By: Matt Greenstein
On May 16, 2020, Governor Walz signed into law new legislation that amends the Minnesota Common Interest Ownership Act, Chapter 515B (MCIOA) and provides new options for homeowner associations to consider when amending declarations or governing documents.
Many homeowner associations want to update and amend their declaration and governing documents, but do not even try to do so because they know obtaining 67% approval of their members is exhausting and unlikely as many homeowners in the association will not respond. Finally, the new amendment to MCIOA approved by the Minnesota legislature provides some hope for communities with apathetic members.
Currently, to amend declarations or an association’s governing documents under MCIOA and most declarations, it is required that the amendments must be approved by no less than 67% of the membership interests and often by a percentage of first mortgage holders who have a recorded mortgage against one of the units. For the homeowners, a failure to respond and vote is deemed to be a NO vote, i.e. a vote against the new documents. To obtain the approval of the first mortgage holders who may be entitled to vote, the association must also send them a written ballot or consent form, but if no response is received within 60 days, the association may treat their failure to vote as a YES vote. This is critical because first mortgage holders rarely respond to an association’s voting process, so the Act takes this into account and allows a failure to respond within 60 days to be counted as a yes vote for approval of the documents.
The 2020 changes will provide a similar process for obtaining consents from homeowners. No longer will the failure of a homeowner to vote be automatically considered a NO vote. The association may send its owners a notice of the vote and a copy of the proposed changes to the governing documents. If a homeowner fails to turn in a ballot or written consent to the changes within 60 days, that owner’s failure to vote will now be counted as a YES vote, a vote in favor of the new amendments to the governing documents. In other words, for future homeowners voting, the failure to submit a vote or a consent to amendments will not penalize the association by being counted as a NO vote. This will allow homeowner associations to adopt amendments to declarations and bylaws even when members in the homeowner association fail to respond to called votes.
The new law will also assist some of the older associations where the governing documents require more than 67% approval by the owners. There are some older documents that provide that a declaration may only be amended by the vote of 75% or even 100% of its owners. This is often times impossible. A new section of MCIOA for 2020 addresses this issue. It provides that where a governing document requires more than 67% of its owners to vote to change the governing documents, if the association has obtained approvals from 67% of its ownership, the association may petition the court and a hearing will take place within 90 days on whether the court will approve the vote and reduce the voting requirement to 67% of the owners. It appears that seeking a change to the governing documents by 67% of the membership will likely become the future standard.
For more information on amending your homeowner association’s declaration or on this new law, contact attorney Matt Greenstein.