Legislative Update - Part I

'I don't make jokes. I just watch the government and report the facts'.  Will Rogers

After a near two year process, the New Hampshire Legislature agreed on a bill which Governor Hassan signed on June 24, 2016, making it a law effective August 1, 2016. As with most pieces of legislation (and sausage), what comes out of Congress, any congress, is usually not very much like what it starts out to be. Both the New Hampshire Senate and the House of Representatives had several committees, with several members, who held several hearings with several lawyers, property managers, constituents and likely others. Each piece of legislation is hacked apart, reconstructed, submitted to reevaluations, set aside when more important things arise (we're talking condos here, not crises), sometimes forgotten or “tabled,” resurrected, more testimony is taken, all of this as it winds its way from sub-committees to committees to the full legislative body, and then if both chambers can agree to pass a similar bill, they get-together in a Joint Committee where further negotiations take place and it is further molded, sculpted, shaped, chopped and finally approved and sent to the Governor to be signed and entered as a law or vetoed.

People believe Winston Churchill was speaking of Russia when he stated, “It is a riddle, wrapped in a mystery inside an enigma, surrounded by a puzzle.” He was not. He was speaking of legislative process.

But the point is no matter the outcome, a lot of well-intentioned people put in a lot of volunteer time stewing over ideas, language, commas, passages, periods, competing purposes and more, all with the hope of making things better.

So here are some of the highlights, some of which will require associations to amend their Bylaws and perhaps their Declaration to enact the changes.

• Many older Associations do not have a Board of Directors, only Officers. The new law requires every Association to have a Board of Directors, with duties and powers specified in the Bylaws. If you do not have a Board, after August 1, 2016, any decisions made by officers will have no effect as the Act specifically requires Associations to create Boards after August 1.

• All of the duties a Board undertakes have to be specifically noted in the Bylaws. Most associations have such language. Many do not. And if they do not, language, such as the ability to hire a management company, must be added to the Bylaws. Any matters not specifically noted in the bylaws, such as negotiating insurance claims, now are left to the Association members, creating the need for notices, meetings (perhaps many), quorum, and time.

• The Bylaws have to designate the officers who may prepare, execute, certify, and record amendments to the Declaration. General language can be used, but the Bylaws need to be amended to provide for this or no amendments can be done.

• The new law requires the Bylaws to contain any provisions regarding meetings, voting, and quorums. An Association is no longer allowed to set Rules for these matters such as saying how long an Association may have to conduct voting by ballots sent to the Owners. They must all be done by language inserted in the Bylaws.

• Although the provisions regarding notice of meetings (at least 21 days for annual meetings and 7 days for special meetings) still exist, these notice provisions may be waived for anything the Board deems an emergency. Some suggested emergencies are budget changes and proposals to remove officers or directors.

• Special meetings may be called by the Board of Directors or non-Board unit owners. That has not changed. However, the new law allows the non-Board unit owners to call a special meeting only if those unit owners seeking such a meeting have at least 33% of the voting power in the Association. Further, this 33% requirement can be lower, but only if the lower percentage is stated in the Bylaws. You may want to discuss as a Board what percentage of interest you feel would best serve your Association, and if it is less than 33% you will need to amend your Bylaws accordingly (unless this lower percentage is already in your Bylaws).

• If the Board does not then notify the Owners of a special meeting within thirty (30) days of such a request, the Unit Owners may notify the members of a meeting. Curiously, however, the statute now says such a meeting may only be an “informational” meeting, so nothing may be voted on or adopted.

• Further, and here's the strange part, the Board need only notify unit owners within thirty (30) days of a such a request that there will be a special meeting. The adopted language does not state the meeting has to be held within thirty (30) days of such a request, and there is no language stating when such a meeting must actually be held. So a nasty Board could simply notify Owners that there will be a meeting, but not set a date for it for many, many months. This was clearly an unintended oversight, so I would suggest when amending the Bylaws, to set a time frame by which the Board must set a special meeting called by the members.

• There is some good news. Meetings of the Association (annual or special), Board meetings and committee meetings may now be held electronically, including by telephone, video or other conferencing process. This should make it easier for those who spend part of the year in other parts of the country to participate. However, in order to allow this type of participation, an Association's Bylaws must be amended to allow such participation. It cannot be done by Rule.

• The law now requires that all meetings be formalized and follow the parliamentary procedures documented in Roberts Rules of Order Newly Revised. These are, of course, byzantine. CAI (the Community Association Institute) recently offered one such paperback of the Rules for sale. It is 243 pages. In reality, abiding by this requirement will open up associations to valid legal challenges on Board elections, budgets, fines and every matter that comes before it. However, before panic sets in, there is language in the Act that allows a Board to void this provision, but such language must be in the Bylaws. I would suggest amending your Bylaws accordingly and make the use of Roberts Rules of Order discretionary, not mandatory.

• The previous law required Boards to make minutes of their meetings available within 60 days of the Board meeting or within 15 days of the date the minutes were approved, whichever occurred first. The new law requires such availability of minutes in this time frame for all meetings, including committee meetings, not just Board meetings. So if your association has committee meetings, minutes must now be kept and made available shortly after the meetings. The good news is the minutes may be made available electronically such as posting on a website and/or sending them via email.

• Notices of meetings may now, in the discretion of the Board, be sent to an email address. If an Owner either does not have an email address or does not notify the Board of an email address, the Board may choose to deliver Notices by either prepaid U. S. Mail (regular, not certified), by hand delivery, or by “commercially reasonable delivery service.”

• At least quarterly the Board of Directors must hold an open Board meeting “during which unit owners shall be afforded a reasonable opportunity to comment on any matter affecting the association.”

• Additionally, if a Board has meetings that are not open to all Owners, it must now electronically record the meetings and the recording must be made available to Owners upon request and the Owner may hold the recording for up to 30 days. Nearly each Association I represent already has open meetings, setting aside 15 minutes at the start of each meeting to allow for Owner input. If you do so already, you need change nothing. If you do not, you should adopt this practice or you will have to do as the Act now requires you to do and record the meetings.

• Boards are now required to give Notice to all Unit Owners of every Board meeting, regardless of whether it is open or closed, and the Notice must be given to the Owners at least ten (10) days before the meeting and shall state the time, date, place and agenda of the meeting. There is an exception to this requirement if a Board meeting is called to deal with an emergency, which is not defined.

• If any meeting materials are distributed to the Board before the meeting, they must at the same time be made “reasonably available” to the Owners. This requirement does not apply to copies of unapproved meeting minutes or matters reserved for executive session.

Finally, just because you have reached the end of the column does not mean you have reached the end of changes to the Condo Act. Part II is next time. Just remember, I had nothing to do with any of this.