UNSIGNED BYLAWS AND OTHER DOCS IN AN HOA – ARE THEY VALID?

Should a Board Rely on Unsigned Documents? Sign Them? Toss Them?

A reader recently wrote to me and she was up in arms about an article/advice posted on another attorney site. Here is the message:

I read a blog on the ************* site and I was appalled by the legal advice that Unsigned bylaws are legal and associations function perfectly fine with them. They may be legal but they should in no way be encouraged!  Look at the risk that puts the HOA in.  Anyone could change them or they could have been honestly changed and no one would know if you had the current copy.  And, if they aren’t signed, how do you know if the board approved them?  Are they not as important as the electric bill check the president signs?   I would think that any governing document would need to be under some kind of change control for the safety of the HOA membership.  That to me would mean signed, dated and version numbered at a minimum.  I couldn’t believe that a lawyer who has ever been involved in at least one contract or took contract law would not want that if he paid money into an HOA.

In addition, there should also be some type of online document retention services.  What I have found is that past presidents, treasurers, etc., have files in boxes in their garages.  Not very comforting to people that live in fire and earthquake areas.”

To the question of whether a Board should use, enforce, or sign unsigned documents or any certification approving them, I would respond that while it is certainly not a first choice, it may be preferable to tossing out the documents altogether. In other words, the lesser of “evils” comes into play here. And caution is in order.

Let’s talk about how this happens. The answer is simple – poor record keeping!

So as to the comment above related to retention, I would say that any form of retention that preserves the association records is important. Options range from boxes in the garage (not recommended) to backup in the cloud or on a retention site. There are many choices in between at the cloud level as well. In fact, I think it is a good time to explore record keeping and retention in the next E-newsletter so be sure and go to www.californiacondoguru.com and sign up (its free)if you want to get the full scoop on records and unsigned documents.

Say you are on the Board and you get an escrow demand, a VA demand, or need to seek HUD Certification or engage in some activity that requires SIGNED Bylaws or other documents, which is the reason that triggered the article on the attorney website and all you have before you is an unsigned set of bylaws that to the best of your knowledge the Boards have been using for years. What do you do?

  1. Investigate: Inquire with the developer, the association manager, and any former board members or owners that have a long history with the association and are still around as to what they may have in their own files for Bylaws, what they have in paper documents provided in escrow, or what they may remember about the unsigned documents or amendments.
  2. Do something. If you come up empty handed, there is little choice but to look for a way to properly “certify” the document being used. Put the item on the agenda “Certify Bylaws” and discuss it, entertain a motion to certify the document, perhaps list the reasons to support the motion (would be best to get legal advice on this), and if it passes certify them either by signing them or signing a Certification that the HOA is operating under the Bylaws (best prepared by an attorney).

Dumping unsigned documents and operating without them is like letting go of the wheel and careening out of control in a vehicle.

Being an attorney and having respect for signed vs. unsigned documents is important. But sometimes in the real world one has to look at a Plan B. These are things to note, however.

With regard to Amended and Restated documents as opposed to original documents:

If you have old signed bylaws and a newer draft of unsigned Bylaws, be careful about certifying them. They may be preferable, but using them also leaves open the door (maybe only slightly but open nonetheless) to challenges. In reality the law contains a lot of controls even for older Bylaws, but without good legal feedback and advice on what to do about this scenario, you will not know where you might run into problems.

With CC&Rs it’s different. You have to honor the latest recorded version, and they cannot be recorded without a signature AND notary acknowledgement. So if you are operating with an unsigned, unrecorded set of CC&Rs, it is critical to get legal advice because there will be signed, recorded CC&Rs (called a Declaration of Covenants, Conditions and Restrictions, hence the common name CC&Rs in California) on record that will be picked up in any title search.

If a Board took the steps to have updated documents prepared, but did not follow through to the end to get them approved, AND recorded, then they are not by law legally effective and are subject to challenge. If you find yourself in that position seek legal advice. I would be asking the Board to investigate what happened that resulted in the unsigned Amended or Restated set, and do it diligently!! Dig deep!!

If evidence can be found and preserved that indicates the membership approved them, take steps to certify and record. Otherwise you are playing Russian Roulette and if you play it long enough, the odds are that you will lose.

 

 

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4 Responses to UNSIGNED BYLAWS AND OTHER DOCS IN AN HOA – ARE THEY VALID?
  1. Anne D'Arcy
    August 25, 2016 | 4:57 pm

    What about unrecorded Bylaws?
    Are they illegal and unenforceable?

    • Beth Grimm
      September 5, 2016 | 2:31 am

      Bylaws do not have to be recorded. In fact they should not and I do not think the Clerk’s offices these days will even accept amended bylaws or amendments to the bylaws, unless the originals were recorded, which sometimes happened in “the olden days.”

  2. roger
    August 25, 2016 | 11:24 pm

    where can I find case law to support HOA fees being based on the size of the unit, all other things being equal.

    • Beth Grimm
      September 5, 2016 | 2:29 am

      The item that determines what the assessments are based on, square footage, equal, common interest shares, size of unit, etc., is determined by the governing documents, namely the CC&Rs. If there is nothing there on this, that is a problem. Consult a lawyer.