MRTA can have a serious effect on your HOA’s existence! Find out how.
By: Ana Sanchez Rivero
Most of us move in to homeowner associations because we want to live in a neighborhood where owners have a minimum requirement to maintain their home. Can you imagine your neighbor painting their home in bright purple? Without the association’s governing documents, the association may not have a way to enforce a color scheme or worst may not have a way to maintain the common areas in the community. An association’s governing documents are at the core of its very existence. Without their governing documents, a homeowner association cannot function.
In this week’s podcast of Community Association Matters we interviewed Daniel Lopez, Esq. an attorney with the Law Offices of Frank Perez-Siam, PA to discuss the Marketable Record Title Act (also known as MRTA) and the impact it plays on the validity of homeowner association governing documents. He explains that MRTA was passed in the 1960s as way to simplify title searches performed in the transfer of title from one owner to another. The passage of MRTA extinguishes any liens on a property that are older than 30 years and thereby making it easier to issue marketable title.
As a result, homeowner association governing documents also become extinguished. In order to prevent this from happening in your homeowner association, you should contact your association’s attorney and have them review your governing documents to ensure that they have not expired or better yet to begin the process of renewing your homeowner association’s governing documents before they expire. Daniel states that the process to renew the governing documents before they expire is much easier and less costly than if an association had to revitalize their governing documents.
In order to renew your governing documents, Daniel recommends that you start several years ahead of the 30 year mark. The steps to renew your homeowner association’s governing documents are very simple. First, contact your association attorney so they can guide you as to the correct steps that your association must take and prepare the documents that must be mailed out. Second, the Board of Directors must schedule a membership meeting and the agenda must specifically state that the Board is going to renew the documents. Third, at said meeting 2/3 of the Board of Directors must vote in favor of renewing the governing documents. Lastly, these documents should be recorded by the association’s attorney with the clerk of courts in the county where the association is located. The association’s documents are then renewed and valid for another 30 years.
The process is much more complicated and costly if the governing documents are not renewed and expire. Again, Daniel advises association board members to contact their association’s attorney to review their documents. In order to revitalize the governing documents, the association must first name three (3) owners to a committee for this purpose. The name, address, and phone numbers of the committee members must appear in all correspondence sent out to the owners. The association’s attorney should prepare all of the required documents but the committee member’s information must be included. A membership meeting has to be scheduled and the appropriate notice must be given to owners of this meeting. Most associations require a 14 day notice for membership meetings, but check with your association’s attorney before sending anything out.
The documents must then be mailed out to all owners for them to approve. A majority of the membership must approve the revitalization. As you can imagine this is a daunting task for any community because participation in association meetings are typically very low. It is important that the Board of Directors convey to the owners the importance of revitalizing the governing documents. Daniel adds that the law requires that the revised governing documents cannot be more restrictive. In addition, the proportional ownership percentage for each owner must remain the same. The amendment provisions must also remain the same and if there were no amendment provisions, the new provisions cannot require less than 2/3 of membership approval.
Daniel recommends that association use the same language as in the original set of documents. This will encourage owners to vote in favor of revitalizing the documents because there are no changes. Once the owners have approved the revitalization of the governing documents the following documents must be sent to the Department of Economic Opportunity (DEO):
- A full text of the governing documents;
- Verified copies of the proposed governing documents and the previous governing documents;
- A legal description of every parcel in the community;
- The names of all of the owners;
- A verified copy of the writ of consents signed by the owners;
- Minutes of the membership meeting where revitalization was approved; and
- An officer’s affidavit that everything was executed in compliance with the statute.
The DEO has 60 days to approve or deny the declaration. After the DEO issues their approval, the association has 30 days to submit their Articles of Incorporation to the Division of Corporations. And then has another 30 days to record these documents with the clerk of courts for the county where the association is located.
Clearly it is easier to renew your homeowner association’s documents instead of waiting for them to expire and having to revitalize them. Don’t wait! Look into this now. For assistance in renewing your association’s documents you may contact Daniel Lopez, Esq. at (305) 630-2874 or via email at email@example.com. To listen to his podcast in its entirety please click here. You may also read Daniel’s full articles on MRTA by clicking the following links.