KW3 (California)
Posts: 146
Posts: 146
Posted:
Hi All,
We, in CA, found at least two confusing elements in our 26+ years old management contract (never amended, changed, or signed new one) related to our declaration and bylaws:
1. Our declaration requires that the management contract must provide for termination by either party w/o cause and w/o fine on 90 days or less written notice, and for cause on 30 days written notice. However, our MM contract only has such provision: This contract will automatically renew unless canceled in writing by either party 60 days prior to the EXPIRATION DATE (which is the end of every year).
Q: How do we deal with this situation? Can we claim that this contract is void or invalid since it does not meet our declaration requirement? And so the management agent is dismissed? Or the board has to call for reviewing the contract and make amendment or sign a new contract in compliance with declaration? (I would prefer taking the 1st option if legit.)
2. Our bylaws state that authorization of signing association checks shall be determined by the board from time to time (I assume whenever there is a new elected board). One of the provisions for financial services in our MM contract states that ALL checks and drafts will be signed by 2 board members. When our new board came to update our bank signature cards and review our check signing policy/procedure, we found that for our reserve acc, it rightly requires 2 BDs to sign. But for the opr acc, the management co was authorized to sign all checks from opr acc. And so, there are all old BDs signatures on the old reserve acc card, but there are 4 signatures from MM co and 1 BD's signature on the old opr acc card. When the new BDs came up questioning the issue on opr acc and making a motion requiring all checks (reserve & opr) shall be signed by BDs, the old BDs voted to oppose claiming that the MM was already authorized (hired) to sign all checks from opr acc. The motion failed (one of the new BDs confused, unaware of the issue joined the group opposing).
According to the posts from other thread, it is "proved" to be a bad and troublesome idea of authorizing any 3rd party (e.g., managing agent) to sign/issue checks from association fund.
Q: How do we resolve this issue? Can we request to review the record of approval authorizing MM to sign checks and, if available, claim its invalidity because their authorization conflicts with the MM contract and they didn't amend or sign a new contract? Bottom line: MM still has to follow the contract, which unamended does not authorize MM to sign checks, but clearly states all checks are to be signed by BDs.
Appreciate all comments and advice.
We, in CA, found at least two confusing elements in our 26+ years old management contract (never amended, changed, or signed new one) related to our declaration and bylaws:
1. Our declaration requires that the management contract must provide for termination by either party w/o cause and w/o fine on 90 days or less written notice, and for cause on 30 days written notice. However, our MM contract only has such provision: This contract will automatically renew unless canceled in writing by either party 60 days prior to the EXPIRATION DATE (which is the end of every year).
Q: How do we deal with this situation? Can we claim that this contract is void or invalid since it does not meet our declaration requirement? And so the management agent is dismissed? Or the board has to call for reviewing the contract and make amendment or sign a new contract in compliance with declaration? (I would prefer taking the 1st option if legit.)
2. Our bylaws state that authorization of signing association checks shall be determined by the board from time to time (I assume whenever there is a new elected board). One of the provisions for financial services in our MM contract states that ALL checks and drafts will be signed by 2 board members. When our new board came to update our bank signature cards and review our check signing policy/procedure, we found that for our reserve acc, it rightly requires 2 BDs to sign. But for the opr acc, the management co was authorized to sign all checks from opr acc. And so, there are all old BDs signatures on the old reserve acc card, but there are 4 signatures from MM co and 1 BD's signature on the old opr acc card. When the new BDs came up questioning the issue on opr acc and making a motion requiring all checks (reserve & opr) shall be signed by BDs, the old BDs voted to oppose claiming that the MM was already authorized (hired) to sign all checks from opr acc. The motion failed (one of the new BDs confused, unaware of the issue joined the group opposing).
According to the posts from other thread, it is "proved" to be a bad and troublesome idea of authorizing any 3rd party (e.g., managing agent) to sign/issue checks from association fund.
Q: How do we resolve this issue? Can we request to review the record of approval authorizing MM to sign checks and, if available, claim its invalidity because their authorization conflicts with the MM contract and they didn't amend or sign a new contract? Bottom line: MM still has to follow the contract, which unamended does not authorize MM to sign checks, but clearly states all checks are to be signed by BDs.
Appreciate all comments and advice.