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CC&R AMENDMENTS & RESTATEMENTS

Governing documents are the heart of any homeowners association. If documents pre-date laws addressing important topics such as assessment collection, election rules, document disclosures, and water damage claims or they are not properly written, an association can be exposed to potential liability and needless legal expenses. To avoid potential problems, CC&Rs should be amended or restated. 

Amend/Restate Defined. An amendment revises or replaces one or more paragraphs in a set of CC&Rs. A restatement revises and/or replaces, and reorganizes everything in the document. The operative language “amend and restate, in their entirety” or the equivalent phrase “amended and restated in its entirety” are industry standards used in CC&R restatements and is generally found on the first page of a restated document. Amendments are good when you only need a few. At some point, amendments are problematic because they are often overlooked by members and they don't address underlying structural problems with your documents. A restatement is a little more expensive but gives you a clean up-to-date document. It's a complete replacement of your existing CC&Rs and bylaws with an integrated set.

Reasons to Restate. Some reasons for restating your documents:

  • Current Laws. In 1986, the “Davis-Stirling Act” went into effect. On January 1, 2014, a revised and restated Act replaced the original Act, putting governing documents throughout the state out of sync with the law in areas such as the Open Meeting Act, electric vehicle charging stations, pets, and rentals, to name a few.
     
  • Declarant Provisions. Remove all provisions related to the Declarant, the original developer of the project.
     
  • Plain English. Remove all legalese in the document and put all provisions in plain English so board members and homeowners alike can understand what they are reading.
     
  • Maintenance Obligations. Older documents are often ambiguous when it comes to maintenance responsibilities. Developers are known for using boilerplate documents that often mention components that do not even exist within the development. Failure to properly define duties leads to conflict, insurance disputes, and litigation. A maintenance chart should be included as an exhibit which provides an easy reference for respective maintenance obligations.
  • Pet Restrictions. Pet restrictions can be relaxed or strengthened depending on the needs of the association. Condominium associations, in particular, may wish to restrict the number, weight, and breed of dogs.
  • Insurance Provisions. Provide a requirement to reduce exposure for the association, that owners are to carry insurance, address insurance deductibles, and clearly spell out the association's obligations.

Approval Requirement. Approval requirements for amending CC&Rs are found in the CC&Rs (usually toward the end of the document). If a set of CC&Rs does not have an amendment provision, the Davis-Stirling Act provides a default method for approval. As provided for in Civil Code § 4270, CC&R amendments and restatements are effective upon completion of the following:

(1) The amendment has been approved by the percentage of members required by the declaration and any other person whose approval is required by the declaration.

(2) That fact has been certified in a writing executed and acknowledged by the officer designated in the declaration or by the association for that purpose, or if no one is designated, by the president of the association.

(3) The amendment has been recorded in each county in which a portion of the common interest development is located [which provides constructive notice of the amendment].

Approval Procedure. Voting must be done by secret ballot (Civ. Code § 5100(a).) in accordance with written election rules. (Civ. Code § 5105(a).) Associations must follow owner approval requirements. Otherwise, any approval of the amendment or restatement is voidable. The act of recording the amendment does not, by itself, make the amendment valid. (Taormina Theosophical Community v. Silver.)

Extended Balloting. Because the approval requirements in older documents can be unreasonably high and apathy among voters equally high, obtaining the necessary number of ballots in a 30-day balloting period is often impossible. The board may extend balloting one or more times to solicit ballots in an attempt to maximize participation. The Inspector or Elections can also extend the balloting period. (Civ. Code § 5110(a).) For more information, see Extended Balloting.

Court Approval. In the event an association cannot achieve the super-majority required by their CC&Rs, they have the opportunity for court approval of the amendment-restatement.

Board-Approved Amendments. In addition to amendments approved by the membership, there are categories of amendments that can be made solely with board approval.

Member Petition to Amend. Members have the right to petition the board to schedule a special membership meeting for any “lawful purpose.” (Corp. Code § 7510(e).) Petitioning the board for a special membership meeting to amend the governing documents with a membership proposed amendment is not one of them. For more information, see Petition to Amend CC&Rs.

Entirely by Mail. Unless an association's governing documents provide otherwise, voting may done entirely through the mail, with no voting at a meeting. However, counting the ballots is still done at an open meeting so members can observe the counting process.

Retroactive Application. Once a CC&R amendment or restatement is recorded, it applies to all members regardless of the date they purchased their unit/lot. The courts addressed this clearly in the Terifaj case:

The questions we confront in this case are whether use restrictions added to a declaration through an amendment and recorded after a homeowner has purchased an individual unit bind such an owner, and whether the rule of Nahrstedt—that restrictions in a development's declaration are presumed to *79 be reasonable and are enforceable unless they are arbitrary, impose an undue burden on the property or violate fundamental public policy (Nahrstedt, supra, 8 Cal.4th 361, 386)—applies to subsequently enacted restrictions. We are also called upon to decide whether the trial court abused its discretion in awarding attorney fees to the homeowners association.

We conclude that under the plain and unambiguous language of sections 1354, subdivision (a) [New: Civ. Code § 5975], and 1355, subdivision (b) [Civ. Code § 1355], use restrictions in amended declarations recorded subsequent to a challenging homeowner's purchase of a condominium unit are binding on that homeowner, are enforceable via injunctive relief under section 1354, subdivision (a), and are entitled to the same judicial deference given use restrictions recorded prior to the homeowner's purchase. (Villa De Las Palmas Homeowners Ass'n v. Terifaj (2004) 33 Cal.4th 73, 78–79.)

Statute of Limitations. The statute of limitations for challenging CC&R amendments (and restatements) is four years from the date the amendment was recorded. (Schuman v. Ignatin (2011) 191 Cal.App.4th 255; Costa Serena Owners Coalition v. Costa Serena Architectural Committee (2009) 175 Cal.App.4th 1175.)

Bylaw Amendments. See "Bylaw Amendments."

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

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