A Board of Trustees May Now Amend the By-Laws Without a Vote of the Unit Owners
On July 13, 2017, a new law was enacted in New Jersey amending the Planned Real Estate Development Full Disclosure Act (PREDFDA). PREDFDA governs homeowners associations, condominium associations, and co-ops.
The new PREDFDA provisions apply to trustee elections and certain by-laws amendment procedures. They also permit an association’s board of trustees to amend the association’s by-laws without a vote of the unit owners. This may be very helpful to an association that needs by-laws amendments to operate more efficiently but cannot get apathetic unit owners to vote.
There are two circumstances in which a community association board may amend the by-laws without the majority vote or procedures required by the by-laws:
To the extent necessary to comply with state, federal or local law, or
By providing notice and a rejection ballot to unit owners. If at least 10% of the unit owners vote to reject the amendment within 30 days of its mailing, the amendment is defeated. However, if less than 10% of the unit owners return rejection ballots within 30 days of its mailing, the amendment would be valid.
It is important to note that this new law does not apply to amendments of the master deed or declaration. It also will not apply to by-laws amendments for tort immunity. Tort immunity amendments are governed by a different statute which requires 2/3 of all unit owners.
It should also be noted that any law which is inconsistent with the by-laws would control whether the by-laws are consistent with the law or not. This means that the by-laws do not need to be amended to be consistent with this new law. However, inconsistent provisions can be confusing to unit owners and some boards may find this type of amendment helpful in making the by-laws more clear.
Read the full text of the PREDFDA amendment here. Additional by-laws amendment procedures mandated by PREDFDA can be found here. The election provisions are discussed in a separate blog which can be found here.