DATE: Saturday, August 9, 1997              TAG: 9708080523

SECTION: REAL ESTATE WEEKLY      PAGE: 38   EDITION: FINAL 

COLUMN: COMMON GROUND 
SOURCE: G. ROBERT KIRKLAND and MICHAEL INMAN 

                                            LENGTH:  103 lines

FIX PROBLEMS IN BYLAWS BY REINSTATEMENT

Q. During the last three years we have amended our declaration and our bylaws five times. It seems that we art constantly needing to change parts of the documents so that we can meet the needs of the community.

Many of the provisions in our documents refer to the declarant, who is no longer around. Is there a simpler way to solve this problem? It takes so much time and effort to get a simple change done.

A. Yes, there is a solution. At first glance, it may not appear to be simpler, but over the long run, it has proven to be the most time- and cost-efficient method. That solution is called ``amendment by reinstatement.''

What this means is that you completely rewrite the declaration and the bylaws and then adopt the revised documents to replace or restate the documents.

While this process will take more work, the benefits are enormous. This method will give the association the opportunity to review all of the provisions. Archaic or inaccurate language can be deleted. Provisions for smoother rule modification can be adopted and the language style can be revised to make the documents more readable and ``user-friendly.''

Over the last five years, a number of associations we know have gone this route with great success.

The process requires the cooperation of the board, the homeowners and an outside lawyer or consultant.

It usually will take three to six month to complete.

There are a number of items to consider when undertaking a complete rewrite.

1. You may not change the percentage of ownership without 100 percent of the owners.

2. You may not change the voting rights of any member without 100 percent of the owners.

3. You may not change the method of calculating the assessment without 100 percent of the owners.

4. You may simplify and/or expand the powers of the board. For example, any of the older documents give specific limitations on pets, in the new documents the board may just have the power to regulate pets. This would make it easier in the future to modify the rules when there is a change in the community.

5. You may and should strengthen and expand the provisions regarding insurance, particularly those areas dealing with the administration of insurance proceeds after disasters.

6. You may delete references to items that are no longer relevant to the association. For example, any reference to the declarant, if the declarant no longer owns any units in the association. Or references to adding more land if the legal time limits have passed.

7. You may impose added, but reasonable, restrictions with the understanding that any current owner who would have a violation under the new documents would be grandfathered until they sold the unit or some other circumstance may allow imposition of the new regulation possible. In one case, and owner had added a free-standing garage, the association had approved it and it was allowed to remain after the documents were amended, by which time 50 percent or more of the structure had to be replaced.

8. You may incorporate new concepts from the statutes that require specific adoption in order to get the benefit of the new law. There are also several other tasks that should be accomplished at the time you are adopting the new declaration and bylaws.

First, a new policy resolution book needs to be created that reflects the changes in the documents.

A policy resolution book is used to detail the procedures the association will use in carrying out its authority. This would include both collections and rule enforcement such as architectural procedures.

And by the way these policy resolutions need to be re-examined and approved at least every three years.

Second, the association needs to create a handbook so that every owner, tenant and resident knows what the rules are and how to receive assistance in asking questions.

Third, the association should adopt a standard operating procedures manual. This manual outlines how the day to day work of the association is to be carried out. It is most critical for associations that are self-managed or that ore on-site managed by an association employee.

It is slightly less critical for an association that has an outside management company, but a smaller version can be done that covers the items that are specific to your association.

This would include job descriptions for the officers and committees, minutes and record formats, as well as items such as the contents of a board package for the directors meetings.

Is it time for your association to review the documents and consider amending them?

The answer is yes if you can answer yes to three of these five questions:

1. Is your association more than 10 years old?

2. Have you amended the declaration or the bylaws?

3. Are there changes to the documents you feel need to be made?

4. Are there references in your documents that are no longer accurate?

5. Do your recorded documents contain specific rules and regulations?

Remember that even Thomas Jefferson felt that the Constitution should be thrown out every 20 years and a new one written. Association documents are not carved in stone.

They are and should be living documents changing to meet the needs of a changing community. MEMO: G. Robert Kirkland, president of a Virginia Beach property

management consulting firm, and attorney Michael A. Inman specialize in

Virginia community association issues and are affiliated with the

Southeastern Virginia chapter of the Community Associations Institute.

Send comments and questions to them at 2840 S. Lynnhaven Road, Virginia

Beach, Va. 23452. To submit questions by phone, call 430-3381; by fax:

431-0410; by E-mail (turk(AT)norfolk.infi.net).

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