On Saturday May 16, 2020, Governor Walz signed into law a much-needed update to the Minnesota Common Interest Ownership Act (“MCIOA”) making governing document updates and amendments easier. Importantly, these updates apply to all common-interest-communities in Minnesota, even those that are otherwise are not subject to MCIOA.
Previously, most association governing documents required homeowners to affirmatively cast a vote in favor of an amendment—either at a meeting or in a mailed ballot. This meant that if a homeowner did not respond to the mailed ballot or did not attend a meeting to vote, it counted as a “No” vote. As Property Managers and Boards of Directors can attest, many homeowners simply do not have the time or interest in voting on amendments to their association’s governing documents. Passing these governing document updates was difficult, time consuming, or sometimes simply not possible.
The new law gives associations new options to get approval from homeowners. Whereas previously, a non-response to a mailed ballot or non-participation in an in-person vote counted as “No” votes, under the new law, these may be counted as “Yes” votes. If a mailed ballot is sent out and no response is received within 60 days, that vote now counts as a “Yes.” Furthermore, if a meeting is properly called to vote on an amendment, any votes that are not cast, either due to indifference or the fact that the owner did not attend, count as “Yes” votes. This provision will allow associations which otherwise could not get its membership to approve an amendment to do so.
In fact, as we recently noted here: https://www.sjjlawfirm.com/blog/2020/05/covid-19-and-the-need-for-electronic-meetings/, amending Bylaws to allow remote member meetings will likely be important for many associations in the future. With this new legislation, many associations will have an easier time updating their documents to allow a remote member meeting by the fall, when many annual meetings occur.
The new law also helps associations that have older, and more onerous, amendment requirements to lower those requirements with the permission of the Court. Many common-interest-communities require sixty-seven percent (67%) of the membership to approve many amendments to governing documents, but some older CICs may require seventy-five percent (75%) or even ninety percent (90%).
The new law gives Courts the authority to lower that requirement to sixty-seven percent (67%) if the association can show that it tried to get approval but failed to reach the higher threshold. Association who use this process will still be required to get at least 67% of the owners to affirmatively approve of such an amendment, but this will likely make some older documents easier to update.
SJJ has extensive experience in updating and amending association governing documents. In fact, we can often offer this service at a flat rate for associations, allowing you to know the cost before starting the process. Feel free to contact SJJ today for a free initial consultation to discuss your governing documents!
Finn Jacobsen, Attorney @ Smith Jadin Johnson, PLLC