Board Member resigned

Started by DavidA7 • 16 replies • 2733 views

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DavidA7 (California)
Posts: 179

Posted:

Hello, we are a small 8 unit HOA complex in Southern California. Our CC&R's require that we have 3 Board Members. One Board member abruptly resigned without going through proper process. I think he just sent e-mail to management company and said I quit. He informed me of this and said that the Mgt. Co. was going to send out ballots and go through entire process at $150+ cost to Assocation. I sent e-mail to other two Board members and informed them of the following:

The Association DOES NOT have to go through sending out Ballots and go through the associated costs. I highly recommend that the Board immediately contact MGT CO. and inform them NOT TO send out ballots as the Board of Directors will fill any existing vacancies per the Corporation Code and/or the Davis Sterling law. This will save the HOA $150 or more per my conversation with "PERSON WHO QUIT"

The following two links provide the information regarding this subject

http://www.davis-stirling.com/MainMenu/MainIndex/Directorremovalrecall/tabid/450/Default.aspx

http://www.davis-stirling.com/MainIndex/AppointmentofDirectors/tabid/1368/Default.aspx

"Unless otherwise provided in the articles or bylaws and except for a vacancy created by the removal of a director, vacancies on the board may be filled by approval of a majority of the remaining directors on the board. Corp. Code §7224(a)." .....

Both myself and another person in the HOA informed the Board that they wish to serve. I also heard that one of the remaining two Board Members also wants to quit.

I have asked the Board to conduct an open meeting to assign a new Board member as defined above and not waste the Association money.

Question: Does the HOA have to go through the process I described or can they let the Mgt. Co. go through a ballot process? If the CC&R's require 3 people on the Board can the remaining two Board Members make a decision to tell the Mgt. Co. to go through the process? Thus, does the 2 BOD have legal standing to make these types of decisions? Etc...

Thanks,

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi David:

Because of the bold text below ... your HOA documents supersede state laws.

Unless otherwise provided in the articles or bylaws and except for a vacancy created by the removal of a director, vacancies on the board may be filled by approval of a majority of the remaining directors on the board. Corp. Code §7224(a).

Therefore, you need to check your governing documents for proper procedure.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Why would your MC do ANYTHING without direction from the board?

He had no right to direct this MC to take any steps and the MC has no jurisdiction over the board.

Time to remind the MC that it works for the board, not the other way around.

(PS - be sure your minutes reflect the approval of the resignatin, then fill the vacancy as directed in your own bylaws.0

DanielH1 (California)
Posts: 482

Posted:

I don't know why management companies do this. I doubt that they read your documents. (If they read your documents, they probably would have quoted them.) They probably just guessed and invented a solution that sounds good. Who cares what it costs in money, time and trouble?

It does depend on your documents but, most likely, if Board Members quit, the Board continues. If you had a 3-person Board and one person quit, now you can vote anything in with 2 votes, even to appoint a third Board Member. If another person quits, a single Board Member can vote on any and all issues (whoo-hoo, a dictatorship!) and appoint replacements. If replacements cannot be found, long live the King!

DavidA7 (California)
Posts: 179

Posted:

I advised the board to inform the MC not to proceed with Ballots and the Board to assign the third person for the remainder of the term per our CC&R's. I guess the Board could have informed the MC to proceed with ballots and be within their legal rights to do so. The only thing is the Board has not held any OPEN meetings this year to approve such a process. Would I have any gripe here to hold the Board accountable to have an open meeting to approve the resignation and to approve the MC doing this?

JanetB2 (Colorado)
Posts: 4,219

Posted:

Hi David:

The board should meet at least quarterly per Davis-Stirling Act at least for financial review:

http://www.davis-stirling.com/RegularMeetingsoftheBoard/tabid/1263/Default.aspx

REGULAR BOARD MEETINGS
"Regular meetings" of the board are regularly scheduled meetings that meet on a particular day, such as the 2nd Tuesday of each month. Meeting dates and times should try to accommodate, where possible, the schedules of directors, including religious schedules.

How Often? The frequency of regular meetings is normally found in the association's bylaws. Typically, boards meet monthly. Boards must meet at least quarterly even if their bylaws require only annual meetings. The reason for quarterly meetings is to satisfy the board's financial review requirements set forth in the Davis-Stirling Act.

Special Meetings. Special meetings of the board can be called as-needed.

SusanW1 (Michigan)
Posts: 5,202

Posted:

With 8 units, WHERE did the MC get a $150 cost for ballots/election?

RobW (California)
Posts: 279

Posted:

Quote:

Posted By DavidA7 on 03/14/2011 5:11 PM
I advised the board to inform the MC not to proceed with Ballots and the Board to assign the third person for the remainder of the term per our CC&R's. I guess the Board could have informed the MC to proceed with ballots and be within their legal rights to do so. The only thing is the Board has not held any OPEN meetings this year to approve such a process. Would I have any gripe here to hold the Board accountable to have an open meeting to approve the resignation and to approve the MC doing this?

This section of the California code is the crux of the matter:

Corporations Code §7224. Filling Vacancies; Resignation.

(a) Unless otherwise provided in the articles or bylaws and except for a vacancy created by the removal of a director, vacancies on the board may be filled by approval of the board (Section 5032)

If the articles or bylaws do not require that a resignation on the board be filled by a vote of the membership, then the remaining two directors constitute a quorum, and they are legally entitled to choose a replacement.

So...

Do the articles or bylaws provide for a different solution?

Rob

DavidA7 (California)
Posts: 179

Posted:

@SusanW1 - this is the amount I was told by the resigning Board Member - mailings/Inspector of Elections, etc..

@RobW - Our CC&R's are quite on the subject

@JanetB2 - LOL - I wish as our Board has refused to hold any meeting other than annual meeting for past two years. All other homeowners beside me don't give a damm and I don't have the money to hire an attorney to go after the Board on this issue. Small claims does not provide relief for this type of infraction thus I could not force their hand on the issue.

FINALLY

Today, received e-mail from all 3 Board Members saying they have resigned. No meeting nothing. I talked to our Mgt. Co. and they said well you know have to have elections versus having a sitting board assign new members for remainder of term. Now we have to go through elections which could take up to one month to complete and all the time with no sitting Board. Myself and one other homeowner asked the Board to just assign us to the Board without going through this rough tumble process that is going to cost us money and time.

I will never live in an HOA for the rest of my live after this. It has been such a joke. Really, there needs to be National guidelines/laws on HOA's that stop all this BS that goes around.

DanielH1 (California)
Posts: 482

Posted:

If the entire Board has resigned, I see no other option besides new elections ... if somebody is willing to run.

RobW (California)
Posts: 279

Posted:

Hold on a second: Who did the two board members send the email to?

Rob

DavidA7 (California)
Posts: 179

Posted:

Everyone: update

Received e-mail from President addressed to me and other person in HOA who wishes to be on Board and the HOA Management Co. indicating that that she was nominating me and this other person on the Board effective 3/20/11.

I then sent an e-mail as follows to the Mgt. Co.

X and myself have been verbally informed that that X(president) will be designating us as new Board Members to replace her and X as they are resigning from the Board. We are awaiting on final confirmation from X via e-mail.

The existing Board of Directors has the rights to assign new Board members per the Davis Sterling act and our CC&R's and bypass a nomination/election process. CC&R's information regarding filling of vacated Board positions can be found in Article III Section 4 (Vacancies) of ou Assocation bylaws. The filling of vacancies in this manner is until the end-of-term of the existing year.

Additionally, the incoming Board is not aware of any directives given by the outgoing Board to Coast Management to send out nomination applications for an election and thus incur the cost of such a process. It will be the directions of the new Board to Coast Management that nomination applications sent to Homeowners shall be null and void and no further process shall be continued regarding elections. When a third person presents themsevlves to the Board as wishing to be on the Board then the new Board of Directors will assign that person to serve on the Board to fill the 3rd vacancy.

X and myself will be posting required signage to hold an open Board Meeting and executive session meeting within 10 days of us becoming Board Members to discuss HOA issues and we would like to have as much information as possible to start setting directions for our HOA. Thus, could you please send X and myself complete January and February financials, update us on the status of late dues as they relate to Unit 1 and Unit 6 as they both are severely late on dues for various reasons, provide us an update on "name of Vendor" and update us on any other issues that you feel would assist us to get up and running in a timely fashion. Also a phone number and contact for "name of vendor" because if we are at a stand still with them completing the project I will be calling them next week informing them they have one week to complete the repairs to our property or we will be pursuing legal processes against them.

I'm in possession of the property keys as X handed them over to me.

We ask that you respond to this e-mail to X and myself that you are in receipt of it and will proceed in responding to the new Board members upon receipt of communication from X that she has assigned us as new Board Directors for "HOA NAME".

Naturally, names have been replaced by an X

The Management Co. rep read the above e-mail at 8am this morning as I received a read receipt via e-mail. BUT no reply from Mgt. Co. as of 11:30 today.

We'll see what happens but we consider this a closed issue and have a new Board.

RobW (California)
Posts: 279

Posted:

I hope it all works out for you David, but if all three board members (including your president) resigned effective immediately in writing (That includes e-mail.), then they can't legally appoint board members to replace themselves after the fact. Also, merely saying in an e-mail that you aren't aware of any directives to the management company to begin the election process has no effect on any actions the board actually took, and in fact, you are aware of the directive, so why would you state that you weren't? By the way, any legal actions the board takes before resigning are still in effect. Resignation does not nullify those actions. The new (legal) board would need to vote to cancel the directive.

Good luck!

Rob

SusanW1 (Michigan)
Posts: 5,202

Posted:

Your board will need a one-on-one with the MC and go over EVERY contract the HOA is involved with - including the one with the MC.

They sound like a loose goose and need watching after. Make sure your board gets its authority with the MC.

Good luck!

DavidA7 (California)
Posts: 179

Posted:

@susan - yes the MC is a loose canon and will be dealt with by the new Board.

MC acknowledged new Board and indicated will provide requested information once effective date is met which is this Sunday.

Time to fix the damage that was done.

Thanks everyone.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By DavidA7 on 03/17/2011 5:04 PM
@susan - yes the MC is a loose canon and will be dealt with by the new Board.

MC acknowledged new Board and indicated will provide requested information once effective date is met which is this Sunday.

Time to fix the damage that was done.

Thanks everyone.

Caution - Read the contract between the MC and the Association prior to dealing with the "loose cannon". Until you get into the records, you don't know what other issues you may discover first. I would suggest that the MC is informed that the Association will be adhering to the Davis Sterling Act and Corporate laws. Then do what you have been doing, trust but verify.

It's a shame that with only 8 units you require a MC vs. being self managed. Unfortunately, an MC is sometimes the only option if volunteers can't be found.

Question: Do you know why everyone is quitting? What issue might be there that they don't want to deal with?

DavidA7 (California)
Posts: 179

Posted:

TimB4

Thanks for advice - the new board will review everything especially the financials prior to moving forward.

Self-Management - quite an idea but I would not be willing to serve on a Board without a backing of a mgt. company for a multitude of reasons. Policy enforcement, liens on late payers, etc... Also, its a lot of work that I wouldn't even be able to put the time towards.

Quiting: Long story but the short is: 1) President has short-sold his home, VP is renting hers and not on property and won't work with anyone other than President, 3) Secretary lives in Northern CA and was a sham third person on ballot. Other owners except me backed the 3 because the President had them in his back pocket. Additionally, other owners don't necessarily like me because I'm an activist and wish the Davis Sterling laws to be followed. We now have 2 new people on the property and 2 more on the way. The new "2" are activist like me and not willing to put up with the BS that occurred with the previous board and other homeowners.

Right now we are having to deal with 2 of units not paying their dues which is hurting us immensely. Like I said time to clean-up shop.

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