Question: Our homeowners association board of directors has been terrorized by our management company and lawyers who have been hounding directors into redoing all our governing documents by saying they are out of date and the board is at risk of being sued. They say it is now the law we have to synchronize all of our documents. We are sick and tired of spending money on legal fees and redoing all our documents. Every time management and their lawyers say "jump" we're supposed to say "how high" and pay them for the privilege! They want to do rewrites again and again. Please tell us if these changes are mandated and how we are to proceed.
Answer: A board shouldn't subject titleholders to the expense of changing governing documents just because it can. These needless recommendations will result in needless expenditures for your association. The declaration and/or covenants, conditions and restrictions (CC&Rs) recorded when your project was built are just as good today as brand-new ones, typos and all. Don't touch them and don't let anyone persuade you otherwise.
That governing documents must be rewritten because they are out of date is a false premise lawyers and management use because it sounds dire. If that were true, the day after they were rewritten, they would be out of date again.
There is no such thing as "keeping up with the law." If this were the case, every time legislation passed, you would have to hire an attorney and rewrite governing documents, keeping advisors and consultants perpetually on the payroll. A good lawyer will advise an association that a change in the law negating a portion of the existing declaration or CC&Rs automatically takes precedence and that the change does not have to be written in.
Warnings to redo your governing documents or "risk being sued" are alarmist. The law defines standards for the development and takes into consideration that not all projects are alike. When courts review conflicts between private documents and the law, as a general rule, the law prevails.
Your management company and attorneys are probably referring to SB 745, which was signed into law by California's governor on Aug. 27, and takes effect Jan. 1. It states, Civil Code section 4205 is amended to read:
• To the extent of any conflict between the governing documents and the law, the law shall prevail.
• To the extent of any conflict between the articles of incorporation and the declaration, the declaration shall prevail.
• To the extent of any conflict between the bylaws and the articles of incorporation or declaration, the articles of incorporation or declaration shall prevail.
• To the extent of any conflict between the operating rules and the bylaws, articles of incorporation, or declaration, the bylaws, articles of incorporation or declaration shall prevail.
As it relates to "conflicts," SB 745 attempts to clear up the hierarchy of control should there be ambiguities among certain governing documents or should such documents conflict with the law. Simply, this means that changes in law will take effect regardless of possibly outdated governing documents.
By agreeing to change the declaration or CC&Rs at this time, the board in essence assumes an obligation, if not a duty, to rewrite the governing documents every time the law changes. This is costly and inefficient; enforcement of long-standing rules is much easier than ones that are constantly changing. Nothing prevents boards from performing their duties of reviewing documents and streamlining operating rules and procedures, but not for the purpose of matching the latest legislation.
It is important to remember that constant changes and updates take their toll not only on the board and association coffers but on the individual titleholders as well. Each new set of documents is recorded against each owner's title and is generally reviewed by potential buyers and their banks. Any confusion or overly burdensome changes could have unintended consequences of lost sales or diminished property values. Such changes may also require additional enforcement by the association. Situations like this could weigh heavy on quality-of-life issues and the residents' stress level living under such restrictions.
Advice to boards from lawyers is just that, but it is only an attorney's opinion of the law, not what the courts may ultimately decide, and petitioning the courts is yet another expensive, time-consuming endeavor with unpredictable results driving up the costs for all homeowners. Slow down! In this case it is probably better leaving your governing documents alone.
Zachary Levine, partner at Wolk & Levine, a business and intellectual property law firm, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to Donie Vanitzian JD, P.O. Box 10490, Marina del Rey, CA 90295 or email@example.com.