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JohnM49 (Michigan)
Posts: 6
Posted:
I am the President and CEO of our Condo Association. We are site condos with 135 homes. Last year we started a $274,000 road project that was not voted on by the residents. Our roads are in poor condition. Our roads our considered private. Since then new developements have happened through research. Our township will allow us to use their contractor (negotiated rates), engineering (no cost). I was able to negotiate this, saving the residents $110,000 and eliminating the special road assessment of $200 a year for the next ten years. The new cost of the project now $164,000. The cost would be paid throught a special assessed district $81 dollars per resident for 15 years to the township. We did not have these options before, now we have three. The other 4 board members don't want to mention these other options to the residents or even allow them to vote. I have a letter prepared to send the residents making them aware of these options. Also I would like to know if anyone has filed an Pro Se injuction before. I would like to get an injunction preventing the board making a decision without the resident approval. I feel the residents should have the right to vote.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Can you call a special meeting? Sounds like a situation where a special meeting would be a benefit. I also don't see why you can't talk to your other fellow HOA members about the subject. Information starts with the person who can provide it. Why not go to the meeting and have it put on the agenda for discussion? The worse they can do is table the idea which by then people who attended should question.

I had an issue involving an expensive unnecessary repair to our pool. Apparently for many years there were rough areas on the bottom of the pool that could cause a foot injury. The board decided they needed to drain the pool and resurface the whole thing for 8K. I did my research and found the repairs necessary would only cost 2K. It still would require a special assessment but only of 1 time $50 etc..

However, my board did go out and get the "required" votes after I hired a lawyer. My lawyer wrote them a letter stating they needed to do so. It was revealed to me that the board members method of getting votes was to tell a bunch of lies and wildly misleading information. So the votes did pass against me and a few other supporters. The members were then specially assessed $125 a piece which was WAY TWICE the amount needed for the 8K in repairs. They didn't tell the members they were going to use the extra money on other projects...Which is illegal or immoral...

I was a board member at the time but no longer president. Believe me, this would have NEVER have passed if I was. The repair would have but NOT the expense etc...What I learned is that it's best to get small group together and pay a lawyer to draft a letter to the board to make sure they do the right thing and get the votes. It doesn't have to escalate to court status at all. Just a good legal letter and a chance to present your idea. Just honestly, don't expect to WIN your argument...Many right people have been wronged...

Former HOA President
JanetB2 (Colorado)
Posts: 4,219
Posted:
Hi John:

Welcome to HOAtalk.

Question: Do your governing documents state resident approval required?

If not then potentially approval is not required. The following statute does make reference to “association of co-owners”; however, if the board has authority in the association documents then their actions would in essence be legal on behalf of the association of co-owners. As a general rule the board is the entity who is responsible for the HOA maintenance following the governing documents; however, in some states and HOA documents there is potential limitations and some of which require homeowner vote. You need to read your documents.

559.232 Construction lien; limitations.

(d) A construction lien may not arise or attach to a condominium unit for work performed on the common elements not contracted by the developer, residential builder, or principal contractor or by the association of co-owners.

Question: Are you stating that the board does not want to utilize the less expensive route for the road project?

JohnM49 (Michigan)
Posts: 6
Posted:
They don't want to go with the cheaper option and that is to replace every single slab of concrete with re-bar brought up to code. When the sub was built 16 years ago. The concrete is 4 inches to 9 inches depending where you are with no re-bar. This just fell into our hands. Back in the late 90's there was a falling out with the township. I have developed new relationship with them. We still have a couple old board members on, that went through this falling out. The township left the meeting and said don't ever talk to us again. So they don't trust them. These rate are the township locked in contractor rate. The other method costing $274,000 is only patch replacement. To me this is a no brainier from a business side.

Here is a few sections from out by-laws

Option 4 in budget is what we exercised.

This top is from the budget section"

(a) budget. Should the Board of Directors at any time determine,
in the sole discretion of the Board of Directors: (1) that
the assessments levied are or may prove to be insufficient
to pay the costs of operation and management of the Condominium,
(2) to provide replacements of existing Common
Elements, (3) to provide additions to the Common Element
not exceeding $1,000.00 annually for the entire Condominium
Project, or (4) in the event of emergencies, the Board of
Directors shall have the authority to increase the general
assessment or to levy such additional assessment or assessments
as it shall deem to be necessary. The Board of Directors
also shall have the authority, without Co-owner
consent, to levy assessments pursuant to the provisions of
Article V, Section 4 hereof. The discretionary authority of
the Board of Directors to levy assessments pursuant to this
sub paragraph shall rest solely with the Board of Directors
for the benefit of the Association and the members thereof,

Special Assessment

(b) special Assessments. Special assessments, in
addition to those required in sub-paragraph (a) above, may be
made by the Board of Directors from time to time and approved by the Co-owners as hereinafter provided to meet
other needs or requirements of the Association, including,
but not limited to: (1) assessments for additions to the
Common Elements of a cost exceeding $1,000.00 for the entire
Condominium Project per year, (2) assessments to purchase ~
unit upon foreclosure of the lien for assessments describe4
in section 6 hereof, (3) assessments to purchase a unit for
use as a resident manager's unit, or (4) assessments for any
other appropriate purpose not ,elsewhere herein described:
Special assessments referred to in this sub-paragraph (b)
(but not including those assessments referred to in sub-paragraph 3(a) above, which shall be levied in the sole discretion
of the Board of Directors) shall not be levied without
the prior approval of more than 60% of all Co-owners in
number and in value. The authority to levy assessments
pursuant to this sub-paragraph is solely for the benefit of
the Association and the members thereof and shall not be
enforceable by any creditors of the Association or the
members thereof.
JanetB2 (Colorado)
Posts: 4,219
Posted:
Hi John:

Apparently from this information you posted it appears the board has sole discretion to provide replacements of existing Common Elements:

This top is from the budget section"

(a) budget. Should the Board of Directors at any time determine,
in the sole discretion of the Board of Directors: (1) that
the assessments levied are or may prove to be insufficient
to pay the costs of operation and management of the Condominium,
(2) to provide replacements of existing Common
Elements,
(3) to provide additions to the Common Element
not exceeding $1,000.00 annually for the entire Condominium
Project, or (4) in the event of emergencies, the Board of
Directors shall have the authority to increase the general
assessment or to levy such additional assessment or assessments
as it shall deem to be necessary. The Board of Directors
also shall have the authority, without Co-owner
consent, to levy assessments pursuant to the provisions of
Article V, Section 4 hereof. The discretionary authority of
the Board of Directors to levy assessments pursuant to this
sub paragraph shall rest solely with the Board of Directors
for the benefit of the Association and the members thereof,

However, the board also needs to keep in mind they have a fiduciary duty to make any repairs with a mind towards what is in the best interest for the community. To let personal vendetta override what is correct and proper could potentially be considered willful or wonton misconduct and gross negligence. You need to review your bylaws per the following statute and insure what is stated. They need to be aware that this type of misconduct or negligence could mean they would be “personally liable”. The HOA insurance generally does not cover board members in this type instance.

559.154 Bylaws; mandatory provisions; allocation of votes; dispute, claim, or grievance; applicability of subsections (8), (9), and (10).

(6) The bylaws shall provide an indemnification clause for the board of directors of the association of co-owners. The indemnification clause shall require that 10 days' notice, before payment under the clause, be given to the co-owners. The indemnification clause shall exclude indemnification for willful and wanton misconduct and for gross negligence.

I would again discuss with your fellow board members the cost difference and the fact the less expensive repair is also the more prudent complete fix compared to patch replacement. Point out that spending more money just because of personal dislikes could potentially be construed as negligence regarding the association affairs and money.

Then see what they say … it might be they have not considered the potential consequences of actions.
JohnM49 (Michigan)
Posts: 6
Posted:
our website is www.westwoodfarmsca.com

all our documents are under e-doc
JanetB2 (Colorado)
Posts: 4,219
Posted:
Hi John:

Doing a quick glance through it again appears that the board DOES NOT need to have homeowner approval. It is at the board’s sole discretion to provide replacement for existing common elements.

However, under Roads it does state in order to “maximize the life of project roadways” and “minimize repair and replacement costs”. Therefore, the board needs to consider replace for less cost vs. patch for more cost.

The following is the section I mentioned previously you needed to check regarding misconduct or negligence:

Section 1. Pursuant to section 209(c) of the Michigan Nonprofit Corporation Act (being Act No 162 of the Public Acts of 1982, as amended) a volunteer director (as-defined in in Section 110(2) of the the Michigan Nonprofit Act) of Westwood Farms Assoeiation, is not personally liable to the corporation or its members for monetary damages for a breach of the director's fiduciary duty. However, this section shall not eliminate or limit the liability of a director for any of the following:

(i) A breach of the director's duty of loyalty to the corporation or its members.

(ii) Acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law.

(iii) A violation of section 551(1) of the Michigan Nonprofit corporation Act.

(iv) A transaction from which the director derived an improper personal benefit.

(y) An act or omission that is grossly negligent.

The following is the section regarding Roads:

C. Roads. Westwood Farms is served by West Road leading to the condominium. The interior roads in Westwood Farms are private and will be maintained by the Association. Replacement, repair and resurfacing of all roads and drives within the project will be necessary from time to time as circumstances dictate. It is impossible to estimate with any degree of accuracy future roadway repair or replacement costs. It shall be the responsibility of the Association to inspect and perform preventive maintenance of condominium roadways on a regular basis in order to maximize the life of project roadways and to minimize repair and replacement costs.

The following is the full text for the section you previously posted regarding Board acting in sole discretion:

section 3. Determination of Assessments. Assessments shall be determined in accordance with the following provisions:

(a) Budget. The Board of Directors of the Association shall establish an annual budget in advance for each fiscal year and such budget shall project all expenses for the forthcoming year which may be required for the proper operation, management and maintenance of the Condominium Project, including a reasonable allowance for contingencies and reserves. An adequate reserve fund for maintenance, repairs and replacement of those Common Elements that must be replaced on a periodic basis shall be established in the budget and must be funded by regular annual payments as set forth in Section 4 below rather than by special assessments. At a minimum, the reserve fund shall be equal to 10% of the Association's current annual budget on a noncumulative basis. Since the minimum standard required by this subparagraph may prove to be inadequate for this particular project, the Association of Co-owners should carefully analyze the Condominium Project to determine if a greater amount should be set aside, or if additional reserve funds should be established for other purposes from time to time. Upon adoption of an annual budget by the Board of Directors, copies of the budget shall be delivered to each Co-owner and the assessment for said year shall be established based upon said budget, although the delivery of a copy of the budget to each Co-owner shall not affect or in any way diminish the liability of any Co-owner for any existing or future assessments. Should the Board of Directors at any time determine, in the sole discretion of the Board of Directors: (1) that the assessments levied are or may prove to be insufficient to pay the costs of operation and management of the Condominium, (2) to provide replacements of existing Common Elements, (3) to provide additions to the Common Element not exceeding $1,000.00 annually for the entire Condominium Project, or (4) in the event of emergencies, the Board of Directors shall have the authority to increase the general assessment or to levy such additional assessment or assessments as it shall deem to be necessary. The Board of Directors also shall have the authority, without Co-owner consent, to levy assessments pursuant to the provisions of Article V, Section 4 hereof. The discretionary authority of the Board of Directors to levy assessments pursuant to this subparagraph shall rest solely with the Board of Directors for the benefit of the Association and the members thereof, and shall not be enforceable by any creditors of the Association
or the members thereof.

(b) Special Assessments. Special assessments, in addition to those required in subparagraph (a) above, may be made by the Board of Directors from time to time and approved by the Co-owners as hereinafter provided to meet other needs or requirements of the Association, including, but not limited to: (1) assessments for additions to the Common Elements of a cost exceeding $1,000.00 for the entire Condominium Project per year, (2) assessments to purchase a unit upon foreclosure of the lien for assessments described in section 6 hereof, (3) assessments to purchase a unit for use as a resident manager's unit, or (4) assessments for any other appropriate purpose not, elsewhere herein described. Special assessments referred to in this subparagraph (b) (but not including those assessments referred to in subparagraph 3(a) above, which shall be levied in the sole discretion of the Board of Directors) shall not be levied without the prior approval of more than 60% of all Co-owners in number and in value. The authority to levy assessments pursuant to this subparagraph is solely for the benefit of the Association and the members thereof and shall not be enforceable by any creditors of the Association or the members thereof.

If for some reason the board votes to do the patch for more money, and you are out voted … I suggest that you make a strong statement that you want included in the meeting minutes that you disagree with the decision and why. This would then protect you if any homeowner later files legal litigation.

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