Changing the Rules

Altering Bylaws in Co-ops and Condos

By Lisa Iannucci

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When you're on the board of a co-op or condo building, sometimes it can feel like you need a law degree to understand all of the paperwork that gets thrown at you. Depending on where you live, there are bylaws and proprietary leases and house rules and everything in between. And like any thriving growing community, sometimes rules and laws need to change with the times. But how often can these documents be changed? Who changes them? Do the owners or shareholders have any say in these changes?

Know the Rules

First, while they sound similar, it's important to understand the difference between some of these documents. For the most part, it all comes down to whether your place of residence is a condominium or a cooperative.

According to Neil Garfinkel, an attorney with Abrams Garfinkel Margolis Bergson, LLP in Manhattan, bylaws in a co-op dictate how the corporation operates-- in that regard, they're very different from the bylaws in a condominium. The documents that tell the people in a co-op what they can and can't do in respect to living in the building are the house rules and the proprietary lease.

"However," says Garfinkel, "the bylaws in a condominium are the rules and regulation the condo owners are governed by; they are set up to protect the interest of the owners."

The condominium bylaws are a self-governing document for the association. This covers board member qualifications and the direction of the board of directors, including how it administers policies according to the bylaws and how it oversees the maintenance and administration of the association. The bylaws will also cover meetings, voting, proxies, budget, assessments, including special assessments, insurance coverage, and restrictions on the use of the units and the common areas. For example, condominium bylaws will state whether or not unit owners can own pets; but the cooperative owner's proprietary lease will state the rules of pet ownership.

Changing the Rules

Now that you have graduated from Bylaws 101, what are some legitimate reasons to change a bylaw or set of bylaws? While most building bylaws are written thoughtfully and with the entire building community in mind, the fact remains that at some point, most buildings find it necessary to review their bylaws and change them if they're obsolete, unenforceable, or universally disliked.

"There are some common reasons for changing bylaws," says Paul Herman, managing director of Rose Associates, a management consulting firm in New York. "In a cooperative, you may want to change the maintenance requirements, or the board of directors requirements, or the flip tax (for transferring a unit). In a condo, the association can change bylaws to address such issues as a change in voting procedures, special assessments or the term of the board.

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If several provisions of the bylaws are being considered for amendment, perhaps it's time to review the entire document, rather than approaching it piecemeal. According to attorney Robert Meisner, a member of the College of Community Association Lawyers and adjunct professor in community association law at Michigan State University Law School and Cooley Law School, your board should consider how long it's been since the bylaws were created, and how many laws have been passed or changed since then. He also suggests that you ask the following questions before deciding to change your bylaws:

  • Would you like to improve unit resale marketability and real estate appreciation, and strengthen the building against potential legal challenges and financial liabilities that could be thwarted through good document provisions?
  • Do you have financial difficulties caused by delinquent assessments, inadequate budget or reserves, or non-recoverable attorney fees incurred in pursuing bylaw infractions, and bylaws that do not seem to provide any remedies or a roadmap for relief?
  • Do your bylaw provisions seem to be contrary to public policy, such as prohibiting the flying of the American flag, prohibiting family day care homes, allowing transient tenants, or discriminating against children or single people?
  • Do you have problems such as parking, pet issues including waste and leashes, common elements not being properly maintained, satellites and antennas indiscriminately erected, and bylaws that do not provide remedies, direction or relief?
  • Do you have trouble getting residents and shareholders to attend meetings, satisfying the quorum requirements, passing votes on important issues, getting people to volunteer for (or stay on) the board?
  • Do you have documents that lack reasonable notice or quorum requirements, or lack the protective indemnification, limitation of director and officer liability, and the director and officer insurance coverage provisions?
  • Are there clear procedures in your bylaws for dealing with insurance proceeds, building funds, eminent domain and other factors that serve to protect the owners' collective investment?
  • Do your bylaws contain outdated provisions regarding the sponsor's rights, and references to governmental agencies or governmental documents which may have been abolished, or an unenforceable and potentially discriminatory right of first refusal unit resale provision?
Carved in Stone?

Flexible as they can be, however, individual bylaws already written can't just be changed on a whim. For example, in a recent Washington Post column, attorney Benny L. Kass, explains that if renting is already permitted in a building's bylaws, the board cannot pass a rule that prohibits owners from leasing out their units.

"However," says Kass, "the board can impose reasonable restrictions. For example, the board could require that all owners and tenants sign an addendum to their leases stating that the tenant has been provided a copy of the association documents and that the tenant agrees to abide by those documents.

"The board could also require that the landlord and tenant acknowledge that the board of directors can take legal action against a tenant for violations of the association legal documents," Kass continues, "Or the board could require that the landlord and tenant agree that if the landlord is not paying the condominium fee, the tenant would upon demand pay his rent directly to the association, instead of to the landlord."

The Residents' Say

Once a bylaw needs to be changed, a consensus needs to held and a certain percentage of shareholders must agree on the change to make it official. "The bylaws are going to set forth what kind of consensus you need," says Garfinkel. "Generally, it's a two-thirds vote. In cooperatives, voting can be done two different ways: it can be based on the number of shares that you own or it can be based on the number of unit owners, but again this information will already be in the bylaws."

Typically the board of directors initiates the process of a bylaw change, but if you are a shareholder or individual who wants to express a concern, you can attend the annual meeting, wave your flag and start a change at the grassroots level. If others feel the same way you do, you can also gather a group of shareholders together and call a special meeting.

If the board of directors initiates a bylaw change, it will hold an informational meeting or circulate the proposal to the shareholders--again, it depends on what the bylaws already say they must do. Anyone interested in attending the special meeting to voice his approval or disapproval of the change can do so. Some associations then have a vote at the annual meeting, while others call a special meeting solely to vote on the proposed amendment.

One such example of how bylaws can be changed occurred in a luxury condo building on Manhattan's Upper East Side. A prospective purchaser had a criminal record--he was convicted of a crime that involved a gun. Since the board had the right of first refusal, the board rejected the purchaser and received a vote from two-thirds of the unit owners that they could in the future reject purchasers convicted of gun-related crimes. Although this was a very unusual case, it shows how the condominium owners can change bylaws.

"Typically we advise our board that if they are going to change something and it will be considered controversial, we would strongly urge the board to go to the shareholders and not rely solely on the powers they were given," says Herman.

"Bylaws generally don't change all that much though," says Garfinkel. "They are pretty standard from corporation to corporation and it's more likely that they will review a proprietary lease in a cooperative."

"Many of these problems can be protected against, avoided and/or significantly reduced through the adoption of the proper bylaw amendments," says Meisner.

"There is an art to getting these documents approved, but it can be done through careful planning and board dedication."

Lisa Iannucci is a freelance writer living in Poughkeepsie, New York.

Comments

Dee

We would like to change the condominium bylaws to state that penthouse monthly dues are more than the standard units' fees.

johanna

what do the residents of the condo do if the Board of Managers refuses to attend a special meeting and refuses to follow the bylaws---ex. expulsion of a negligent board member?

CATHLEEN JONES

WE HAVE 4 UNITS AND WE ARE VOTING ON GETTING STORM DOORS AND 3 OF THE 4 UNITS AGREE TO GET THEM. DOES THE MAJORITY VOTE WIN OR DO THEY HAVE TO REVOTE.

anita

We have bylaws....why write rules and regulations in a condo association? Are rules and regulations done to explain the bylaws .

Ron Colarusso

We want to limit the number of rental. Its not in the bylaws. Can this be done where current units that are rentals would be held harmless with a maximum percentage total?

C.J. Stevens

Do condo owners have to hire and pay a lawyer to add something to the By-laws without a majority. Or, is it even necessary to hire a lawyer?

John

Our board of 5 members has just rewriten our Rules&Regulations which are absurd and which are only to apeaze two board members. We have 135 units and most are against the new rules this is a retirement village.

Ibreslaw@aol.com

Can a husban of a unit owner vote on a annual budget meeting if he is not on the deed

Linda B

If the condo employed the "right of first refusal" was it then obligated to buy the unit@ the price agreed upon by the rejected buyer? Once an amendment is approved by the owners, where & how does one record it?

an unknown user

My association fee is more because i have a ranch, it is smaller than the colonial,my increase is also more, i get no more than anyone else.

an unknown user

i live in coop n there is no renting to out siders but a neighbor is doing so she lives in aparment our by laws say if you are destatued you can she holds a job she wants only cash from her renters our board is not doing there job can you help me with some information

board member

does anybody know if it's possible to get rid of a union in a coop employing 2 1/2 persons (one is shared with a neighbor co-op). With the union contract expiration upon us and financial burdens becoming harder and harder, what happens if the board just doesn't sign the agreement with the union?

sharon

my association will not let me rent my condo as it is in the bylaws, however, I have been renting my condo to my mother who has recently died. Am I grandfathered in?

an unknown user

We were renting and were grandfathered in until the tenant moved out. Arent't we legally grandfathered in since at the time of purchase we were allowed to rent and these changes came after?

an unknown user

Is it mandatory to file an amendment of the by laws in a co-op with the attorney general

Thiru

Our 18 year old Town home community is in Clarendon Hills Illinois. The Board imposed 100% rental restriction in 2008. Even after reducing $100k from $250, no takers/buyers. So, we have 5 foreclosures now. Renting will help ot hold on to the asset. Given the Real estate collapse, is the a law change expected regarding bandoning the rental restrictions?

Carolyn

How does one go about removing board members if there aren't enough people to vote and are concerned? And if one doesn't have a board who controls the condominiums until a Board is in place? Thanks.

laura

I am a renter in a subdivision and want to put a paartition out to change a rule is it leagal or will it be heard

Dale-Massachusetts

We can't find the by-laws and have a very uncooperative owner-Is a copy filed anywhere with the CIty, and what remedies do we have if an owner violates by law rules? We are a 3-condo building and the owners of the unit in question are a couple, hence have 2 votes, we have 2 votes, too.

Karem Pinto

my husband and I are moving into a community that does nto allow dogs. However their are people who do have dogs because they said that the law passed 12 years ago and people who had dogs then could keep their dogs and if their dog died they could get a new one. I believe this to be unfair. How come they can get a new dog but people who are jsut moving in cant. Can my husband and I do anything to change this?

Ron Sarnie

can the board of directors of a coop mobile home park in Fl. change the by-laws and rules and regulations without a vote of the shareholders. The change would be from a no pet park to a pets allowed with the proper rules pertaining to same.

Bernadine Hart

Can a Condo owner be elected president if they have a lean on thier condo due to not paying some of thier maintance fees due to the condo. Is this conflict of interest?? Also can a president call a meeting when thier term aftwr the date of thier term. Also can there be a volunteer Sectary, instead of and elcted one???

anne

Are renters allowed in annual owner meetings in Ill.

shirley

the mintance fee,s are to high

Ron Sarnie

My I read what the answer to my above question on changing the by-laws to change a co-op by lawss from a no pet park to a pet park.

Louie

Is it legal to require Board members to sign a confidentiality form even though it is not stipulated in the By-laws?

Patty

I own a condo I would like to change the weight restriction of a pet ( dog) from 8 pounds ( unrealistic) to maybe 35 pounds maybe just to owners with dogs not to renters How do I do that ? what is my first step/ can i send out letters to all owners to see their views? Thanks

Cats Mom

We are a small 24 unit condo complex. Nobody wants to serve on the board and the same people have to keep serving over and over again just to keep things running. What happens if no one wants to serve and there is no board?

Deb

Which cooperative document controls when the proprietary lease requires 3/4 super-majority to amend but by-laws only require simple majority? Issue is subletting.

cynthis j yamaji-glueck

Is it mandatory to file an amendment of the by laws in a co-op with the attorney general

Wes

When I moved into my condo the by-laws said that vehicles are limited to standard motor cars (no boats, no trailers, no moter homes and no commercial vehicles). That was in 2004 and I have a pick up truck and my wife has a suv. When we moved in our property was being managed by one property management company. Now 7 years later a new property management company has taken over and they sent us a letter stating that the vehicle restrictsion are: (no trucks, pick-up trucks, vans with sliding slides, recreational vehicles (RV's), trailers, motorcycles, or commercial vehicles of any kind, unlicensed or inoperatble vehicles are not permitted to park on the association property. My question is can the property management make this kind of change that affects people who had a vehicle that was ok when the condominium was bought?

frank

Our rules and regulations in 1996 state no pets, at the end of the rules and regulations it says they can be changed by a majority vote. The bylaws in 1976 says amendments have to be done by a 75% unit owner vote. Which is correct?

Jan

I am on my co-op's Board. We were told that it will cost upawards of $750 to change or add a by-law. Is this true? Something about the cost of registering it with the State???

an unknown user

An idea for a future article....please in depth explain why it is counter productive to add "first right of refusal for renters" when it has NOT been a part of the by laws for 17 years. Lenders don't want to get involved with assoc that have first right of refusal. And this board needs training on discrimination. A fine line they cross daily.

an unknown user

How can an individual implement the change of house rules without getting support from the shareholders or other board members ?

wje

I need to resurface my existing Cedar deck and the board refused my modification requirest stating I had to reduce the size from 12x30 to 12x22. The structure does not need to be repaired. Can they force me to do this?

an unknown user

I live in Berrien Springs MI & I was wondering if anybody knows what the weight limit on dogs are for a mobile home park?

Nydia & Moe

My husband and I Have brought a condo about five years ago We were told we are allowed to have dogs I found out we were not Able to It was in the past law were allowed and we are not able to have a dog ..most units have cat we rather have a dog what can we do to chang the law . One person on the Association bord dose not want dog

M. Dale

Our association only consists of 9 units. Our FHA certification expired last month, with out our knowledge, and since our last certification 2 years ago, the FHA guidelines have changed and their is a sentence in our By Laws that is unacceptable to them and we need to amend the By laws, removing this sentence. Do we just write up the amendement (after majority rules voting) and have it signed by our association president, notorizd and attached to the By Laws? Thank you.

an unknown user

how can you put a cap on renters in a coop. our by-laws only state that an owner must live in his unit for 2 years before renting. because the market is so bad, we are being inundated with renters. our annual meetings are very poorly attended. what can we do to limit rentrs. thank you

C Hanson

how do we change from being a "co-op" to where we own our ind. land and unit...and get an abstract or Torrens Cert for it...as we are having trouble selling in a co-op as people can not get mortgages for co-op property. thanks for your help

edward

our condo fees have gone up 10 % a year for the last 3 years which we as owners feel that is more than is needed to run this complex our annuley meeting is coming in jan also our board shoves it down your throat like it or not can we remove them at our meeting in jan if we have the votes to do it there is a lot more going on here. our board does not like to be talked to in a neg. way have we got any options thank you

an unknown user

Does a condo association need to go through a lawyer to add something to the bylaws if there is the required percent of approval of the owners

jared

I am in a condo and the tenants have two dogs and our rules say you are only allowed to have one. Their floors are not sound proofed and make constant noise running back and forth. They refuse to get rid of one of the dogs, and have been sent various letters. What can be done? The board seems no help..

Rita H.

I live in a condo. The board has violated the some of the bi-laws (two board members). We need new windows. they will only allow Anderson windows, there is no money in the assoc budget to buy them, so each owner is responsible. We would like to purchase wallside windows. The board let one homeowner buy wallside windows. They now say they made a 'mistake', and everyone else must purchase Anderson windows? Some of us think they have now set a new standard, and the bi-law is void? Yes, or no?

MiHarri

There is only one tenant in our coop unit that is being held to the bylaws. The board members have been violation members rights by running a 2 member board. How can only one individual fight to have an unbiased board appointed do to gross misrepresentation by the board and the property management company. I have had to make a civil complaint, but nothing has changed much. Still only two members of the board control and do things outside what the bylaws, articles, and house rules state. Because of my persistence, they are trying to have me removed from the membership. Who can help and advise.

Ross

Our Coop board has begun a "laundry use fee" on renters over and above our existing "transfer fee". This appears contrary to Florida Coop statute s.719.106(1()i) which prohibits anything other than a transfer fee on renters--based solely on the approval of the transfer itself. Illegal?

R

See all of the above questions, but no responses. Have some questions of my own, but I do not understand how this site works. Please advise. Thanks

Rosemary Murray

Our Condo Board changes its rules by a Board Vote that now only allows owners to have a dog in their unit and not renters or guests. How do we know this is legal and what are our rights since it was not voted on?

CC

The board has changed the rules and regulation for their personal attack of home owners and they have been on the board for 9 years with holding new elections.

Rita Bauguess

our board has had the management company devise an addendum to add to a rental lease. the addendum gives the management company the right to notify tenants to vacate a unit if they do not adhere to the bylaws of the building. Is this legal?

Nancy Gomez

I got 75% vote to permanately change parking when 2 people agree. My son and I agreed, his condo is being sold Monday, my association presidet says we can not make the change, I followed the 1976 Dockets, that allow this, It was preseted to the board prior to the vote. What do I do.


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