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Unauthorized BOD

Started by DorieW • 11 replies • 2121 views

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DorieW (Tennessee)
Posts: 52
Posted:
Our CC&R's state that once our development has 90% ownership the HOA managed by the original owners (the developers) would be transfered over to a Managing Committee consisting of 5 owners who would serve the subdivison through the coordination of yard care, collection of dues, and late fees if applicable and this interim entity would be in place until their successors were elected by a majority of the lot owners in said subdivsion. The members of the Managing Committee shall be appointed by the owners.

Now here is what really happened-The Developers oversaw the subdivsion for a few years. Then a property managment company came on board. Then some neighbors decided they did not like the property managment company. So they found another property management company, selected a couple of people in the neighborhood, and they all appointed eachother to board seats and then they fired the previous managment company and hired the new one. Then they had by-laws drafted. Then they started fining, placing leins on homes, and filing lawsuits, harrassing personally and through the property managment company. Major power tripping 24/7.

Well, there are many of us who have had it with this fiasco. None of us signed a notarized ammendment to the CC&R's for this to happen as it did. Anyone know of any legal recourse I can take with this? Thanks.
TimB4 (Tennessee)
Posts: 21,062
Posted:
For any legal recourse you need to consult with an attorney who will have access to all documents.

I would recommend that prior to seeing the attorney you attempt to get a copy of all Board meeting minutes and general meeting minutes since the Association was formed.

Since the posters on this forum do not have access to those documents we could only speculate on if what happened was proper or not. Based on what you posted, I could see it both as proper and improper. I also have the following questions:

When the first management company was hired was it for the transition or a company to assist the Developer run the Association?

Did the Developer appoint any of those people to the Board (perhaps as a way to appease them) or was a general membership meeting held with elections?

Is the Developer still in control (i.e. do they have the voting power)?

The meeting minutes will answer some of those questions. The minutes and the governing documents will answer other questions an attorney might have.

When is your next scheduled elections?

It might be easier (and would definitely be less expensive) to wait until the election and vote the bums out. Another option would be to gather support and call for a special meeting to recall the board and elect new board members.

Hope this helps,

Tim
DorieW (Tennessee)
Posts: 52
Posted:
For any legal recourse you need to consult with an attorney who will have access to all documents.

I would recommend that prior to seeing the attorney you attempt to get a copy of all Board meeting minutes and general meeting minutes since the Association was formed.
**I had to take my attorney with me to the property managment company to get documents. They piled a table deep and wide with documents and told me to fill out a form listing each page that I wanted the date and the title. I said okay, pretty much anticipating the mound of documents they would have for me and whipped out my computer tablet and took 219 photos of what my attorney said I needed to have. I could tell the managment company was thrown by this twist and one of them starting banging things around and yelling around us. It was comical.

Since the posters on this forum do not have access to those documents we could only speculate on if what happened was proper or not. Based on what you posted, I could see it both as proper and improper. I also have the following questions:

When the first management company was hired was it for the transition or a company to assist the Developer run the Association?
**We do not know what the intention of the Developers where. We can only go by what the Developers wrote in the CC&R's that appear to have not been followed. I am pulling our file with the Secretary of State this week to see when we became a Non Profit entity...to learn general history as far as the state is concerned.

Did the Developer appoint any of those people to the Board (perhaps as a way to appease them) or was a general membership meeting held with elections?
**To my knowledge there was not a single owner appointed by the developer.

Is the Developer still in control (i.e. do they have the voting power)?
**My understanding is that the Developer has been long gone. As in at leatst 5 years out of the picture.

The meeting minutes will answer some of those questions. The minutes and the governing documents will answer other questions an attorney might have.
**The meeting minutes show that owners appoint eachother and there is no actual election (i have a taped meeting with this admission from this group of people to this happening as well).

When is your next scheduled elections?
**End of this quarter or early next quarter.

It might be easier (and would definitely be less expensive) to wait until the election and vote the bums out. Another option would be to gather support and call for a special meeting to recall the board and elect new board members.
**We want to go backwards and do what the CC&R's state is to happen. We want to contact the Developer and have the Developer transfer the HOA they initially established over to us so we can host a proper election as opposed to a cherry picked appointment fiasco that these people created.

Hope this helps,

Tim
DorieW (Tennessee)
Posts: 52
Posted:
Yes it is.
TimB4 (Tennessee)
Posts: 21,062
Posted:
Is the association incorporated?
If it is, is it incorporated as a non-profit (most are)?

If it is, the Association must comply with TN corporation law.
Here is a link to TN code from lexisnexis.com

Open up the menu tree on the right as needed.

You should look at Title 48, Nonprofit Corporations (which start at chapter 51).

Hope this helps,

Tim
DorieW (Tennessee)
Posts: 52
Posted:
Pulling the whole file from the Secretary of State to see what kind of entity it started out as and if any changes were made. The Charter as of this year lists this entity as a non profit entity.
BradP (Kansas)
Posts: 2,640
Posted:
Dorie:

taking a stab in the dark here, you really need to read your documents to get some answers. Some are written that it gives the board the recourse to do all the things you are talking about at board meetings. The board could have been elected in at a properly called meeting, most all you have to do is give written notice of the meeting and a lot of people ignore that.

Two approaches, first depending on state law they are required to keep ballots for elections for x amount of years and that should be public record. If it falls within that time period then ask to see them.

Secondly, I would focus on the upcoming election. Start a grass roots effort with your neighbors and vote in a new board or a new majority board. That to me is your best effort.
DorieW (Tennessee)
Posts: 52
Posted:
We have on record that a couple of people got together and appointed eachother. They clearly misinterpreted the Restrictive Covenants.
TimB4 (Tennessee)
Posts: 21,062
Posted:
Quote:
Posted By DorieW on 10/20/2011 9:32 AM
I have reviewed three things-
Our initial Charter for our HOA filed by the original agent, on May 16, 2001 states that our HOA is a corporation that is a mutual benefit corporation and that the corporation will have members.

OK. This indicates that the Association must comply with the TN corporate code,
Title 48, chapter 51.

Use the link posted earlier and open up the menu trees in the left panel to select the title and chapter.

Quote:
Posted By DorieW on 10/20/2011 9:32 AM

Our Restrictive Covenants filed by our Developers/Original Owners on May 27, 2001 states that any amendments made to the Restrictive Covenants would require 75% of the owners agreement in order for legal allowance of the amendment to be permitted.

OK. Mind you, at the time the covenants were filed, the developer probably represented 75% of the membership on their own and could therefore amend the document at will.

Quote:
Posted By DorieW on 10/20/2011 9:32 AM

Tennessee Non Profit Corporation Act states under 48-60-301 Approval by third persons.-The charter may require an amendment to the charter or bylaws to be approved in writing by a specified person or persons other than the board or members. Such a charter provision may only be amended with the approval in writing of such person or persons. [Acts. 1987, ch. 242, 10.30.]

I suspect that this would refer to the lenders who hold the mortgage to the property. Note that the law used the word "may". To rephrase this section it could read:

If the CC&Rs or Bylaws require approval of lenders to amend the CC&Rs or Bylaws, then this approval must be in writing. If there is no such requirement then this section does not apply.

Quote:
Posted By DorieW on 10/20/2011 9:32 AM

What we have on our hands is an amendment (changing the name of our HOA and changing the name/address of our Agent) signed by an owner in December of 08 claiming to be the President of our HOA when the Secretary of State has on file that another individual (the developer from 2001) along with another for profit company acting as our HOA Agent had filed the annual corporate report for that year as of August of 08 and none of us knew what was happening in the neighborhood but a select few...

I agree that you might have a mess on your hands.

Going back to your original question about legal recourse to address this issue, you should consult a local attorney who is versed in contract law (the contract being your CC&Rs) to help sort these things out for you.

Tim

DorieW (Tennessee)
Posts: 52
Posted:
I have and have learned a few very important things since then.

The Developers were listed as the BOD according to the corporate filing with the sate of tennessee in 08 and according to my attorney the BOD would have had to have provided approval/authorization for an amendment to the charter to take place as it did by this imposter president who was just an owner in December of 08.

I see no documentation of this approval/authorization having happened.

So, we had a BOD in theory and the secretary of state had a board consisting of our Developers names at the same time...we had TWO BOD's!!!!

During this time period the HOA circulated a news letter stating that all monies were to go to the new property management company while the previous managment company was listed as the HOA Agent per the documents I pulled from the Secretary of State.

The new property managment company proceeded to collect $14,000.00 from my neighbors during this time period AND the true property managment company stopped receiving monies from our neighborhood and therefore was unable to pay the lawncare company for services which resulted in our HOA being sued for almost $10,000.00 all because we paid our monies to the new property management company when they were not legally the Agent of our HOA and not a single one of us knew!

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