contract or declaration language interpretation

In My Humble Opinion (IMHO)
#1

(1) NEW Homeowner’s association.
(2) New board determines that a change is needed to the ‘Declarations’, and ‘Amendment’

(3) A Meeting is duly called and 68% of the lot owners (including the board members) are signed in, present, ready to vote. They are called class “A” members

(4) A question is raised by a voting member as to what will constitute a passing vote on the question.

the language that pertains:

“…the Declaration may be amended only by (i) the written agreement of consent of those Class A members , or the affirmative vote at a duly called meeting of the Association of those Class A members, to whom are allocated sixty-seven percent (67%) or more of the total number of votes allocated to the Class A Members, and (ii) during the Development Period, with the written consent of Declarant.”

One interpretation is that 67% of class A members must approve the amendment, either in writing (someone going to their door and getting their signature, for example), or in a general meeting…

Another interpretation is that a meeting has to have 67% of the Class A membership present, and the vote of a majority of those members will decide the question, up or down.

Can anyone with experience with this language give us a cite or personal experience?

#2

Legal advice is best suited to IMHO.

Colibri
General Questions Moderator

#3

thanks for putting it where it belongs. how about an opinion?

#4

No one who an give you an authoritative answer to this question will attempt to do so. A lawyer should refrain from answering such a specific question without more facts (and being licensed in your jurisdiction) (and being paid). A non lawyer’s opinion might not really help you that much.

#5

Forget about anything authoritative…I’m just wondering if we are too close to it and aren’t seeing the obvious meaning, obvious to everyone but us.

Last night, because we were forced to make a choice, we decided that the meeting had to include 67% of the A owners, and that they had to decide by a majority vote, whether to approve the amendment.

It is possible, then, for, say, 35% of the owners to get the covenant changed, or to change it back, and, to change it again, based on one vote swinging.

had we insisted that 2/3 of all the A’s had to vote for the amendment change, it would be nearly impossible to have someone propose a contrary amendment and get it passed.

Or am I just being strange?

#6

Not a lawyer and not from the US, so feel free to disregard. For what it’s worth, I’ve spent lots of time interpreting contracts.

There would be two questions I’d be looking to answer before addressing this particular clause:

  1. Does the constitution/articles of association/whatever it may be called state anywhere else what constitutes a valid meeting at which decisions may be made?

  2. Is there anywhere else any reference to what is required generally for a motion to be passed?

If either of these exists then it could make interpretation of the quoted material easier.

Absent either of those, we need to look at the text, “the affirmative vote at a duly called meeting of the Association of those Class A members, to whom are allocated sixty-seven percent (67%) or more of the total number of votes allocated to the Class A Members.”

As far as I can see, there is nothing in the sentence structure that could be seen as the equivalent of, “the affirmative vote … of 67% or more of the total votes [cast] … .” To me, the structure is, “the affirmative vote … of [those present]” where “those present” is defined as “the Association of those Class A members, to whom are allocated sixty-seven percent (67%) or more of the total number of votes allocated to the Class A Members.” In other words, it is defining what sort of meeting is required, rather than what constitutes a successful vote.

That leads to a new problem. Unless my question 2. above is answered elsewhere in the document, the wording “the affirmative vote … of [those present]” can be open to further interpretation. It may mean that everyone present needs to agree, or (more likely) it may mean a simple majority or a 2/3 majority.

If I had to make an on-the-spot decision with no other information available, I’d probably have gone with your interpretation (simple majority, providing 2/3 of interests are represented). But if it was a contentious issue, I’d probably record the result of the vote and seek further clarification before acting on it.

#7

thank you. There are other places in the document where the valid constituency for a meeting is defined. One would suppose, if the document author were being consistent, that the language would be the same in each instance.

One such instance, a section involving taking a given property out of the original declaration, the language is…"…must be approved by the Owner of such portion of the Properties and by the affirmative vote of …67% or more of the votes cast by the Members present a a duly-called meeting…(a meeting where appropriate notice of the proposal was given) In that case, it is clear to me that 2/3 of the people voting must approve the withdrawal, but not clear what, exactly, constitutes a ‘duly called meeting’…

In another instance, to call for an independent audit of association finances, the language involves…"…the affirmative vote of majority of the votes cast by the Members present at a duly called meeting of the Association…" Clearly, that language is calling for a simple majority in favor for the proposal to be approved.

Still another section says that the 'Association may adopt and enforce reasonable ruless and regulation for the use and operation of the Common Property and/or for the implementation and enforcement of the Gorverning Documents, and amend them from time to time. …any such rule or regulation adopted by the Board may be amended or repealed by the affirmative vote of a majority of the votes cast by the Members present a a duly called meeting…"

#8

Thanks for the extra info. It’s interesting that have one case where it appears the required representation at the meeting is defined but not the required voting majority (the clause in the OP), and three cases where the required voting majority is defined but not the required representation at the meeting ("… must be approved … by the affirmative vote of … 67% or more of the votes cast by the Members present a a duly-called meeting …", “… the affirmative vote of majority of the votes cast by the Members present …” and “… any such rule or regulation adopted by the Board may be amended or repealed by the affirmative vote of a majority of the votes cast by the Members present”).

The language is fairly consistent in the three cases where the majority required for a motion to be passed is defined, which strengthens the case that the different language used in the clause in the OP refers instead to the definition of a quorum requirement. However given that each other case explicitly states the majority required, its absence in the one clause is odd. I could see an argument that the 2/3rds requirement was meant to apply to both the attendance at the meeting and the voting majority, but I still maintain that the actual wording does not support that argument.

The next thing I would consider is whether some sort of equivalency between clauses can be found. Given that we know what vote is required in some instances, which one of those (if any) is most similar to amending the Declaration? I should state here that I didn’t know what a “Declaration” was until a few minutes ago when I took to Google, so from here on in I may be making assumptions which are not valid.

The three cases we have are:
[ol]
[li]Taking a given property out of the original Declaration[/li][li]Appointing auditors[/li][li]Changing the association’s governing rules (by-laws)[/li][/ol]
We can disregard the second point - it makes sense that the bar for appointing auditors is fairly low.

Number 1. is a drastic move (at least it seems that way to me), so a 2/3 majority makes sense. For number 3. I can see arguments both ways, but here the decision was made to go with a simple majority.

Now the question is whether amending the Declaration more closely resembles taking a property out of the Declaration or changing the rules by which the association is governed.

[Actually, I’ve just had a thought which makes kind of makes any other considerations moot. Given that only a simple majority is required to change the rules, before the vote on amending the Declaration is taken the meeting could always vote to add a rule explicitly stating that only a simple majority is required to amend the Declaration, then job done. :smiley: ]

My instinct would be that amending the Declaration and amending the by-laws are analogous given that they both involve “changing the rules” and so a simple majority applies.

I would also be putting a motion to the next meeting to amend the by-laws to clarify that position.

#9

The idea that we can just change the rules to suit the need of the moment (subject to the membership reversing it at a general meeting) makes a little bit of sense. Maybe a lot.

Another matter arose recently, one that, as one poster claimed, lawyers won’t touch without being paid…

when the developer platted the development, 2008, in a plat plan never changed, one lot was set aside as “Home Owners Association”. Later, when lots were beginning to be sold, after streets and water and electrical and other stuff was put it, a sign was erected at the entrance with a layout of all the lots, showing the same lot as on the plat as being ‘potential pool site’.

After we bought our place in 2012, I asked the developer every once in awhile ‘when are you going to sign over that lot to the HOA officially?’ Finally, I was told verbally and in email, that they thought, at first, that a HOA run pool might make the whole development more attractive, but, after the first couple of people bought and moved in, the developer asked them if they wanted a pool, and were told, 'no, there won’t be enough people living here to pay for it, let alone to run it." so, they made the lot available for sale, and, to this day, it is not sold. The plat plan remains the official plan, etc. etc.

I contend that everyone who bought land and built here had a right to believe the lot was going to be used for the community and may have based their decision partly on that potential. The developer says, “nope, we could do as we pleased and we decided that we needed to sell that lot just like the other ones. We never thought anyone believed it was going to actually be used by the community”