Board Hires New Property Manager but there's a catch...

The Board of Directors at my Condo Association (18 units) surprised everyone at the annual meeting last week with the announcement of a new PM. The contract was signed a month prior and the old PM has been terminated. The new PM introduced himself and then we had a question and answer period.
Question from an owner: What does your termination clause state?
Answer: In one year, you can terminate the contract with 60 days prior written notice. No early termination except “for cause” determined by me (the PM).

Our Condo Declaration states:
“The Board of Directors of the Condominium Association shall have the authority to enter into a contract for professional management of the condominium. If they enter into such a contract, the maximum term shall not exceed One (1) year, and the contract shall be terminable without cause or payment of a termination fee on thirty (30) days written notice.”

Question for the HoaTalk community: If the new PM had read our governing documents prior to signing a contract with the Association, which clearly violates our own declaration, then can our association rescind the contract or terminate the contract (without cause) with 30 days written notice?

I obtained a copy of the new PM contract and it clearly states that they (the agent), “…shall perform the duties and carry out the functions of the association as provided and specified in the Declaration and Covenants, Conditions, Restrictions, and Reservations for and Bylaws of the BLANK Condo Association.”

Based on the statement in their own contract, how can the new PM have signed a contract with us that violates our declaration?

Any Legal Beagles out there to answer this?

BTW: 10 unit owners were at the annual meeting (in addition to the 3 board members) and strongly opposed this change in PM. We were very vocal about our position. Is it not a conflict of interest for this PM to support the 3 people who hired him when a majority of the association you are supposed to represent is clearly opposed to the hiring him?

Thanks for the post.
Nobody would want to sue the BOD. Sounds like we are stuck with the new PM for the one year term. At this point, it is likely that they themselves wished there was an escape clause in their contract, based on the reception they got at our meeting!
Daniel, do you have a background in law?
Thanks again for the information.
Dianne

Why does everyone want to sue their HOA or their BOD members? Suing a HOA is suing yourself and your neighbors. What really gets me is that the HOA is set up with the power of making it's own changes. Each homeowner has the right to VOTE. If the majority of owner's don't like something, they can call a "Special meeting" to discuss the issue. They also can recall BOD members as long as they have someone else willing to do the job.

The board's job is to represent the general members in the daily operations of the HOA. Which empowers them to sign contracts and enforce the rules of the HOA. If they felt a change of PM was necessary, they have a right to change it out as long as they gave proper notice according to the contract agreement with the previous PM. It sounds like there was an issue with the previous PM. It might have been a private matter, a frustration, or just a decision to make a change. Either way, you have a year to find out if the change was a good one or need to go back to the old way.

Daniel,

You are absolutely right about having to follow the contract. The partnership cannot hold the contractor responsible for knowing who does and does not have authority to sign the deal.

However, the partnership can sue the partner who overstepped his authority. If there is a cancellation clause in the contract, the partner who made the bad deal can be made to pay the cost personally.

The same goes for a homeowners association and its Property Manager. The PM can't be made to bear the consequences of an overreaching board member, but the board member can be held accountable. Sue the board member personally for his indiscretion.

Thanks for all the helpful feedback. Based on your input, an email went out today to the BoD (cc'ing the new PM):

"Board,
Although you are fully empowered to hire and fire property managers, you’ve signed a contract with BLANK REATLY CO which violates our Declaration.

I’m sure Mr. BLANK had no prior knowledge of this requirement in our Declaration but my hope is that he realizes that the 2 of you were acting without proper guidance and will consider revising the contract which is not in effect until April 1st, 2011"

Last I heard, the PM will likely honor the requirements of our Declaration and update the terms of the contract to reflect a 30-Day no cause termination clause.

This will be the best outcome from a bad situation.

Thanks Again!