Chapter 8 - § 8.2 • LEGISLATIVE FUNCTIONS
| Jurisdiction | Colorado |
Community associations have a variety of legislative functions: amending the declaration, amending the bylaws, and drafting community rules.
§ 8.2.1—Amending the Declaration
The declaration is effectively the association's "constitution,"8 and the role of the governing board in amending it is limited. While the governing board generally may act in all instances on behalf of the association,9 it may not act on its behalf to amend the declaration.10 The declaration may, as a rule, only be amended by the affirmative vote or agreement of the unit owners.11 There are, of course, exceptions, and seven of them require the association, without a vote of the unit owners, to amend the declaration.12 Those circumstances include:
• Any reallocations of allocated interests pursuant to the CCIOA statute regarding eminent domain must be confirmed by an amendment to the declaration prepared, executed, and recorded by the association.13
• If expiration or termination of a lease decreases the number of units in a common interest community, the allocated interests must be reallocated as though the units had been taken by eminent domain, and the reallocations must be confirmed by an amendment to the declaration prepared, executed, and recorded by the association.14
• Reallocation of a limited common element between or among units on application to the governing board for approval of the proposed reallocation.15
• Relocation of boundaries between adjoining units on application to the association by the owners of those units.16
• Subdivision of a unit on application by the unit owner to the association.17
• A person taking title by foreclosure or enforcement of a lien or encumbrance against withdrawable real estate in a condominium or planned community may require from the association, on request, an amendment to the declaration, prepared, executed, and recorded by the association, excluding that real estate from the common interest community.18
• If a lien or encumbrance against a portion of the real estate comprising the common interest community in a condominium or planned community has priority over the declaration and the lien or encumbrance has not been partially released, parties foreclosing the lien or encumbrance, on foreclosure, may record an instrument excluding that real estate subject to that lien or encumbrance from the common interest community. Then the board of directors must reallocate interests as if the foreclosed section were taken by eminent domain by an amendment to the declaration prepared, executed, and recorded by the association.19
In none of these cases does the association — or the governing board — initiate the amendment. In each case, the amendment must be prepared, executed, recorded, and certified on behalf of the association by an officer of the association designated for that purpose or, absent a designation, by the president of the association.20
The governing board does, however, have some role in amending the declaration. While the CCIOA does not say anything about how an amendment proposal is to be formulated, it will often be the governing board — sometimes at the suggestion of the association attorney — that proposes an amendment to the declaration, calls an association meeting at which the unit owners vote on the proffered amendment, and furnishes notice of that meeting that includes a statement of the "general nature of any proposed amendment."21 But the unit owners themselves are permitted to call a meeting at which an amendment to the declaration that they propose could be considered.22
Another role the board can play in amending the declaration is to petition a court to order an amendment. Under the CCIOA, the association, acting through its governing board, may petition a district court for an order amending its declaration if three preconditions have been met. The chief precondition is that a vote has been taken on the proposed amendment and unit owners with more than 50 percent of the votes required for adoption voted in favor of the proposed amendment.23 The other two preconditions are that the association has sent two notices of the proposed amendment to all unit owners entitled by the declaration to vote on it or who are required for approval by any means allowed pursuant to the provisions regarding notice to members in the Colorado Revised Nonprofit Corporation Act,24 and the association has discussed the proposed amendment during at least one association meeting, as opposed to a meeting of the governing board.25 Thus, the board is not authorized to act unilaterally to petition the court, but first must conduct discussion of the proposed amendment at a unit owners' meeting and hold a vote in which a majority, but not the usual super-majority,26 of unit owners votes to approve the amendment.
If the declaration requires first mortgagees to approve or consent to declaration amendments, but sets forth no procedure for registration or notification of those mortgagees, the CCIOA prescribes a procedure the association may follow.27 That procedure, or any procedure that is established in the declaration, will likely be carried out by the board, although in most instances it will be the manager or association attorney who actually does the work.
§ 8.2.2—Amending the Bylaws
The bylaws are the instrument, no matter how denominated, "adopted by the association for the regulation and management of the association."28 They constitute "the code or codes of rules . . . for the regulation or management of the affairs of the . . . corporation irrespective of the name or names by which those rules are designated."29 The bylaws include amended bylaws and restated bylaws.30 Generally, the bylaws must provide for: (1) the number of members of the governing board and the titles of the officers of the association; (2) election by the board of a president, a treasurer, a secretary, and any other officers as specified; (3) the qualifications, powers and duties, and terms of office of, and manner of electing and removing, board members and officers and the manner of filling vacancies; (4) which, if any, of its powers the board — or officers — may delegate to others or to a managing agent; and (5) which officers may prepare, execute, certify, and record amendments to the declaration on behalf of the association.31 Additionally, subject to the declaration, the bylaws may provide for any other matters the association deems necessary and appropriate.32
If the association is a nonprofit corporation, which most are, the Nonprofit Corporation Act applies. It allows the bylaws to address:
• The admission of members;33
• "Delegates";34
• The record date for determining members entitled to notice and to vote;35
• Quorums;36 and
• Voting for directors.37
There are also a number of matters in which the directives of the Nonprofit Corporation Act must be followed — although the CCIOA may conflict, in which case it governs38 — unless the bylaws provide otherwise. These are:
• Consideration for admission of members;39
• Rights of voting members;40
• Resignation of a member;41
• Expulsion or suspension of a member;42
• The association's purchase of memberships;43
• The annual meeting;44
• Special meetings of members;45
• Meeting notice;46
• Action taken without a meeting;47
• Meetings by telecommunication;48
• Action by written ballot;49
• Members list for meetings;50
• Voting entitlement;51
• Proxies;52 and
• Quorums.53
The bylaws themselves must provide a method for their amendment.54 The CCIOA states that, without specific authorization in the declaration, the association may adopt and amend bylaws.55 That would mean all the unit owners; however, the governing board (called the "executive board" in the CCIOA) is defined as the body designated in the declaration to act on behalf of the association56 and, except as provided in the declaration, the bylaws, or the CCIOA, the board may act in all instances on behalf of the association.57 Thus, unless the declaration or bylaws require bylaw amendments to be approved by the full membership of the association or impose some limitation on bylaw amendments — for example, requiring all or some bylaws to be ratified by the unit owners or allowing them to repeal a bylaw — the governing board has the sole authority under the CCIOA to amend the bylaws. However, the Nonprofit Corporation Act alters that.
Under the Nonprofit Corporation Act, the board of directors may amend the bylaws at any time to add, change, or delete a provision.58 Three exceptions limit that authority:
1) When the articles of incorporation or the Act itself reserve the power exclusively to the members in whole or part;59
2) A specific bylaw expressly prohibits the board from making any amendment; and
3) The amendment would change the rights, privileges, preferences, restrictions, or conditions of a membership class in voting, dissolution, redemption, or transfer by changing the rights, privileges, preferences, restrictions, or conditions of another class.60
Even though the board of directors may have authority to amend the bylaws, the member/shareholders may also amend them.61 In general, members representing at least 10 percent of all of the votes entitled to be cast on any amendment may propose an amendment for submission to the members.62 The corporation must give notice to each member entitled to vote at the meeting where the proposed amendment will be considered. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the amendment. The notice also must contain, or be accompanied by, a copy or summary of the amendment or state the general nature of the amendment.63 Certain actions require class voting in those corporations that have it.64
§ 8.2.3—Association Rules
The governing board usually adopts the association rules, which are sometimes referred to as "house rules." These rules traditionally govern...
To continue reading
Request your trial