Amendments MUST be Recorded to be Valid

Our Firm was recently hired by an association in Westerville, and another in Dayton, Ohio. Both associations were under the impression that they had enacted valid and legally binding amendments to their Declarations. The Westerville association thought they enacted a "no-leasing" amendment. The Dayton association was under the impression that they had properly reduced their quorum requirement of their annual meeting to "those Owners present in person or by proxy."

Both associations were surprised to learn their amendments were not valid or legally binding because the associations never properly recorded the amendments with a filing at their local County Records Office.

Ohio Revised Code Section 5311 clearly mandates that amendments must be recorded to be valid. Community association boards would be wise to be aware of the two step process to be followed to enact a valid and legally binding amendment. An overview of the two steps are as follows:

STEP 1

A. Decide on topic needing amendment

B. Cover letter to all owners explaining reasons for amendment (Kaman & Cusimano provides)

C. Consent form ballot for each owner (Kaman & Cusimano provides)

D. Board reviews, approves, and distributes to owners

E. Enclosed self-addressed stamped envelope for return of consents

F. Meeting to answer questions (caution - some documents require a meeting)

G. Count percentages* to determine if required approval achieved

*Some documents establish one vote per unit/lot

H. Repeat until passed or defeated

STEP 2

A. Notify Kaman & Cusimano of percentage obtained

B. Amendment document prepared for recording by Kaman & Cusimano

C. Board executes amendment document which must be notarized

- Affidavit as to number of consents received

- Affidavit as to mortgage consents (if required)

D. Mandatory recording with County

E. Distribute copy of recorded amendment to all owners (caution - some documents require distribution by certified mail)

$250,000 FDIC Insurance Limit Extended

As discussed in our recent seminar entitled "The Financial Crisis - What Every Board Member Needs to Know," the FDIC Insurance limit on bank accounts was increased from $100,000 to $250,000. This increased limit was set to expire on December 31, 2009. However, the FDIC recently extended the higher insurance limit of $250,000 through December 31, 2013. An association's board would be wise to make certain that no more than $250,000 of association funds are in any one FDIC Institution.

It is also crucial that all association funds are deposited in an FDIC insured account. As of July 11, 2009, fifty-three (53) banks have failed nationwide. If a bank fails and its accounts are FDIC insured, the FDIC will reimburse the account holder for the amount in the institution, up to $250,000. If funds are placed in non-FDIC insured accounts, when a bank fails, the account holder could lose all deposited funds.

In light of the above, association boards are clearly fulfilling their obligation to the owners by making certain that association funds are deposited only in FDIC insured accounts and in an amount no greater than $250,000 in any one institution.

Super Lien Article in Columbus Dispatch

On Sunday, July 5, 2009 the Columbus Dispatch ran a feature story reporting on the Ohio Super Lien. That story, which reported on the progress of getting this legislation passed, can be viewed by clicking the following link:

Columbus Dispatch Super Lien Article

We will keep you updated on this blog with further status updates and will inform you as soon as this proposal has been introduced.