Restating HOA Governing Documents
Effective CC&Rs and HOA bylaws are essential to running an efficient community, but when it comes to changing the governing documents to better serve an association and its members what is the better solution? Restating the governing documents or amending the existing ones?
Why Restate Governing Documents?
If the governing documents are more than 15-20 years old, the decision to restate governing documents may come down to being the most cost-effective. However, there are 3 main reasons an HOA should restate instead of amending their documents.
3 Reasons to Restate
- Bring documents up-to-date with current California law.
- Remove obsolete provisions in governing documents.
- Hindsight & experience.
Restating vs. Amending: What’s the Difference?
To restate or not to restate, that is the question. Which option is best for what and why should you choose one over the other? First, the board of an HOA needs to understand the difference between restating and an amendment to current documents.
What is an amendment?
An amendment is a change to the current documents to make a provision in the language of the CC&Rs and HOA bylaws.
Restating Governing Documents
When a board opts to restate the governing documents for their community it is because they are looking to replace existing documents even if everything operational remains the same. An HOA would choose this option is good if there is a new format, a new template to the governing documents, or to replace old language that does not serve the community.
California Law & Governing Documents
California law, especially in the area of HOAs and common interest developments continue to change. Law can change drastically from one year to the next and if your community’s bylaws and CC&Rs are more than 30 years old, you may have too many provisions to your current documents that they begin to conflict with current law rendering them ineffective.
Davis-Stirling Common Interest Development Act does not require you to update governing documents if provisions conflict with the law because there is a hierarchy. By this hierarchy, California law will always take precedence and prevails over governing documents. If the association isn’t required to make these changes what is the benefit? Clarity. If there is a new or prospective homeowner that is reviewing the association’s governing documents, the homeowner is likely not to know which provisions are superseded by the law.
Removing Obsolete Provisions in Documents
In this case, the valuable real estate within your governing documents is being taken up by language that is no longer serving your community. Documents that are old contain language that may have been needed as part of the original development but is now obsolete to the members of your community. Restating lends you the opportunity to take out declarant language and provisions that do not need to be carried over into the new documents.
The Benefit of Hindsight & Experience
If you are at the stage of restating your governing documents, then you have had your CC&Rs and regulating documents around long enough to see the problems your community has that cannot be resolved with the current language. This is your opportunity to make the governing documents read the way you want or need them to read that is in line with your community’s current practices.
What’s The Process of Restating Governing Documents?
Two of the most important things to remember when considering restating your governing documents are:
- It’s a process that takes time; don’t rush the process to meet a deadline.
- Communities should not restate their own documents; hire a lawyer.
Why a lawyer should handle the restatement
Typically lawyers are reluctant to review restated governing documents that are written by the boards of the HOA because the language in them may not translate to members of the community effectively and the language may not be legally correct as written by the board. The advantage of having a lawyer take over the process include:
- Lawyers know what the current laws are and how they affect HOAs
- They can contribute their own experience from restating governing documents for other HOAs
- They know how to use legal language to make new documents effective
What does a successful restatement involve?
- The board taking the time to make the documents as effective for the community as possible.
- Regular reviews of drafted restatements that involve meetings with both the board and the lawyer.
- Draft sent out to community members before a vote to get input on restated documents from the homeowners.
- Taking the time to educate the membership about clarifications within the document or outright changes to the language.
- Keeping the community updated from the moment you decide to restate and giving progress updates throughout the process.
The success of a restatement depends on the involvement of the board or the committee that has been charged with the task. Taking those meetings with lawyers are vital to creating an effective restatement; a lawyer will learn the most about your community by sitting down with the board and management.
If you decide to restate your governing documents, it is important to keep in mind that this process does not happen overnight and when done right you can get another 15-20 years out of the newly restated documents.