Open Board Meetings #2

Refer to Maryland House Bill 552
Closed meeting for specific issues only i.e indivisual assessment discussions, legel matters with legal council.

Donald,
Find out when your association will be turned over to the members. Right now, you don't stand a chance of changing your (actually, the developers documents), he has absolute control, and controls the board and not much you can do. Don't send any letters until you understand where you stand. Find out the turn over date, approach his Board if you can, if there are owners on this board approach them and and satisfy yourselve what really is going on. Chances are you won't like the answer. Then get back here and let us know what you found out. The developer is in control, can the owners move him, remains to be seen, but it won't be by forcing him or requesting him to change the documents, he wrote the damn things, he did not get approval from anyone but his lawyer, and he registered them at the court house. You will want to on line search all the documents he filed at county court house considering you association or any other interesting information on record...all public information and usually free for download. Know your adversary, if he is indeed one. He may turn out to be be a great guy and realizes the profit in keeping good relations, or he could be more interested in the bottom line and knows he has already dealt with you.

Thanks Robert & Mary, it appears that this may be a thornier issue than I expected. Perhaps I was being naive thinking that the developer would be receptive to what seems like a pretty reasonable request. You posed some questions, Robert, for which I need to determine the answers. I moved into this community just before the last HOA meeting in DEC 2009 and there was only one person representing the board and I believe he was a representative of the builder/developer. This developer has several other communities in the Myrtle Beach area and, as Mary alluded to, I’ve learned that the By-Laws in our docs appear as boiler plate and are the same, except for names, as used in at least one of the other communities.

Mary, I’m very reluctant to wait until after the transition to take any action. It’s possible that a new board may quickly see an advantage in closed board meetings and create such a rule; once made it could be very difficult to reverse as now you have to convince the board that they were wrong. If possible, I’d like to take steps that may help avoid even getting into such a situation – I’d really like to get in front of this issue prior to the transition.

SC is, I believe, in the process of instituting HOA legislation and I understand that they are leaning towards board openness. It’s possible that such legislation could resolve my issue but I don’t care to just wait and hope. I’m going to try to dig up some answers to Robert’s questions, see where I stand and decide how best to proceed.

Donald,Mary is right of course, except I think she would agree there are steps and plans and procedures that you can look at, outside your documents.
You still have rights, granted they are certainly not something that will make you friends with your developer of the developers board or the developers M/c.

Keep trying to resolve this, keep good records and if all else fails, post back again. But first, make your presence felt to the developer and the Board and MC and if you got a couple other owners interested, take them along to any meetings you attend or set up. Again try, to resolve your differences, but keep records of events. You get into this,, you may find there is no cause for concern, but make sure.

DonaldM3 Oh yes Donald our CCR's requires 50%+1 approval vote of all our members to make any changes to our CCR's. JerrellC Florida homeowner

Thanks, Jerrell, for sharing. One of the bits of information I was seeking in my original post was which states have legislated (mandate) open board meetings. Now I have CA, AZ, FL (for sure) and DE is questionable. I’m sure there are others but at this point I am lacking supporting information.

I don’t agree that what you describe “sounds like a small dictatorship”. To me it sounds like a mini democracy. You elect your legislators and they legislate. My issue is that they legislate in openness and my greatest concern is the time subsequent to the developer turn-over when there is a Homeowner populated Board of Directors acting on behalf of the HO’s. Although appealing at times, I would not expect the ability to vote at a board meeting and that’s why I elect qualified and dedicated (ideally) board members. If any of my board members are failing their HOA, I want to be aware of this so I can recall them or vote them out in 2/3 years and open board meetings help in this regard. Open board meetings are conducive toward a congenial relationship between the BOD and the Homeowners whereas closed meetings, on the other hand, perpetuate suspicion and distrust.

Robert, as usual, brings up some interesting points. He asks when prospective owners have the right to find out the content of the CC&R’s. In PA, where I was a Realtor some years ago, I recall that prospective buyers were required to be given a copy of the CC&R’s at the time of signing the Agreement of Sale. They then had 10 days to review them and if there was something in the covenants the prospective buyer did not like he/she could then withdraw from the AOS.

Donald,

The Virginia Property Owners Association Act specifies:

"A. All meetings of the board of directors, including any subcommittee or other committee thereof, shall be open to all members of record. The board shall not use work sessions or other informal gatherings of the board of directors to circumvent the open meeting requirements of this section."

The statute also defines a limited list of valid reasons for the board to convene in executive session such as to consult with legal counsel...

RobertR1 Well robert to your first question. Yes Florida law is clear on this. Florida chapter 720.307 on home owner associations under Transition of association control in a community.Par (1)(a)Three months after 90% of all parcels in all phases of the community that ultimately be operated by the homeowner's association have been conveyed to the members. Its hard for me to believe that a developer would retain hold on 10% just to retain control. In our subdivision the developer immediately sold off all his lots to at least three other builders in the initial stage of development. I believe its boiler plate language in Florida where the developer is a class B owner and the owners are class A owners with 3 votes given to the developer and 1 vote given to the owners. After installation of the utilities in the subdivision the developer had little to do with anything that went on. He paid the management company to manage according to our CC&R's after that. So you might say we really didn't have a declarant just by name only in the corporation documents was the developer involved. Thats also why we never had any meetings befor turnover. I asked the management company was there any minutes of any previous board meetings. She said there wasn't any minutes of any board meetings befor turnover. In our membership and voting rights class B membership shall cease and become class A members when the number of votes assigned to class A members equals the number of votes assigned to class B members. As lots are sold off this happened in July of 2007. We have 473 lots in our subdivision. When 355 lots are sold off leaving 118 lots this is the point where the declarant would become class A member. The above interjection may explain why we never had any meetings befor turnover. This was the first time anyone ever saw the developer. I might add he never said a word just acknowledged that he was the developer. The budget we had at turnover in January 2009 was made up by the PM. It was accepted by the current board without questions. ( the PM gave their company a 11.3% raise). Three board members were voted in at turnover. President, Vice President, and Secretary/Tresurer. We had a total of three board or HOA meetings last year. All members have the right to speak, ask questions, or give suggestions, etc., but do not have any voting power in how the board spends our money. The only vote the owners have is to vote in new board members or recall them. The builders do inform you when you purchase your home about the HOA restrictions. The association was incorporated in Feb 2003 with the first home deeded in late 2003. Construction was very steady until late 2008 and came to a crawl after that. We now have three vacant lots to full buildout. I've lived here since March 2005. I hope all the above explains how our HOA has come to exist. JerrellC-- Florida

RobertR1 you do have a lot of questions don't you. Turnover was January 28, 2009 even though the 90% rule by state guidelines was not followed. It hapened to be Sept 30,2009 by looking at when deeds were recorded. I did my own checking on this. Ballots were supposably sent out to all members to vote before hand. There were twelve people who wanted to run but six were disqualified by the property manager because they were not current in their dues. It was kind of a circus at the turnover where ballots were being handed out to anyone there. We had a total of 42 people there. There was never a roll call or verication of who actually was voting. Every owner has one vote for their lot owned (max one vote if multiple lots are owned)Votes were counted by a comittee of the developer and his secretary and a couple of volenteers from the members. Each perspective board member had a chance to introduce themselves to the membership. Each was given about 3to5 minutes to speak. After that the PM said who the winners were. That was the end of the meeting. The membership was not asked to vote or approve the budget at turnover as I said it was already made up befor years end 2008, and the board just accepted it as given by the PM. We still have the same PM. The 2010 budget was also made up by the PM and accepted by our board. The few meetings that we had in 2009 were not very well received by the membership. There were a lot of complaints and dissatisfaction expressed by many people about many things manily petty complaints, but some were reasonable. There was no accounting by any CPA of the financial records. Just a year end report given of the financial condition of our association. There was no attorney present at turnover. There is now one committee(two people)for the ARC committee set up. No the board we now have is not very stable. One member said he does not plan to run again. At January 29 we had elections for a new board. We did not have a quorum and the PM said the existing board will remain in office. It almost turned into a riot with many outburst from several people. A week later we had a BOD meeting. At this meeting the board said we would have another election. I have heard it wil be on April 6. I don't expect we will have any change in the board makeup if it is done like last year. We have received a nomination form from the PM to be returned in by the first of March. I am planning to run. I hope to bring a little more common since to the board and watch over our expenses closely with control over writing checks to our maintainence people. Wish me luck. JerrellC-Florida

Well Jerrell,
I do thank you for all the information and since what we do around here is give opinions, I will give you mine. If you are close to accurate in what you are saying, it appears just about everything in the association is dysfunctional. Your history reads dysfunctional and it seems to be rolling along that way. If that assumption is close to the truth then there are lots more questions to ask, but I'll ask only one. Why did your association let this all happen? Doesn't it appear to you all that at this point and maybe before the management company runs the train. Not supposed to be this way, and it is the owners responsibility to set the train back on the track. You can't get folks to come help you because your problems belong to all of you. It's a mess.

What would I do? Well if you are going for change you have to know what to change, you find that out by learning the truth about what is going on there. Go back to the court records and follow your history through the creation of your complex. This will raise many questions. Request to find these answers by looking at the association records. Follow your documents on how to do this. It should be a simple process, you request specific information, they allow you to review the documents. I suspect it will turn out to be far from simple, then you begin to get an idea of who you are going up against. You desperately need support, you must get organized and do a better job and know more than who ever is your adversary. It will be long, hard and maybe expensive, but you all made the bed, you have to sleep in it.

Finally, don't take anything as I say as written in stone. If it helps, good, if it don't, throw it out. Your desire to get on the Board is commendable and you can bring change from within, if, you can be in the majority and have the talent and drive. It won't be done by a rider in a white horse, it will be done by hard work, smarts and dedication and people. Let this post stand a while and see what other folks think, the more that post the better the advise normally.

Virginia Property Owners Association Act requires open meetings of board and all subcommittees and these meetings must be publicized in advance. It is hard for me to imagine how an HOA board could get away with having meetings closed to those they represent.

MaryA1 You could be right but I've talked to three different association members, and they say theirs are the same as ours with 3 votes to the Declarant class B members and 1 vote to each property owner or class A members. JerrellC

Donald after transition depending on your documents you and your fellow H/O’s have the option to call a special meeting to change the By-Law to open the meetings. While generally changes are initiated by the BOD the H/O’s can change them as long as they don’t violate the law.

Donald,
Thanks for the ionfo, good for you to know.

Yes I am against you sending this letter to developer. Why? You single yourself out as a dissident.......like it or not, that is probably how the developer will take it.

But you get ten folks to sign your letter as representing 3o homeowners living in the association and you can make music. Then you will become not Jack.......but one of the homeowners that formed a private group outside the organization and are gearing up to take over this place come turn-ower. They will say and think, this group is serious, they are thinking long term, they are organized, they have strong leadership, they have a war chest, thay have set up a web site to inform their fellow owners of how this association works, they are ready to elect their officers the day of turnover and they will be at the table. In the meantime they will have requested and recorded numerous advances to the developoer to be more involved in the finances of the organization, they want to know about the reserve fund, they want to know about these mechanics liens against the developer that they picked up off the county court records, etc, etc.
Which letter would you rather sign?

Mary,
Donald's original post quoted this:

rticle 3.10 of our By-Laws reads: “No member of the Association shall have any right as an Association Member to attend any meeting of the Board, except such meeting of the Board as the Board of Directors shall, in the exercise of its sole discretion, open to the membership or any other person.”

Now it seems to me the developer has pretty much established the pecking order .
A face to face meeting might work, but at what cost to Donald at this point. Do you think a face to face meeting will open any doors that the developer has not seen fit to open up to now. He would much rather let things play out as the have been and as he knows he can make happen withing the documents he wrote.

But, I respect your opinion and believe Donald should give it serious consideration. He could lose a little face but there is not much the developer can do to him, and it just may cause the developer to see the light.

Mary & Robert, I think I’m going to go with a letter; I am not concerned about ‘losing face’ (any change in my face would be an improvement). Although I do not care to be a future board member, I do plan to be involved in the community. The letter’s probably lacking in sugar but any vinegar detected here? What would you change?

March X, 2010
RE: Happy Homes CC&R's & POA Transparency
Happy Homes Board of Directors
C/o Bossy Management Services
P.O. Box 0000
Myrtle Beach, SC 00000

Dear Happy Homes Board of Directors,

As a resident of the Happy Homes Property Owner’s Association in Myrtle Beach, SC, I am writing to respectively express my opposition to Article 1, page 2 of the BY-LAWS of the Happy Homes POA documents where it states, “No member of the Association shall have any right as an Association Member to attend any meeting of the Board, except such meeting of the Board as the Board of Directors shall, in the exercise of its sole discretion, open to the membership or any other person”.

This Article gives the future HO (homeowner) populated BF Board of Directors the authority, at their discretion, of causing Happy Homes board meetings to be held as closed. Such authority goes beyond what any HOA board should be allowed to exercise. Once such an egregious rule is established, by a neophyte Board of Directors, it will be difficult to reverse. Proactive steps taken prior to the HOA turnover can, however, prevent such a detrimental policy from even being considered. As in any HOA, the Happy Homes Homeowners will be better served if its Board of Directors, while acting on their behalf, are acting in a transparent manner. Openness helps avoid suspicion and distrust which otherwise is easily perpetuated.

States, such as CA, AZ, FL, and VA, being mindful of the importance of democratic openness, have legislated that HOA boards within their state are required to hold all board meetings as open to its members. The Virginia Property Owners Association Act reads, “All meetings of the board of directors, including any subcommittee or other committee thereof, shall be open to all members of record. The board shall not use work sessions or other informal gatherings of the board of directors to circumvent the open meeting requirements of this section.” South Carolina has been working towards HOA legislation and my understanding is that they appear to be inclined towards openness.

Before moving to Happy Homes, I lived in the Less Happy HOA community in X where the developer inserted the following section into its By-Laws, “... all meetings of the Board shall be open to all Voting Members ...”, thereby requiring all board meetings to be held as open to its members. Board members are, after all, elected by and serve at the pleasure of the HO’s; if they then function in secrecy, suspicion and distrust are a real and potentially harmful result.

I have personally served on the HOA Board of Directors of Real Happy in X, PA, More Happy in XX, MD and Less Happy in XXX, SC and except for Executive Sessions, our board meetings were always rightfully held as open to the HOA membership. Not only were board meetings open, a Homeowners Forum was inserted on the agenda, near the beginning of each board meeting to allow HO’s to express any concerns they may have regarding the HOA and the way its business is conducted. This openness is conducive towards a congenial relationship between the Board of Directors and the Homeowners who elected them.

The intent of my letter is to appeal to you to consider amending Article 1, of the Happy Homes BY-LAWS such that when a HO populated BOD is created (later during turnover of the HOA to the Homeowners) it will have been mandated that board meetings will always be held as Open to the membership.

In the best interest of the Happy Home Homeowners, I ask your serious consideration of this issue. I’m happy to speak, meet with you or to work with you on this matter if you like.

I look forward to your response. Thank you.

Sincerely,
DonaldM, Happy Homes Homeowner

Donald,

Very good letter. No vinegar detected.

You may want to consider suggesting the bylaws be amended to state that only during declarant control do the members not have a right to attend board meetings. That way once the assn has been transitioned that restriction will not apply.