Want to hire attorney for members

I'm a Director of an HOA in NC. My fellow Board members continually break the law by violating the Declarations and By-laws designed to protect both the members and the Board if they act accordingly.

I have failed to enforce anything because there is no other Board member that wishes to follow these guidelines for our actions. In fact, they refuse to even read the documents. The HOA attorney apparently has told them that it doesn't matter because no HOA follows their governing documents and therefore will not be held accountable.

In our By-laws it states that any one Director can act on his/her own if an emergency arrises. Our current yearly member meeting notice just went out (they are only two months late) filled with illegal instructions to the members.

I've decided that this IS an emergency and have retained an attorney to represent the members filing suit against the Board for their illegal actions. I've also approved payment for his services through the HOA dues that have been paid by the members. I believe that in acting in the best interest of the members is what I'm supposed to do. However, I would like verification that paying the attorney this way is legal. I see no restrictions to it nor do I see anything that says the HOA can hire an attorney and pay that attorney out of the dues, but that's exactly what we do.

Any advice here would be great...I'm going into the great unknown.

Hi Patricia:

I would potentially believe you are over stepping your authority. Virtually all decisions are to be made by the board, unless required to go before members, especially when spending HOA money. I do not know what is stated in your association documents; however, state statutes generally supersede CCR’s.

§ 55A 8 21. Action without meeting.
(a) Unless the articles of incorporation or bylaws provide otherwise, action required or permitted by this Chapter to be taken at a board of directors' meeting may be taken without a meeting if the action is taken by all members of the board. The action shall be evidenced by one or more written consents signed by each director before or after such action, describing the action taken, and included in the minutes or filed with the corporate records reflecting the action taken. To the extent the corporation has agreed pursuant to G.S. 55A 1 70, a director's consent to action taken without meeting may be in electronic form and delivered by electronic means.
(b) Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date.
(c) A consent signed under this section has the effect of a meeting vote and may be described as such in any document. (1973, c. 314, s. 3; 1993, c. 398, s. 1; 2008 37, s. 7.)

Why do you not pursue this legal route? If the membership agrees with you regarding the other board members, then this is the proper route to follow and the members remove board members.

§ 55A 8 08. Removal of directors elected by members or directors.
(a) The members may remove one or more directors elected by them with or without cause unless the articles of incorporation provide that directors may be removed only for cause.
(b) If a director is elected by a class, chapter or other organizational unit, or by region or other geographic grouping, the director may be removed only by that class, chapter, unit, or grouping.
(c) Except as provided in subsection (i) of this section, a director may be removed under subsection (a) or (b) of this section, only if the number of votes cast to remove the director would be sufficient to elect the director at a meeting to elect directors.
(d) If cumulative voting is authorized, a director shall not be removed:
(1) If the number of votes; or
(2) If the director was elected by a class, chapter, unit, or grouping of members, the number of votes of that class, chapter, unit, or grouping;
sufficient to elect the director under cumulative voting, if an election were then being held, is voted against the director's removal.
(e) A director elected by members may be removed by the members only at a meeting called for the purpose of removing the director and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director.
(f) In computing whether a director is protected from removal under subsections (b) through (d) of this section, it should be assumed that the votes against removal are cast in an election for the number of directors of the class to which the director to be removed belonged on the date of that director's election.
(g) An entire board of directors may be removed under subsections (a) through (e) of this section.
(h) A majority of the directors then in office or such greater number as is set forth in the articles of incorporation or bylaws may, subject to any limitation in the articles of incorporation or bylaws, remove any director elected by the board of directors; provided, however, that a director elected by the board to fill the vacancy of a director elected by the members may be removed by the members, but not the board.
(i) Notwithstanding any other provision of this section, if, at the beginning of a director's term on the board of directors, the articles of incorporation or bylaws provide that the director may be removed by the board for missing a specified number of board meetings, the board may remove the director for failing to attend the specified number of meetings. The director may be removed only if a majority of the directors then in office vote for the removal.
(j) Notwithstanding any other provision of this section, the articles of incorporation or bylaws may provide that directors elected after the effective date of such provision shall be removed automatically for missing a specified number of board meetings.
(k) The articles of incorporation may:
(1) Limit the application of this section in the case of a charitable or religious corporation; and
(2) Set forth the vote and procedures by which the board of directors or any person may remove with or without cause a director elected by the members or the board. (1955, c. 1230; 1973, c. 192, ss. 1, 2; 1985 (Reg. Sess., 1986), c. 801, ss. 19 21; 1993, c. 398, s. 1.)

The route you are pursuing could potentially put everyone in an uproar and they might vote to have you removed. It is the membership's responsibility to determine who will or will not be a board member, if they agree with your assessment then they can remove following proper procedures.

I forgot to mention that they are doing the same thing this year. They've sent out the member meeting notice late, it is chock full of violations and lies and the members call me whenever this stuff happens. EVERY Single time! They trust me, but not the Board.

You ask why we haven't used the legal means above...we have tried. That is the reason for the need of the attorney.

Last year every single member signed a petition to have the Board members removed. They threatened the members with having their homes foreclosed, fines, and more. That pretty much scared off everyone. The members backed down and dropped the removal process. This year, they like the idea of getting an attorney involved. The attorney, while my idea, was also their idea. I think that I have the full backing of the members, but if they back out like last year, I'm just not sure if I could handle on my own or not.

There is a stipulation in our By-laws that says a Director can act on his/her own in case of an emergency. The members feel this is an emergency because the Board has run amuck.

Like other say, I don't think that you have the authority.

Legally, you should pay for the lawyer out of your own pocket (or those who support you) and then, in a court of law, request to be reimbursed for attorney's fees.

Your situation is not an emergency.

We aren't unsympathetic but accusations do not equal proof/conviction. You've got to fight it out on your own until such time that your accusations become a conviction/judgement at which point you can petition the court to force the HOA to reimburse you.

An idea might be to have homeowner’s pitch in to pay for the attorney, have the attorney notify the board and HOA attorney that he will be present during the upcoming elections as a representative of the homeowners, due to illegal membership meeting and voting allegations.

Between now and then he can also assist in insuring proper proxies and ballots as needed. If he does this then current board and attorney should be attempting to do everything correct following documents and the law. This would potentially be a lot less expensive for everyone if it works than going to court, as you supposedly have elections coming up soon per your comments.

Keep in mind either option will have attorney fees to be paid for by the members. Whether the HOA needs to reimburse or not … it still is money members have or will pay. I am just trying to think outside the box for a potential quicker and less expensive resolution.

Jon,

Again, using Association money

You probably have already guessed that since I'm the ONLY one who was not placed on the Board by our current self appointed President, I have no one on the Board who supports anything that I try to do to keep us on track; therefore, these same Directors are content with the President working independently with pretty much everything...not that anything really gets done.

Last year we had six sinkholes on the property. At every meeting we talked about it and debated what to do. I even had estimates from several contractors...still no decision was made because our President had it in her head that we need 13 X 9 foot signs, three of them, to declare who we were are. She made herself available for photo shoots with the town and has bragged about all of her accomplishments (which are none). I objected to the signs, which is going forward, the members objected to the signs, and still it is going forward.

Last year she hired someone to powerwash the sides of the buildings. Only two of the eight buildings had materials on the side of them that could be powerwashed. I told her that and she had them washed anyway (this was done because a homeowner hired an attorney to sue the Board because they had not maintained her building and she had a huge amount of algae growing on the side of her home). The guy came out and powerwashed all units and all but two now have siding either laying on the ground or is in the process of falling off the building. Nothing has been repaired a year later.

I have all of the documentation to back up my claims, but you have all made good points to consider. Please be aware that my action to contact the attorney was only done after many many calls and complaints against the Board based on the member's meeting notice. I did not act without regard to anyone else, I acted in regard to everyone else and their request for help to control the Board. And although you are correct that it is very hard to get the members to stand up for their rights against the Board, I still feel compelled to help them when they ask for it. I do feel like it's my responsibility to do so as a member elected Director. It is also true that it is hard to get them to get involved in any fashion. They really do want someone to swoop in and fix everything.

I appreciate all of the feedback and will probably not go forward with the attorney. I am taking into consideration that they backed down on removing the Board members last year and left me hanging. In their defense of their lack of ability to follow through, in previous HOA activity, members have had their homes foreclosed on them for things that they shouldn't have been foreclosed on and that is the threat that is used most often against members who fight them in any way.

I may be forced to give up too if I can't get anyone to support these efforts and then the Board, legal or not, may just win.

I agree with others, and it seems you now agree that, as a director, you may not "decide" to hire an attorney no matter how pure your motives. The advice to resign and try to get others to chip in for an attorney is worthwhile.

Several of us non-directors in my HOA were going to take that route, but decided instead to get some of us elected to the board. Took an additional year to get a majority on the board, but we've been on the right (and lawful!) course every since.

It sounds like your P.M is breaking the law too. Is s/he independent, or does the person work for a mgmt. co.? Your PM or Company probably, though is afraid of losing the contract with your HOA if s/he doesn't participate in the illegal behavior. Right? Does your HOA contract with the Co. state that they must abide by your gov. docs & state laws?

You do realize that suing your HOA is suing yourself and your neighbors. Plus you hiring the attorney to represent the members when the HOA already has an attorney doesn't make much sense. The HOA attorney doesn't just work for the board. The board are members elected to represent the WHOLE membership on daily operations of the HOA. Which means the HOA represent ALL of the HOA.

I think you need to step back and see the forrest for the trees. Your starting to battle the wind... It is time to regroup and do some of your own reviewing and educating. The HOA will continue to run even if it isn't the way you want it. Just take some time and see the BIG picture.

I am confused as to how you and your husband can hold BOTH of these positions at the same time. If he's treasurer, your director, and the household only has 1 vote...How is that legal? In my HOA a husband/wife could NOT be board members at the same time. Each lot had 1 vote regardless of the number of tenants. The board members were elected to represent the MAJORITY of those voters but didn't have an extra vote. They just had the power to make things happen representing the majority vote. Having two people from the SAME household is unfair and double-dipping in my opinion. 100 votes for 100 households/members.

Your too focus on "LEGALITY" without knowing much about the law. Who's going to enforce these "illegal acts?" There's no Police in a HOA. Living in fear of lawsuits is just no way to live. Your going to get sued just face it don't fear it. PREPARE for it instead. It's cheaper to counter-sue and NOT every lawsuit is valid. Keep focusing on it's "Illegal" in a HOA isn't a jailable offense. It's just a violation of the rules. There should be a concentration of ENFORCEMENT of violating the rules. Which is lacking in many HOA's. If you don't have a fine system set up in your documentation then you can't really enforce fines.

My best advice...Get reading and if you want a lawyer...Use him/her to answer your questions instead.

I realize there are a lot of assumptions here because the history of the Board's activities is so extensive that I've barely rippled the waters with what has occurred.

The HOA attorney does not and will not represent the members. She will ONLY represent the Board. I've spoken to her and asked her why she told the Board that they can do whatever they want because HOAs are not held liable for their actions and that most Boards have no idea what they're doing and it's accepted in courts that this is the case.

The attorney that I spoke with to represent the members was given the paperwork that was submitted last year to the secretary to call a special call meetings to have the Board members removed. She NEVER sent the meeting notice but did start contacting every single person that was on the petition to have the Board members removed. All violations of the Board members were outlined along with the violations that were conducted against the Declarations, By-laws, and NC statutes. The outlines were exact and were not done in a personal defamation manner, but straight to the point on the violations that are clearly defined in all governing documents. Bare in mind that no one other than myself and one other Board member has ever read these documents because the Board members don't want to "bother" to have to read them much less abide by them.

Last year the members meeting notice was sent out six days before the meeting and because the town closed our clubhouse because of health violations that extended for about 10 years, the pasted a note on the door of the clubhouse and moved the meeting that very night. So not only did they violate the 15 day requirement for a meeting notice, but they also included invalid ballots that gave residents no choices. There was no nominating committee, but rather the acting President wanted people to be on the Board who would not give her a hard time. She was referring to me of course because I did try to keep us on track. I raised a red flag every time a suggestion was made that was either illegal or violated our governing documents. For instance, destroying records, not letting members view the documents, removing the documents from the registered office in order to hide them, discarding proxies and throwing out members votes to ensure control over who served on the Board. We have on guy who has never shown up for a meeting because the President told him that he didn't have as long as it blocked anyone else from serving on the Board.

The attorney I spoke to has seen our request for a special call meeting, the email correspondence that validates the violations (and there is a lot...two years worth).

My husband was Treasurer and NOT a Board member. The President asked him to take time off from work to handle some things and told him that his pay would be reimbursed. When the rest of the Board members complained about this, she sacrificed him and never owned up to not only the request for him to do the work but that she approved paying for his lost time at work. He resigned immediately at that point. I stayed on the Board because when the members found out the repairs were going to stop because my husband resigned, they begged me to stay on to protect their interests. I ageed. As a result the defame me at every single opportunity when I try to explain to them why we have to do things in a certain way. Every time I would read from the Declarations, By-laws or NC statutes they would roll their eyes and insult me and blow me off.

Last year I told our acting President and PM about the community improvement programs that were being offered she jumped all over it and told everyone (in front of both me and the PM) that it was her idea. She got her picture taken with the town manager, et al and told them what a great HOA President that she was and all of the great things that she was doing. Then the town started getting complaints from the residents and when they came to investigate they discovered that all these wonderful things that she claimed to be doing were never actually done...that she was a fraud. The town started fining the HOA for violations and the HOA had done the very least that they have to do to pass safety inspections. Then they blame the residents because they complained instead of taking responsibility for their lack of due care and total neglect.

The President has her heart set on having three 13 x 9 foot signs on our property and has arranged for landscaping done on and around her property. She also works for the local utility and has three expensive light poles directly in front of and behind her property while where we live there is one pole to service both our parking area and a large common area.

She sent out all of her accomplishments for 2010 that included powerwashing of the buildings but did not mention that it caused damage to all but two buildings, she claimed to have cleaned out gutters that were done just three weeks ago, she claimed to fix the fencing on the pool that was abandoned more than 10 years ago and allowed to gather stagnant water and wildlife where the fencing was broken apart so a full sized adult could walk through them. Their idea of fixing the fence was to wrap chicken wire around it. If the teens could pull apart the regular fencing, what does she think will happen with chicken wire?

We've had flooding inside of about 1/3 of the units because the run off pipes were not done correctly and to make matters worse have filled with vines and tree roots. The roofing on most units are rotten and leak into the homes. Most of the privacy fencing is rotten and in two units they had fallen down and had been down for more than two years. In her letter to the members she claimed that she had the fencing replaced when in fact both owners had finally paid someone to replace the fencing and have provided proof of that expense to the attorney.

In everyone's purchase agreement, it states that the HOA has agreed to maintain insurance on ALL buildings and in fact they ONLY maintain insurance on the clubhouse which has been neglected since it was build. My husband and I had worked with the insurance agent to have repairs begin two years ago when we both first started. No one had ever contacted the insurance agent to put in claims. Some of it was rejected by the agent because it was due to years of neglect. For years the water had been shut off to the building and the toilets had been left with feces in them for all of those years. When the town inspected and discovered this, they closed the building down immediately and the HOA was fined for health violations. After I met with the insurance agent and my husband hired the repair folks we had all of the restrooms rebuilt and with rebates that he found it cost us nothing. He also replace the water heater which froze and exploded through the ceiling (where it was located), got the ceiling replaced, had windows replaced that had bullet holes through them and leaked into the building every time it rained, rewired the building because it was arcing, replace all of the broken lights, replaced the damaged refridgerator, replaced the non-working heating/cooling sytem...and that's when the President threw him to the wolves.

So you see, there is a lot to this situation. I could go on for months and still not be able to tell you all of it.

Even so, you can't use HOA money to hire a lawyer.

If things are this bad, you should consider petitioning the court to appoint a receiver. That way, you'll get a hearing on all your issues. Your HOA fees might zoom up but, if it is as bad as you say, somebody else will take control and it'll be worth it.

You might also consider moving. It may be a great property or a great home but, if the HOA is headed for a disaster, it might drag your property down with it such that you can't sell it or use it.