gets complicated. About 30 days after the court ruling they find a copy of the bylaws that were signed by the original declarant and our election is not scheduled until December 23rd. . They filed a motion to reconsider with the court based on this new found evidence. We have been operating with no bylaws for over ten years. One owner out of 41 units had bylaws. Do the bylaws govern? Do the CCR’s govern? Statue is silent who is eligible to vote. Would this be considered a waiver of bylaws, if they have been out of circulation for as long as they have been?

  3. dennisl

    Nicole;

    Thank you for the clarification. As you are hopefully aware I am not an attorney and cannot give you legal advice and this is getting a little off my level of experience. I will comment on several of the points that you brought up. Any action taken by the board by unanimous written consent is a violation of Arizona’s open meeting laws unless it involved emergency actions that could not wait the 48 hours for notice of a meeting of the board. I would seriously doubt the legitimacy of the board action to create bylaws that did not exist since they must have been created at the time of incorporation. Without the authority granted by the bylaws for the board to exclusively modify the bylaws without homeowner approval, they would clearly have no basis to believe that they could create a set on their own. So not only was the act improper, the method for adopting the bylaws was improper and illegal. Once the original bylaws were found that changes the entire game. I can only assume that they included provisions relative to member eligibility to vote. Because bylaws existed but were not provided to homeowners and home buyers raises serious concern of their legitimacy. Arizona law puts the burden of providing the governing documents for the community on the home seller for associations of less than 50 members. But how can a member provide information it was never supplied in the first place. It is the responsibility of the association as a corporation to maintain its governing documents and records and make them available to any member upon request. Your association clearly breached this responsibility and duty. This is where my experience ends and where legal counsel is required to pick up. If you wish to challenge the validity of the bylaws that were found then you absolutely need to seek legal counsel.

    Lastly I do want to point out that it is incredible to me to believe that more than half of the community are delinquent in their assessment payments. Clearly you all have to realize that whether their are bylaws or not you are all contractually bound to pay your assessments unconditionally. You do not get to pick and chose which laws you live to and which you ignore. This is what happens to homeowners based on bad boards and their advisors, it cannot be the position that the homeowners take if we are ever to make progress in protecting your rights in these communities. You had 41 homes and 22 homeowners signing a petition to remove the board. If only 11 signatures on that petition were by homeowners current in their assessment than the petition for a special meeting to remove the board was legitimate under Arizona Law. And the board is compelled by the same Arizona law to schedule and hold the meeting 30 days after the petition was received. While I believe in the fundamental right to vote the reality of these communities is that the fundamental premise is that each homeowner is required to pay their share of the cost of the association, it is plain and simple and not subject to interpretation either you pay or you don’t. If you don’t you should not be allowed to have a say in the governance of that community. This is your choice not the associations. What I want to work for is to limit the associations from denying homeowners the right to vote for other reasons other than payment of assessments.

    Rather than going to court again, pay your assessments and get the 11 people necessary to call a special meeting to remove the board, but when you do so have candidates ready to run for those board positions that will run this community appropriately.

    Dennis

  4. Nicole Crown

    I have always paid my dues along with most members of the community. I have always maintained the position that everyone should be pay their dues even when things are not the best. However since this BOD took over it and hired a collections law firm and the management company of their choosing it has all been about voter suppression. They created delinquencies for most of the owners. The management company refuses to return calls or emails. Everything goes though management company to the attorneys that are running the place as if it was under receivership. No hoa meeting since February, no announcements, everything being done in secret.

    1. dennisl

      Nicole;
      I fully understand the tactic of boards using voter eligibility issues to suppress voter dissention and to maintain their positions on the board. While we have made some progress in changing the laws to restrict this and have a bill to be considered this year that will directly address this issue, I’ve little faith that changing the Laws of Arizona will do anything to change the situation in your community, because the board from what you have told me has chosen to ignore the law in every aspect of its business. Your only recourse is to do what you have tried to do already and that is to remove the board. Read the requirements of your newly found bylaws very carefully relative to member eligibility to vote and make sure that at least 11 people in your community satisfy those requirements. The board has no authority to disqualify voters other than what is specifically provided in your governing documents. Each person has the right to request whatever record the association has on them personally that can be used by the board to disqualify them from voting. Make the association prove that you are not eligible to vote, and contest any record that is inaccurate.

      You can use the ADRE to file a petition to force the board to comply with their governing documents or the law. This process is substantially less expensive than superior court. I can help you organize your petition(s) if you would like. We have to force the point to the board that compliance with the law and the governing documents is not optional. You have a right to open meeting and full transparency in the governance of your community, you need to demand that your association understand and provide for that right.

      Dennis

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