Your HOAs CC&Rs is one of the most important documents that govern your association. However, it could’ve been written so long ago that its content may not be applicable anymore to the current times. Worse, there is a possibility that your HOAs CC&Rs expire. Let’s talk about that more here.
Do CC&Rs Expire?
Homeowners associations are responsible for the maintenance and management of communities. When someone buys a property belonging to an HOA, they automatically become a member of that association. They then have to abide by the association’s rules. An HOA’s Declaration of Covenants, Conditions, and Restrictions (CC&Rs) is what legally binds homeowners to the association. It’s also one of the things that grant the association its authority.
But, these covenants don’t always last forever. In fact, it’s entirely possible for CC&Rs to expire. There are two ways this can happen. The first is when state law says they expire. For instance, in Florida, covenants that are more than 30 years old expire and essentially become unenforceable.
The second way CCRs expire is when the association’s governing documents say they expire. If a CC&Rs expiration clause is written within the declaration, then the covenants will expire. For example, if your declaration says that covenants have a lifespan of 20 years, then they will no longer be enforceable past that point.
If neither state laws nor the association’s declaration says anything about an expiration, then the covenants will persist until the homeowners choose to terminate them.
What Happens When CC&Rs Expire?
The expiration of an association’s CC&Rs can set off a domino effect. First of all, it would render the covenants basically unenforceable. That means homeowners no longer have an obligation to the association and vice versa. Homeowners don’t need to pay their dues anymore, and the HOA doesn’t need to maintain the community’s common areas. The HOA board’s powers basically become null and void.
As an added effect, the homeowners association will simply cease to exist. Residents can then expect curb appeal to drop and property values to plummet soon after. While it may seem like a small event, the expiration of HOA covenants can have a huge impact on everyone in the community.
Why Do CC&Rs Expire?
In the past, real estate attorneys wrote expiration dates into CC&Rs because of the rule against perpetuities. This rule basically required covenants to have an expiration date. The rule, though, is old and outdated. This is why you will normally find expiration clauses in the declarations of older communities. Newer associations tend to have built-in renewal clauses or no expiration dates at all.
Extending Term of Declaration
Many lawyers nowadays craft CC&Rs to include an automatic renewal that would kick in periodically. This is also known as extending the term of declaration. In doing so, homeowners associations can operate without worrying about their covenants becoming unenforceable. Additionally, it covers the HOA should a court rule in the future that CC&Rs must still include termination dates.
Amending Your Governing Documents
If your association’s CC&Rs don’t contain a provision for automatic renewal, consider making an amendment. An amendment will also require the board to go through several steps, including drafting the amendment and proposing it to homeowners. Amending your CC&Rs also means having to schedule a meeting so that owners can vote to approve to reject the amendment. Associations must provide sufficient notice of the meeting.
To pass an amendment of the CC&Rs, an HOA board will need to obtain the approval of a certain number or percentage of all owners. As such, it is important to educate all homeowners about the impending change so they can make a decision ahead of time and attend the meeting to vote. During the meeting, the board may need to explain the amendment again and answer any questions that owners may have. It’s a good idea to ask a lawyer for help when amending the governing documents.
Extension by Vote
Alternatively, you can extend the term of the declaration by obtaining a majority vote from the members of your association. This is a much simpler process because it doesn’t require the board to make an amendment. However, it also means you will have to secure a majority vote every time your CC&Rs are set to expire.
Keep in mind that there may be a limit to the duration of the extension. For instance, under California law, extensions are deemed invalid if they exceed the length of the initial term of the CC&Rs or 20 years, whichever is less.
How to Revitalize Expired HOA Covenants
If state law dictates the expiration of HOA covenants, there is usually a workaround that allows associations to reinstate them. In Florida, for instance, associations can revitalize their declaration of covenants by following a set of procedures. Covenant revitalization typically requires the HOA to obtain a majority vote from all homeowners in favor of revitalizing the covenants and thereby restoring the association’s authority. Following the vote, the association must secure the approval of the state or local government.
In other places, the requirements are much more stringent. Condominiums in California, for one, must obtain 100 percent written consent of all the owners to reimpose expired covenants. In addition to that, the condominium must also obtain 100 percent written consent from all the mortgage lenders. This is not only time-consuming but also incredibly difficult to achieve.
Do CC&Rs Expire? Answered!
Managing homeowners associations can come as a big challenge, especially when you consider the fact that covenants can expire. The entire process of amending your declaration to include an automatic renewal is confusing enough as it is. If your covenants do end up lapsing, revitalizing or voting to reinstate them will take a lot of time and hard work. As such, HOA boards should do their research and make adequate preparations ahead of time.
If you feel like your HOA board can’t handle these things alone, an HOA management company like Clark Simson Miller can help. Call us today at 865.315.7505 or contact us online to learn more about our services.
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