Covenant Interpretation

We are having a struggle in our neighborhood with interpreting the covenants. The bylaws do not indicate proper procedure to follow when there is a split on the board. We do not want to take it to court. What is typical in this situation. People have their heels dug in.

Hi William:

How many board members do you have? Usually the board is an odd number to avoid this situation.

Another option in a tie would be for the board to motion to take the issue to the general membership for a vote.

William,

It's not a decision for the membership.

If the Association goes to arbitration and wins, they may or may not recover legal fees and court costs. If the Association goes to court and wins, they have a better chance of recovering those costs.

You said that the Association has sued the homeowner. This indicates that papers have already been filed in court (vs. just having the lawyer send a letter threatening legal action).

Having a second, or third opinion, is always a good option if you can afford to spend that money. The Association will not be able to recover legal expenses for another opinion. This could amount to $1,000 - $2,000.

My advise, since the Association has already taken the issue into legal action, that you let the attorney handle it. You are on record of being against taking it this far and if the home owner requests arbitration you can be a supporting voice within the board. Unfortunately, as a board member you really can't and shouldn't speak to the owner about this issue on your own.

That's my two cents, for what it's worth.

Tim

My thought, for what it's worth (considering I don't have much to go on) is that your Board isn't split - it's 3-2. If you were outvoted, your duty now is to support the decision that your Board made. All decisions do not need to be unanimous, but the support for the action that results needs to be 100% backed up by all the Board members.

I'm not saying this only because it's my opinion, but because it's a well-known principle of HOA governance. If the Board votes, and your governing documents confirm that a majority vote is all it takes to pass a motion, then your Board has done its job, and now you all must live with the decision. If you don't support the action in solidarity, and instead seek to undermine the authority of the Board to act because the decision didn't go your way, then chaos will ensue. You can certainly state for the minutes that you don't believe the action to be in the best interests of the Association, but unless the action is illegal, it's only your opinion that it's not the best course to take. You may in time turn out to have been right, or wrong, but only time will tell.

As for taking the matter to the homeowners: The homeowners elected you and the other 4 Board members to conduct business, to deliberate and debate possible actions in any matter of business that comes before the Board, to vote, and then to move forward.

Finally, if you truly believe the attorney is "milking" your Association funds, then you have the right to move that the attorney's fees be challenged in arbitration. This can be binding or non-binding, depending upon the situation and the state. If someone seconds your motion, and it's deliberated, and then a vote is held, and you and two others vote to take the matter to arbitration, you wouldn't then object that you should get a second opinion, or start talking with homeowners to question whether or not a 3-2 split vote is sufficient grounds to act, will you?

Do you see my point?

Your currently in a sinking ship. Hopefully we can get some air to ya soon...I hate to call things mistake but I see a few in this situation. The FIRST and foremost is the idea of filing a lawsuit against a homeowner in the first place. Here is a rule of thumb to keep in mind in a HOA at ALL times:
SUING A HOA IS SUING YOURSELF. A HOA SUING A MEMBER IS SUING ALL.

Your HOA has itself in a TOXIC loop. A lawsuit is just a "Judgement". If the HOA does win it's lawsuit the owner can simply walk away from the property and NOT pay the judgement until they want to or time limit is up. Which can be up to 7 years or more. In the meantime the HOA has paid the legal costs and is still out the money owed.

This is why a LIEN/Foreclosure process is the strongest tool for a HOA to have and to utilize. A Lien is a "Judgement" to. Except for a Lien the owner can NOT sell their property/home until they pay the judgement off. They can rent the property out but they can NOT sell it without a clean title. Which means the HOA has the owner's feet to the ground. Plus the owner has to continue to pay the dues or the HOA can escalate the situation to foreclosure.

What your HOA should have done and can still possibly do is to fix the easement problem themselves. After they fix the easement problem, the HOA then Liens the homeowner for the amount of money it cost to fix it plus legal fees. Drop the lawsuit and reduce the legal fees by paying filing fees for the lien.

Second issue: I believe Convenants take precedent OVER the By-laws. It is the Convenants that are required to be filed with the state and what homeowner's are held to. By-laws are more of an option to supplement the Convenants. They don't have to be filed like Convenants or Incorporation paperwork. So whatever the Covenants say is what you go with.

There are more details of course but this should get you to atleast hear air bubbles. I'd suggest to your board to drop the suit and pursue the lien instead. Use the stronger tool in your arsenal instead of the least effective and costly one.

We have a similar situation within our Association. Sixteen months ago, the Board, using a new management company, started litigation against a homeowner. To date the fees have exceeded $100K. This was a homeowner to homeowner dispute, yet the Board at the time, with the advise of a new management company voted to take the issue to court. The homeowner got free legal counsel. The action taken by the Board was against provisions of the CCR's which stated "no litigation may be taken against any person or entity where the cost were to exceed $2500, without written approval of a majority of the members, even if you knew you would prevail". The two members who are party to this litigation are now on the Board and will stop at nothing to make sure the process continues. We have a 3/2 vote to continue this litigation and drain Association funds. As one poster said, " We are suing ourselves, with our own money".

I agree, as a Board if you have a split vote, you should support the decision once the vote is in, but there are times when you must do what is right for the community. In our case most Board votes are tied to the suppoort or lack of support of the lawsuit.

As far as the intrepretation of the covenants, the same attorney flipped flopped on their decision to go forward based on the property management in charge.