What Happened to the 2019 covenants - a history
The 2017-2018 Board set out to update the restrictions (aka covenants) our community was held under. This was to provide several benefits:
- Provide clarity by consolidating two separate restrictions into one document.
- Update the language to reflect the actual desires of the community members post developer involvement.
- Increase the property values of all HOA members.
The 2018 Annual Meeting was held in June and the board submitted to the community proposed changes, but deliberately decided to not vote on those changes to allow the following 2018-2019 board evaluate the work of the 2017-2018 board. At the same meeting, as is the usual case for our Annual Meetings, the 2018-2019 board was elected and installed.
The 2018-2019 board did in fact set out to finish the work of the 2017-2018 board. They finalized the draft of the new restrictions, coordinated a vote, received 50% plus one of the class A members' votes, and confirmed those votes at the next Board meeting.
The Problem: Our Articles of Incorporations and By-Laws state that the HOA Board has three main functions:
- Hold Annual Meetings (Bylaws Article III Section 1)
- Hold Special Meetings (Bylaws Article III Section 2)
- All of the power necessary or desirable to perform the obligations and duties and to exercise the rights and powers set out in the Articles Incorporation, By-Laws, or the Declaration (Article 7, Section b) These powers include:
- Fix, collect, and enforce payment of assessments, and other charges to be levied against the Units (Article 7, Section (b), Subsection (i) ).
- Enforce covenants, conditions, or restrictions affecting any property (Article 7, Section (b), Subsection (iii) ).
- Engage in activities to foster, promote, and advance the common interests of all Owners. (Article 7, Section (b), Subsection (iv) ).
The 2018-2019 board failed to call a Special Meeting with the stated purpose of adopting those new restrictions. This Special Meeting would have met the requirements of our incorpoation which require that any business not covered in Article 7, Section (b) of our Articles of Incorporation must be done at the Annual Meeting (By-Laws Article III, Section 1) or a Special Meeting (Bylaws Article III, Section 2). At this meeting, the community could have debated and voted, as well as have any members' absentee ballots submitted, on the motion to pass new covenants (Reference: 2018-2019 Minutes, Articles of Incorpoation, and By-Laws).
Despite this Special Meeting not occurring, a version of the covenants were still submitted to Probate Court on April 3rd, 2019 (Reference: 2019 Probate Court Submission) . Unfortunately, due to an accidental swap of a "draft version" with the correct version, the wrong draft version was instead submitted. This error was later identified in May 2020 and the correct version of the covenants were submitted to the Probate Court on May 13th, 2020 (Reference: 2020 Probate Court Submission).
But there is still a problem.
Despite the confusion on which copy of the covenants are in effect, there was never an Annual Meeting or a Special Meeting which had business making either copy official. Thus, this alone makes the covenants submitted in 2019 and in 2020 null.
Additionally, our Bylaws allow for our HOA to have broad power to vote on and take action against issues of concern. However, our 2003 and 2005 restrictions state in section E6 that the HOA "...may make other restrictions applicable to each homesite by appropriate provision in the contract deed or any deed without otherwise modifying the general plan herein outlined..."
This sentence needs to be worked out legally. It was the position of the 2017-2018 board that this meant new covenants could be made to replace the 2003 and 2005 covenants so long as those new covenants essentially followed the same general plan that the 2003 and 2005 covenants provided. However, this question were never put to a legal test from a legal expert by subsequent Boards.
Thus, it is the position of the 2022 -2023 Board that the restrictions our neighborhood is held under are in fact the original 2003 and 2005 restrictions.
Where does that leave all the work that has been done? The HOA must decide to vote on new covenants at an Annual Meeting or a called Special Meeting. Either of these meetings must be called in accordance with our Bylaws Article III, section 3 and the new covenants must pass the legal test presented in Section E6 of each the 2003 and 2005 Restrictions.