Seeking advice on how to handle this issue

Started by TimB4 • 29 replies • 4386 views

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TimB4 (Tennessee)
Posts: 21,059

Posted:

Our past BOD consisted of 2 people who could usually attend meetings and 2 individuals who only made half of the meetings due to conflicts. Due to these conflicts and the fact that one individual is scheduled for a military transfer, only 1 person submitted their name to serve next year. The nominating committee solicited for volunteers and I know that 10 people were asked directly if they would serve. The responses were either "been there done that, not again" or "not now".

Tonight was our annual meeting. Turnout was light, 17 in person & 16 by proxy for a 130 lot Association (or a 25% turnout). I was the only name on the ballot. I explained to the membership that if three people were not elected that, even though a quorum doesn't exist - the elected Directors would appoint people to serve. Failure to achieve a quorum on the Board would prevent decisions from being made. I then open the floor for nominations. You could have heard a pin drop.

I was elected and one member received two votes as a write in (because the people at the table thought she would be a good Director. However, this person is serving as our Architectural Chair and said that they didn't mind serving on the committee but would not be on the Board.

Bottom line, there is only 1 person on the new board and no volunteers willing to serve. We need a minimum of 3 Directors to conduct business.

I do see some potential solutions:

1) Ask the person who is transferring to serve until the transfer is closer. Then appoint my wife (and I am actually against this) so we have a quorum and can conduct business.

2) Appoint my wife and adult daughter to the Board along with an article that I don't believe that one family should be able to make decisions that affect the whole community (in a hope of ticking the membership off) and say that if you agree that this shouldn't happen to volunteer for the board and they will gladly step down. The unintended consequence of this would be that the community might act badly toward my wife and daughter.

3) BEG for volunteers within the community (but we have already been doing this)

4) Petition the court to be appointed as receiver so I can legally pay bills and renew contracts (no I don't like this one but it is an option).

5) Go with option 1, sign checks in advance of when they are needed, renew contracts early and before the transfer happens, then when the transfer happens - cease making decisions and let the chips fall how they will.

Mind you I'm tired and venting just a bit (as it just happened a few hours ago). However the issue is a real one. Any feedback will be appreciated.

Tim

PetunkaM (Florida)
Posts: 1,009

Posted:

Mind you I'm tired and venting just a bit (as it just happened a few hours ago). However the issue is a real one. Any feedback will be appreciated.

Tim,

I bet you are tired. Now, your views make sense to me. In any event, please know I truly wish you good luck. AND,I mean it, truly. It ain't easy for any of us.

SusanW1 (Michigan)
Posts: 5,202

Posted:

I'm for you appointing the other board members if no one steps up - but NOT your relatives. Tell those people that you have chosen that the HOA is in danger of receivership and unless they serve, you will begin the petition process.

Then do it.

FredS7 (Arizona)
Posts: 927

Posted:

If you have a lawyer- (personal or HOA) you could appoint him. And have him charge. And exlain to the community that they will be paying the charge until volunteers appear.

This avoids impropriety, puts some pressure on, might not actually cost all that much, and is quickly reversible.

PetunkaM (Florida)
Posts: 1,009

Posted:

Hi Tim,

I would go with Option 1 or Option 2. Either one would not be in conflict with our By-laws nor state statute providing the relatives are on the deed or pay assessments.

Yes, tick the membership off. Perhaps that will get their attention. Send them a letter stating your reasons for the decision you have made. If they do not like it they can step forward. Otherwise, tough luck.

If I may, we had the same problem some years ago. Then the membership authorized ‘small fee’ to be paid to the President, Treasurer, and Secretary. The fee equaled to ½ annual dues. Guess what. It solved the problem in a hurry. I think you are against such a fee, but I do not see anything un-fair about it.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Unfortunate truth: to get people's attention, hit their kids or their pocketbook.

CarolR11 (Colorado)
Posts: 2,563

Posted:

You've helped soooo many of us and now I cannot help you. I wish I could!

Ilke your reasons for #2 and with your written explanation to members, I don't believe they'll become angry with your family. In also like Fred's idea if it's legal per your docs, etc.

Members hate to see their $$$ go to lawyers!

TimB4 (Tennessee)
Posts: 21,059

Posted:

Thank you all for your replies.

Currently our documents specify that no director shall be compensated for duties. Therefore until, As Petunka suggested, the Bylaws are changed by the membership hiring someone to serve on the Board would not be allowed. I do suspect that if I proposed such an amendment that we would get volunteers to run for free. It's certainly an option to consider.

I did do some more research and per VA Nonstock corporation act § 13.1-857 item F, similar to other States corporate laws, even if a term expires, Directors continue to serve until a replacement is elected/appointed. Therefore, in case I do need to appoint family members, I have pointed this issue out to the past board members and requested that they reply with a willingness to continue serving or an immediate resignation (since their term did end). This way, I'll be protecting the Association in case there are any challenges from disgruntled members. So far only one of the three other Direstors said that they resign. Perhaps this means the other two are considering it.

There might be light at the end of the tunnel yet.

As it is sometimes difficult for anyone involved in the issue to see all possibilities, please keep posting your suggestions. They are appreciated.

Tim

BradP (Kansas)
Posts: 2,640

Posted:

Tim:

i always believe the best way to get people's attention is to create controversy. Get example, best attended meeting we ever had is when we were discussing making everyone in the neighborhood use one trash hauler. It would have saved everyone a lot of money, cut down on traffic, etc., yet folks don't like to be told what to do and I didn't think we would get out alive.

To your issue, I like options #1 and #2 and hopefully along the way you will find folks that would be willing to serve. #5) is probably not a good option unless you are intending to move, that happened with us and when we ressurected things it was a nightmare and we are still digging out of that mess and may never fully recover.

Use a ruse to get folks to the next meeting, perhaps a huge increase in dues will be discussed and then go through all these issues. Tell folks the consequences of having just your family on the board and potentially just one home making decisions for the neighborhood. At the end of the day that is about all you can do short of kidnapping folks and making them do it against their will (may not be a bad option though, J/K)

LarryB13 (Arizona)
Posts: 4,099

Posted:

Tim:

Do board members have to be members of the HOA? If not you might see if you can entice someone from outside to the board.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Unless your rules demand monthly meetings, see about reducing the number of meetings throughout the year (maybe quarterly) to entice people whose schedules would conflict with monthly board service. My board actually got more efficient with little bickering among directors when we spaced meetings to every three months (minimum required by by-law) with a longer new business agenda. Of course, pressing matters requires meetings to be called more frequently.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

TimB4 (Tennessee)
Posts: 21,059

Posted:

Thanks Brad. I know of an issue that will get the turn out. I'll have to think about it.

Larry, there are no qualifications on who may serve, so anyone can serve. It's an option, thanks.

Kelly, The Board always held only the number of meetings necessary to get the job done. This last year we met 8 times. The previous year we met 13. However, it might be an option. fewer but longer meetings can be an option. Thank you.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Tim -there may be something in the documents that prohibit relatives from serving on the board.

Since 9/11 non profits are being looked at more closely and as I understand it, not more than 2 board member can be related. (they were looking at families setting up charities and "washing" the money overseas) BUT I don't know if it applies to HOAs.

From all the expertise and help you have give others on this board, i am surprised that you are even considering having 3 relatives on one Board.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By SusanW1 on 10/29/2011 9:19 AM

From all the expertise and help you have give others on this board, i am surprised that you are even considering having 3 relatives on one Board.

Please remember that when I was posting I was doing a bit of venting and free thinking concerning options.
I don't want to do this. However, even with knowing the headaches it can cause, It came to mind with the following rationalizations:

1) Hoping to stir up the membership out of apathy and be willing to step up (granted, doing it this way won't create friends and might actually hurt the Association).
2) We require two signatures on the checks - it's a way to allow bills to be paid
3) Selfishly, if the membership is this apathetic, I may as well make it easier on me.
4) I don't want to do it. I think it is improper. It is a legal option based on our documents (but I'll check into what you posted about).

I'm not really relying on that option. It could, initially, make life a lot easier for me. However, as you and others point out (and I already knew) the unintended consequences of using that option outweighs the initial benefit.

Like I said, I've had one past Director agree to stay on for a little while. I also just got a possible lead to a potential Director but need to ask them.

Thanks for keeping me focused on the issue vs. getting sidetracked into the easy way out, which causes more problems then it would solve.

Tim

TimB4 (Tennessee)
Posts: 21,059

Posted:

Wanted to provide an update to this issue as we had our organizational meeting tonight.

Ended with the following:

One individual from old Board of 4 when asked to stay had resigned.
One individual agreed to stay until 12/31 but failed to show for this meeting
One individual agreed to stay until they are transferred (military) and attended
One individual (me) was reelected to the Board and was in attendance
One individual who was a write-in on the ballot, attended the meeting and
resigned at the end of the meeting (as they preferred to stay on the
Architectural Committee).

This provided us with a quorum and work was able to be done.

We authorized the following:

1) Treasurer to solicit bids and enter into contract for required financial review.
2) President to solicit bids and, if there are not a minimum of three directors serving on the Board, to sign contracts for service contracts expiring in 2012.
3) Treasurer is authorized to turn accounts that are delinquent by 4 months or more over to the lawyer for further action.

This allows us to do the minimum work required to pay bills and maintain services (snow removal, trash, etc.)

Additionally, we will request volunteers for the following:

1) Committee for erosion control
2) Directors
3) Individuals to do solicit bids and oversee planned maintenance items

We will explain that if there are no volunteers, then the membership should expect pending and future issues requiring board action will not be addressed.

Questions, Comments, Concerns?
Advice?

Tim

BradP (Kansas)
Posts: 2,640

Posted:

Tim:

tough situation, all you can do at this point is paint the picture of what will happen if no one volunteers. We aren't as big as your association but we went through that and now we are on the other end trying to clean it up...

Dues don't get paid, homes get sold without collecting dues, HOA property is not maintained, vendors don't get paid and quit providing services, money is unaccounted for and misappropriated, covenants not enforced and neighborhood lots not maintained.

Not a pretty picture but one that needs to be painted. Still won't get their attention. I would get your wife, any adult children and if your bylaws allow your drinking buddies to volunteer and help you out if no one wants to step forward.

TomE4 (South Carolina)
Posts: 26

Posted:

Tim,

I'm with Brad and Fred. Show them how not having a functional board can have dire consequences for the community. Sit down with the board's attorney and write up a list of consequences if the HOA doesn't have a quorum to conduct business.

Before moving into the neighborhood we're in now, my wife and I never dealt with an HOA. I had no clue how it all worked, but thanks the board we have now, I had to educate myself (that's a whole other story). People really can't appreciate the work the board does, the heat they take, etc. All they think is "well, my dues didn't go up, so everything must be ok". That is far from the truth, as you know. Take Brad and Fred's advice and use scare tactics to wake up the neighborhood.
That's what it's going to take.

Steve

TimB4 (Tennessee)
Posts: 21,059

Posted:

This is one article I'm planning to run in our November newsletter. Comments are encouraged (too strong, not strong enough, word it this way, etc.):

Currently, there are three individuals serving on the Board. On January 1, that number will drop to two. In the spring, that number will drop to one.

On January 1, 2012 a quorum of the Board will not be attainable unless the vacant seats are filled. Virginia Law and our Association’s governing documents allow the remaining board members to appoint willing individuals to fill the vacant seats for the remainder of the term.

If there is no quorum, the Board is not allowed to make decisions. Some of the decisions that need to be made in 2012 include:
Common Area Maintenance Contract
Snow Removal Contract
Road Repairs
Bus Stop Shelter Maintenance
Tree Trimming
Insurance Renewal

At the last Board meeting, held on 10 November, a quorum was present which allowed the Board to make some decisions that will allow some, but not all, of the items scheduled to be done this year to occur.

The Board also discussed options to fill the vacancies and allow the Board to conduct business until Spring. One of these options included appointing our Secretary, who is currently not a Director, to the Board. Since the Secretary is the spouse of a current member of the Board, we are reluctant to do this. However, unless volunteers materialize, the Board will have no choice.

JohnM48 (Pennsylvania)
Posts: 89

Posted:

Tim,

If it were our association, I think I'd expand a bit on what happens when the decisions don't get made next year. Agreed, it *should* be obvious, but here it wouldn't be for far too many.

I also think I would expand on the last paragraph. I think you need to come out and ask for volunteers. I know you alluded to it (and again it should be obvious from your wording) but I'd take a page from business and "always ask for the sale". Also, I would explain why the board is reluctant to appoint the secretary - anyone who has not previously served on a board will likely miss the point.

Good luck with it.

Association President

TimB4 (Tennessee)
Posts: 21,059

Posted:

excellent points John.
Thank you.

JohnM48 (Pennsylvania)
Posts: 89

Posted:

Your welcome Tim.

Best of luck

Association President

CarolR11 (Colorado)
Posts: 2,563

Posted:

I like the ideas of the others including John's. If you're not uncomfortable with the writing style, I'd also try to express a little warmth and a really welcoming, neighborly tone.. Perhaps focus on "your" board, or "our" community. Your draft is perfectly logical & rational, but might be a bit off-putting.

Maybe you can emphasize your hope that neighbor work together as a "team," or some such.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Carol, I understand what you are saying. I'm not sure how to incorporate it into the article. I am open to suggests (which is why I'm posting it here first) Here is my rewrite:

Currently, there are three individuals serving on your Board of Directors. On January 1, that number will drop to two. In the spring, that number will drop to one.

On January 1, 2012 a quorum of the Board will not be attainable unless the vacant seats are filled. Virginia Law and our Association’s governing documents allow the remaining board members to appoint willing individuals to fill the vacant seats for the remainder of the term.

The Board of Directors is actively seeking volunteers willing to serve on the Board of Directors and hold various Officer Positions. Interested volunteers should contact the Associations President via e-mail at: President@[association.com] or leave a message at [phone number].

If there is no quorum at a meeting, the Board is not allowed to conduct business at that meeting. Business can include awarding contracts, renewing insurance policies or making decisions to address non-emergency issues of the community. Some of the decisions that need to be made in 2012 include:

Common Area Maintenance Contract
Snow Removal Contract
Road Repairs
Bus Stop Shelter Maintenance
Tree Trimming
Insurance Renewal

At the last Board meeting, held on 10 November, the Board made decisions and approved motions that will allow minimal business to be completed without a quorum.

The Board also discussed options to fill the vacancies and allow the Board to fully conduct business until the spring of next year. One of these options included appointing our Secretary, who is currently not a Director, to the Board. Since the Secretary is the spouse of a current member of the Board, which would place two votes of the Board within one household, we are reluctant to do this. However, unless volunteers materialize, the Board will have no choice but to appoint the Secretary to a vacant seat.

JohnM48 (Pennsylvania)
Posts: 89

Posted:

Tim,

Hope you don't mind, but I took the liberty of having a go at it:

-----

Currently, there are three individuals serving on your Board of Directors. On January 1, that number will drop to two. In the spring, that number will drop to one.

Beginning January 1, 2012 a quorum of the Board will not be attainable unless the vacant seats are filled. If there is no quorum at any meeting, the Board is not allowed to conduct business at that meeting. Business can include awarding contracts, renewing insurance policies or making decisions to address non-emergency issues of the community. Some of the decisions that need to be made in 2012 include:

Common Area Maintenance Contract
Snow Removal Contract
Road Repairs
Bus Stop Shelter Maintenance
Tree Trimming
Insurance Renewal

I'm sure you'll agree that these items represent important decisions to our community. The maintenance and road repairs are necessary to maintain our facilities, and I'm sure you can imagine a winter with no snow removal! And of course, our insurance is critical to protect all of our interests. Yes, these are pressing matters that affect all of us, and there are other decisions to be made as well.

At the last Board meeting, held on 10 November, the Board made decisions and approved motions that will allow minimal business to be completed without a quorum. That was a step in the right direction, but we feel our association and our members deserve better than "minimal".

The Board of Directors is actively seeking volunteers willing to serve on the Board of Directors and hold various Officer Positions. Interested volunteers should contact the Associations President via e-mail at: President@[association.com] or leave a message at [phone number].

Virginia Law and our Association’s governing documents allow the remaining board members to appoint willing individuals to fill the vacant seats for the remainder of the term. The Board has discussed options to fill the vacancies and allow the Board to fully conduct business until the spring of next year. One of these options included appointing our Secretary, who is currently not a Director, to the Board. Since the Secretary is the spouse of a current member of the Board, which would place two votes of the Board within one household, we are reluctant to do this. However, unless volunteers materialize, the Board will have no choice but to appoint the Secretary to a vacant seat.

Remember, our association is here for the benefit of all of our members. Please consider volunteering some of your time - our board is only as strong as the members we have, and we need you!

Association President

TimB4 (Tennessee)
Posts: 21,059

Posted:

John,

Thank You! I like it.

JohnM48 (Pennsylvania)
Posts: 89

Posted:

Your welcome Tim

Association President

CarolR11 (Colorado)
Posts: 2,563

Posted:

Nice work, John. I like the tone. I've suggested a few little changes and a bit of editing for whatever their worth. I think I'm mistaken with the Sp. 2012 date, sorry. Oh, here's a newsletter item title used by a previous president here concerning the same topic: "Time to Serve" I like the double-maining aspect of. Onward, Tim!

------------------
Beginning January 1, 2012, a quorum of the Board will not be possible unless the vacant seats are filled. The Board will not be allowed to conduct business at that meeting or at any future meeting without a quorum. Business can include awarding contracts, renewing insurance policies or making decisions to address non-emergency issues in our community. Some of the decisions that need to be made in 2012 include:

Common Area Maintenance Contract
Snow Removal Contract
Road Repairs
Bus Stop Shelter Maintenance
Tree Trimming
Insurance Renewal

I'm sure you'll agree that these decisions are important to our community. The maintenance and road repairs are necessary to maintain our facilities, and I'm sure you can imagine a winter with no snow removal! And, of course, our insurance is critical to protect all of our interests. Yes, these are pressing matters that affect each and every one of us, and there are other decisions that the board needs to make as well.

At the last Board meeting, held on 10 November, the Board made decisions and approved motions that will allow minimal business to be completed without a quorum. That was a step in the right direction, but our Association and our members deserve better than "minimal."

Your Board of Directors is actively seeking volunteers to serve on the Board and hold various Officer positions. Interested volunteers should contact the board president President via e-mail at: President@[association.com] or leave a message at [phone number].

Virginia Law and our Association’s governing documents allow the remaining board members to appoint willing individuals to fill the vacant seats for the remainder of the term. The Board has discussed options to fill the vacancies to allow the Board to fully conduct business until the spring of 2012. One option is to appoint our Secretary, who is currently not a Director, to the Board. Since the Secretary is the spouse of a current member of the Board and would place two Board votes within one household, we are reluctant to do this. However, unless volunteers step up, the Board will be forced to appoint the Secretary to a vacant seat.

Remember, our Association is here for the benefit of all of our members. Please consider volunteering some of your time--our board is only as strong as the members we have, and we invite and need you!

JohnM48 (Pennsylvania)
Posts: 89

Posted:

Quote:

Posted By CarolR11 on 11/16/2011 6:43 PM
Nice work, John. I like the tone.

Thanks Carol

Association President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Thank you everyone.

I'm getting the newsletter out this weekend. I will keep you updated.

Tim

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