Changes to CCR’s
Has there been any new case law or legislation to allow changing the CCR’s without a 100% of homeowner approval.
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Janet,
Associations retain the right to change most of the CC&Rs with whatever provision specified in them to do that (typically 67% of the total votes). The 2022 Supreme Court case Kalway v Cambria Rance simply ruled that the association requires 100% approval for any change that adds a new restriction on private property or changes an existing provision in a way that could not have been reasonably foreseen by a buyer at the time of purchase. This is a very specific and small subset of all the things that can be changed in a declaration. There was a bill introduced this year that would have allowed all changes to the CC&Rs to be made by a vote of 75% of those voting, even if that was less than a majority of the homeowners. That bill has been withdrawn because it was inappropriate and too broad, but we’ll be working with that legislator between sessions to introduce legislation to establish three tiers of changes requiring different approval requirements for each tier. I’ve already drafted that legislation and tried to get the sponsor to consider it, but it was too late in the session to make that happen.
Dennis
Dennis,
Can you provide some clarification on what the “specific and small subset of all the things that can be changed in a declaration” pertains to? I am working on getting documents redone, and while there are no plans as of yet to increase any restrictions, I’m leery that the argue could be made that a powerhungry homeowner could argue that any reduced/removed restrictions “could not reasonably be forseen” by simply saying the purchased the property becasue of the tight guidelines already in the CC&Rs
Zach,
The Arizona Supreme court in their ruling in Kalway clearly explained that the ability of the community to modify the CC&R’s is predicated under basic contract law to any issue where the original declaration provided reasonably foreseeable notice of any restriction. Any restriction in a declaration provides that notice that it can be changed by the specified majority required in the same document. Those people that agreed to the declaration because of all the restrictions contained in the document also agree to the fact that a super majority of the homeowners can change those requirements in any way as long as the way it is being changed does not create a new restriction that was not previously noticed. By default, the homeowners are free to reduce or eliminate any restriction in the CC&Rs with the amendment process. This is why a super majority is required for these changes to prevent a simple majority of the homeowners from eliminating provisions that they specifically wanted protection from. The case focused on both new restrictions and substantial material changes to the basis of existing restriction from which notice of those types of changes could not have been foreseen by any homeowner when they first bought their unit. The issue addressed by the court was not on the fact that provisions were changed but rather of whether sufficient notice was provided on the possibility of that change. The reduction or elimination of any restriction satisfies the notice requirement. Any change that does not satisfy the notice consideration requires unanimous consent of all homeowners to approve.
Dennis
Thank you for your work Dennis!