The vote, and how it was changed

The Original Covenants — an Act of Dedication dated December 5, 1984 — required a 66⅔% membership vote to amend, and suspended the voting rights of delinquent owners.

The board instead opened the vote to all owners, including delinquent ones, and changed the approval requirement to a 51 percent majority of votes cast. Eighteen valid ballots came back: twelve in favour, six against. Among owners current on their assessments the split was ten for and three against.

The court's holding on that:

“Pursuant to 11 U.S.C. §§ 105(a) and 1123(a)(5), the Court finds that the manner in which Port Louis HOA adjusted the voting requirements for an amendment under the Original Covenants was fair and equitable.”

Section 1123(a)(5) is the provision that lets a plan provide adequate means for its implementation “notwithstanding any otherwise applicable nonbankruptcy law,” and the court relied on that language expressly as a route to preempt contrary state law, citing In re Heather Hills Amenities, LLC, 637 B.R. 168 (M.D. Fla. 2022).

A townhouse owner's motion to dismiss the petition for want of corporate authority was denied at ECF Doc. 345.

What the amended covenants do

The Amended Covenants, dated December 6, 2025, make owners responsible for both interior and exterior maintenance, require owners to carry individual insurance policies, and give the board authority to pursue injunctive relief or damages for violations.

In other words, the regime converted from something master-policy-shaped into something closer to a fee-simple subdivision. That is a structural answer to an insurance problem, and the Department of Insurance advice recorded in the opinion is why it was available.

What this does and does not mean for a Louisiana association

It does not mean an association can lower its amendment threshold. Outside bankruptcy the arithmetic is the Planned Community Act's, and it is demanding. R.S. 9:1141.14(C)(1) requires a supermajority to amend a declaration to “[p]rohibit or materially restrict the uses of a lot” or to “[i]mpose more burdensome restrictions,” and R.S. 9:1141.2(33) defines a supermajority as “more than eighty percent of the voting interest in the association” — the whole association, not those present. There is a one-year peremptive period to challenge an amendment adopted under that section.

Whether shifting exterior maintenance onto owners would even be a “more burdensome restriction” within (C)(1)(b), as against an allocation change under a different provision, is not a question any Louisiana court has answered.

What the case does mean is narrower and still significant: a Louisiana association's recorded amendment threshold is not absolute in bankruptcy. That is a reported decision on the facts of one insolvent 53-unit association, and it should be described as exactly that.

The other numbers in the opinion, and why they are worth quoting

Louisiana has no reserve-study mandate, no milestone-inspection regime and no statutory limit on assessment increases. What it has instead, in this opinion, is a court-found picture of what happens without them: 25 of 53 units delinquent, average delinquency above $20,000, dues of $380 to $400 a month, and a master policy the market would no longer write.

The Planned Community Act's answer to the funding half of that is procedural rather than substantive. R.S. 9:1141.34(A)(1) requires the budget summary to state “any reserves, and a statement of the basis on which any reserves are calculated and funded”; subsection (D)(3) permits — and does not require — establishing a reserve from surplus. R.S. 9:1141.32(C) supplies the collection lever: three or more missed months in any eight-month period after notice of delinquency lets the association accelerate twelve months of common-area assessments.

And it does not reach a unit owner's protected equity. Louisiana's homestead exemption still has no exception for association assessments; the 2025 bill that would have created one for condominiums passed both chambers unanimously and was vetoed.

What this means for a board

• If you are a townhouse regime, ask who should be the named insured. The opinion records Department of Insurance advice that an association of townhomes should not be the insured on a master policy, because it does not own the property it insures.
• Treat chronic sub-50% turnout as a governance risk, not an annoyance. An association that cannot muster a quorum cannot amend anything, and cannot respond to a shock.
• Use the acceleration trigger before delinquency compounds. Average arrears above $20,000 per unit is what it looks like when nobody does.
• Do not read this as a plan. Subchapter V is an insolvency proceeding with costs, a trustee and a confirmation standard, not an amendment mechanism.

What to watch next

Whether the confirmation order was appealed, which we could not establish. And whether any Louisiana state court is asked to enforce the Amended Covenants against an owner who did not vote for them — which is where the preemption reasoning would meet Louisiana property law.