If your association’s bylaws were drafted sometime before 2015, it is entirely possible they contain outdated and burdensome provisions that can hinder your association’s operations and unnecessarily increase administrative costs. For example, does your board conduct business via email or text? If so, have you checked the bylaws to see if they require unanimous written approval from all directors before a decision may be made outside of a meeting? This is a fairly common requirement, especially in older documents.
Do your directors issue proxies when they cannot attend board meetings? If so, have you checked your bylaws to make sure they contain authority for this? Colorado law explicitly prohibits board members from issuing proxies unless such authority is contained in the bylaws. Even so, the proxies may only be issued to other directors and must direct the proxy holder how to vote.
It is not uncommon for associations’ operational practices to either conflict with their bylaws or the law. And, unfortunately, such practices expose associations and directors to liability, as well as cause distrust of the board by owners.
The good news is many of these issues may be resolved by simple limited amendments to the bylaws that often may be approved solely by the board. The determination of whether an amendment may be approved solely by the board, depends on three factors:
- the nature of the amendment;
- when the association came into existence; and
- the requirements set forth in your governing document for amending the bylaws.
Although the board should confirm with its legal counsel, below is a description of some common problematic bylaw provisions that could be easily resolved by a simple board-approved limited amendment.
If your community was created (the date your original declaration was recorded) before July 1, 1992, the board can independently amend the bylaws to make changes that do not modify quorum requirements or board powers. The caveat being, if your governing documents expressly prohibit the board from single-handedly modifying the bylaws, owner approval must be obtained.
Communities created on or after July 1, 1992 have additional restrictions that prohibit boards from unilaterally amending the bylaws to change: board qualifications or board terms, in addition to quorum, board powers, and board duties.
Below are a few examples of simple bylaw amendments that in most cases, may be made by a board, and that can address some of your current problems:
Number of Directors
If an association has fewer directors in office than what is required by the bylaws and the board cannot find volunteers willing to serve to fill the vacancies, an amendment would be appropriate to reduce the size of the board. Conversely, if you have an active and involved community, a bylaws amendment could serve to expand the size of the board to allow for greater community participation. But be careful to ensure you stay within the range established by your articles of incorporation.
Annual Meeting Date
Some boards are surprised to learn their bylaws require the annual meeting to be held on a specific date, such as the second Saturday in June of each year. Such association may have historically held its meetings on completely different dates. A simple amendment to allow the board more flexibility to select an appropriate date for the annual meeting can serve to resolve this issue.
Fiscal Year
The bylaws may set an association’s fiscal year, which is not ideal for the community’s accounting practices. For this reason, many communities choose to amend their bylaws to allow the board to set the fiscal year.
Corporate Seals
Many older sets of bylaws require the association to use a formal corporate seal on certain types of documents. Corporate seals are no longer required under state law, and a simple board-approved amendment can be utilized to remove this outdated requirement.
If you have questions or your board would like to discuss any possible bylaws amendments, please contact an Altitude attorney at [email protected] or at 303.432.9999.