Monday, October 19, 2009

Do you know which of your actions are really material alterations?

Most board members understand that they must obtain membership approval for material alterations or substantial additions. What they are not so clear on is what constitutes a material alteration.

The most basic litmus test is if the change materially or palpably changes a common element's appearance or use, it's a material alteration. In a condominium association, a material alteration must be approved by at least 75% of the total voting interests unless the governing documents provide otherwise. In a homeowners' association, the governing documents will control what needs to be done in the event the board makes any changes to the common areas.

The reasoning behind the requirement for membership approval is quite simple. An owner might have purchased in a particular community solely because it has a tennis court or is painted a lovely shade of blue. While that same owner might be on the losing end of the vote to change these items, they must at least have a say.

Some examples are obvious and others might be a little less clear. The following examples are material alterations which must be approved in advance by your members:

1. Changing the paint color of the building's exterior, corridors or any other common area;

2. Adding a cell phone tower to the roof;

3. Changing from carpeting to tile or vice versa;

4. Changing from a flat tile roof to barrel tile;

5. Cutting down a large tree on the common areas;

6. Changing light fixtures in the clubhouse;

7. Adding a fountain to the lake; and

8. Changing the card room to an exercise room.

These are just a few examples of changes that constitute material alterations which require membership approval. There are exceptions to the need for membership approval. For example, changes required in order to comply with local or state ordinances can be made without membership approval. If you are performing maintenance or repairs and simply want to take advantage of new materials or technology that was not available when your community was originally built you can do so without treating it as a material alteration.

This is one of those areas that definitely requires a discussion with your association attorney in advance. Some boards are hesitant to ask the members for approval for these kinds of projects for fear they will be voted down. Even the best ideas can fail to garner enthusiasm and support; they should be scrapped until the board and members can jointly decide on a vision.

2 comments:

  1. Would incorporation of an HOA constitue a "material change?"

    Our small (47 lot) HOA has been unincorporated since its inception (we do use proper insurance, and a small volunteer "staff.") Two owners want to incorporate. Our CC&Rs state in its General Provisions that "a 75% signature vote is required for any and all amendments."

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  2. MONDAY, OCTOBER 19, 2009

    Do you know which of your actions are really material alterations?
    Most board members understand that they must obtain membership approval for material alterations or substantial additions. What they are not so clear on is what constitutes a material alteration.

    The most basic litmus test is if the change materially or palpably changes a common element's appearance or use, it's a material alteration. In a condominium association, a material alteration must be approved by at least 75% of the total voting interests unless the governing documents provide otherwise. In a homeowners' association, the governing documents will control what needs to be done in the event the board makes any changes to the common areas.

    The reasoning behind the requirement for membership approval is quite simple. An owner might have purchased in a particular community solely because it has a tennis court or is painted a lovely shade of blue. While that same owner might be on the losing end of the vote to change these items, they must at least have a say.

    ReplyDelete