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Are Your Bylaws Blocking Your Success?

October 31, 2012

Among the housekeeping Ryan Conrad, RCE, e-PRO®, started tackling at the Lehigh Valley Association of REALTORS®, Pa., when he took over as CEO in 2011 was a review of the bylaws.   

For more than 10 years, the bylaws hadn’t been fully reviewed or updated (with the exception of required NAR amendments). Many existing provisions didn’t even make much sense anymore, Conrad says.

By way of example, he points to a rule in the bylaws that prohibited more than one member from the same office to serve on the board at the same time. “Although there’s some merit to this provision, in practice it discouraged highly qualified members from running for the board because someone in their office was already serving,” Conrad explains. Plus, considering the flood of offices consolidating in the area, it led to board members either resigning from the board because they joined the office of another board member, or passing up great business opportunities because they would have been forced to resign from the board. This issue and others were the impetus for the review that revealed even more instances of outdated and ineffective provisions, which hindered association progress.

For help auditing its bylaws, Lehigh Valley turned to Hank Lerner, director of professional practice for the Pennsylvania Association of REALTORS®. Lerner helped Conrad guide his association through a revision process. The bylaws now reflect the current industry and changing business practices. Here’s Lerner’s advice on updating your REALTOR® association bylaws.

1. Know your limitations

As a REALTOR® association, you are highly dependent on NAR rules and policies that dictate what must be included in, and excluded from, your bylaws. As a corporate entity, you are also subject to various state and federal laws regarding nonprofit (or for-profit) corporations. And in most cases, your bylaws themselves say that Robert’s Rules will dictate your operations unless you have bylaws to the contrary.

Since there is likely to be a number of bylaw provisions that can’t be changed, or can be changed only within certain parameters, it’s good to have a copy of the current bylaws highlighting which items can’t be touched.

2. First, say it in plain English

Unfortunately, it’s not unusual for a committee to write a sentence that sounds great, only to spend an hour arguing over what it really means. Before you start drafting clauses in bylaw-speak, talk through and write down in plain English what you’re trying to accomplish. Compare your formal version to the plain-language version to see if it really does the job.

3. Consistency, consistency, consistency

I recently read a set of bylaws in which the section on officers required the secretary to send a written meeting notice to members 10 days before elections. But a revision to the elections section would have required that a proposed slate of officers be provided to members at least 30 days prior to the election. Both are perfectly good rules individually, but when they were read together, members could have received a slate of officers 20 days before they were actually told of the election date—and that didn’t make sense. At some point before you finish your process, read the new bylaws from top to bottom to make sure there are no such inconsistencies.

Speaking of consistency, keep track of all defined terms to ensure their proper use. If you use the term “board” to refer to the “XYZ Board of REALTORS®” in one section, but to the “board of directors” in another, it may be difficult to tell which body is being referenced when the word is used out of those contexts.

4. Less can be more

Don’t try to cover every single eventuality in your bylaws. Use them to set up the major elements of your governance, but put the details in a policies and procedures document so it’s easier to adjust them as circumstances change.

For example, your bylaws should cover your officers, board of directors, and major standing committees. But additional committees, subcommittees, task forces, etc., should be listed in a policy document so that they can be more easily adjusted over time.

5. Bylaws are operational, not inspirational

Some associations regularly ignore their bylaws in favor of practices that just seem to work a bit better. Don’t be that association. If there’s an election process that works better than the one in your bylaws, change the bylaws. If you can’t get enough volunteers to fill all the spots on your board, maybe you should reduce the size of the board instead of regularly leaving spots unfilled. At the end of the day, ignoring your own rules is a quick way to get yourself in trouble. And frankly, if members see you ignoring the bylaws on a regular basis, it can make them wonder what else you’re not doing correctly.

6. Use your Resources

It’s very easy—and sometimes preferable—to borrow language from other organizations when drafting your bylaws. Try to get copies of bylaws from several other groups, including some that aren’t REALTOR® associations, so you’ll have sample language to draw from. Just remember that every group has different needs, limitations, and styles, so don’t just copy and paste text without editing it to fit your specific circumstances.

Don’t forget that in most cases, you’ll want to get your attorney involved in a bylaws review. Make sure to take advantage of other available resources, too. Local associations should check in with their state associations to see if there is legal or policy staff who can help. Since NAR staff will have to review your bylaws anyway, you may find it helpful to speak with them before your final vote to be sure there aren’t any obvious problems.

2012 Model Bylaws for Local Member Boards

The 2012 NAR Model Bylaws are designed for boards of REALTORS® to use as a guide in adopting suitable local board bylaws. Remember, local association bylaws (and other governing documents, such as MLS Rules and Regulations) must be sent to the Member Policy Department of the national association every two years for review.

—Contact Hank Lerner, Esq., at 800-555-3390 or hlerner@parealtor.org or follow him on Twitter: @PARhank