Question on process for spending approval

Started by DaveC6 • 8 replies • 1380 views

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DaveC6 (Wisconsin)
Posts: 76

Posted:

I was recently elected president of our HOA. We have retention ponds and paved walkways in desperate need of repair. I contacted our lawyer and the board does have thee authority to approve the spending on any and all maintenance programs.

My questions; how do I proceed? We just had our annual meeting to elect officers. I have called a special meeting for the 27th of February inviting all HO's as well but with the express purpose of a board vote on the expenditure.

Our by-laws have no specific directions on procedures. Because this does not require community approval, how do I open the meeting and move to a vote by the BOD on the funding approval?

It is my understanding that all board voting should be in public. Should the vote be a show of hands?

GlenL (Ohio)
Posts: 5,491

Posted:

Dave as president it would be better if one of the other Board members proposed it but on a small Board the president can make motions IMHO it just looks better if another does it. The motion would then need to be seconded and the Board would discus the scope of the work and how it is to be funded. The items you have identified as needing repair could be paid for from reserves if you have them. After discussion the Board would vote either by voice, roll call or show of hands and yes it is acceptable for the president to vote on a small Board. Since you are new to this you could look up parliamentary procedures on line, Roberts Rules of Order is the most often touted example but can be overly complicated for small Boards. If your local City, County, or Township meetings are televised, they can be used as examples of how Boards are run.

Studies show that 5 out of 4 people have problems with fractions

DaveC6 (Wisconsin)
Posts: 76

Posted:

GlenL: Thanks for the reply. I just received my brief copy of RROR.

The only quorum identified in our by-laws refers to a board quorum majority, in our case 3 being a minimum for a quorum. Below is language from our by-laws. My question is based on the language as written, if it was proposed to spend $6,000 on trees, does the 2/3 vote approval mean a 2/3 approval vote of non-board members in attendance? As I understand it, each board would also have a vote as well.

the Board's powers hereinabove enumerated and described in the
Declaration, shall be limited in that the Board shall have no authority to acquire and pay
for any structural alterations, additions to, or improvements of the Lots requiring an
expenditure in excess of Five Thousand Dollars ($5,000.00), without in each case the
prior approval of Voting Members having two-thirds (2/3) of the total votes;

FWIW, our lawyer has indicated that our by-laws are rather vague in many areas.

GlenL (Ohio)
Posts: 5,491

Posted:

IMO it would require a simple majority or 3 of 5 votes to pass the measure. We have a similar passage in our CC&R's but if you look closely it has to do with improvements or capital additions not repairs which is a whole nother kettle of fish. I'm sure if you look closely through your CC&R's you'll find that one of the Board's duties is a "duty to maintain the common areas." However if in doubt break the projects into separate motions, one for the ponds and one for the walkways to keep each under the spending cap.

Studies show that 5 out of 4 people have problems with fractions

DaveC6 (Wisconsin)
Posts: 76

Posted:

I agree. We are making a point to separate improvements from maintenance. I was just trying to imagine a scenario where a small group of HO's could make a motion to spend funds that would not necessarily benefit the community at large.

Just trying to get a handle on how to proceed on a number of issues while restoring some process to our meetings.

Have you or your HOA had any experience with restrictions not being enforced? Over the last 7 years, someone gave an opinion that our rv/boat parking restrictions were superseded by county parking restrictions. Because of the bad advice, a number of homeowners have been storing their boats/rvs in driveways. Last year while treasurer, I contacted our lawyer as well as county attorney for clarification. All agreed our by-laws were fully enforceable and should be enforced. The president refused to do anything.

We now have a dilemma as the rvb/boat owners acted in good faith based on information provided by the board. I suggested grandfathering those who currently store boats/rvs at home.

Any suggestions?

GlenL (Ohio)
Posts: 5,491

Posted:

Somewhere in your CC&R's should be a passage similar to: Waiver. No covenants, restrictions, conditions, obligations or provisions contained in this Declaration shall be deemed to have been abrogated or waived by reason of any failure to enforce the same, irrespective of the number of violations or breaches which may occur.

This means that even if prior Boards for whatever reason didn't enforce a particular Covenant or Rule the current Board can. I would explain to the homeowners involved that the rule can and will be enforced and give them reasonable time to correct the violation. That or change the Covenant to allow them, that would require approval of whatever percentage of homeowners your CC&R's specify, usually around 75%.

Studies show that 5 out of 4 people have problems with fractions

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By GlenL on 02/18/2012 5:06 AM
Somewhere in your CC&R's should be a passage similar to: Waiver. No covenants, restrictions, conditions, obligations or provisions contained in this Declaration shall be deemed to have been abrogated or waived by reason of any failure to enforce the same, irrespective of the number of violations or breaches which may occur.

This means that even if prior Boards for whatever reason didn't enforce a particular Covenant or Rule the current Board can. I would explain to the homeowners involved that the rule can and will be enforced and give them reasonable time to correct the violation. That or change the Covenant to allow them, that would require approval of whatever percentage of homeowners your CC&R's specify, usually around 75%.

I agree. A nice polite letter saying like: after many homeowner complaints, and discussion among the BOD in consultation with our attorney, the BOD intends to enforce the rule. Give them time to make other arrangements.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By DaveC6 on 02/18/2012 2:37 AM
GlenL: Thanks for the reply. I just received my brief copy of RROR.

The only quorum identified in our by-laws refers to a board quorum majority, in our case 3 being a minimum for a quorum. Below is language from our by-laws. My question is based on the language as written, if it was proposed to spend $6,000 on trees, does the 2/3 vote approval mean a 2/3 approval vote of non-board members in attendance? As I understand it, each board would also have a vote as well.

the Board's powers hereinabove enumerated and described in the
Declaration, shall be limited in that the Board shall have no authority to acquire and pay
for any structural alterations, additions to, or improvements of the Lots requiring an
expenditure in excess of Five Thousand Dollars ($5,000.00), without in each case the
prior approval of Voting Members having two-thirds (2/3) of the total votes;

FWIW, our lawyer has indicated that our by-laws are rather vague in many areas.

Dave

I do not read the $5,000.00 limit as applicable to repairs which I believe you were talking about. Now depending on the costs maybe you could $5,000.00 them to death. Project 1, $5,000.00 for road repairs. Project 2, $5,000.00 for drainage pond repairs, etc.

The real question will be do you have the money or do you need to do an assesment and/or dues raise to get it. This could be the straw that breaks the camels back.

DaveC6 (Wisconsin)
Posts: 76

Posted:

JohnC46:

Agreed on repairs and restoration. The board will make the decision as to when to proceed and how much $$ to authorize for the restoration of the ponds and paths. Ironically, the maintenance of the ponds is non-negotiable. If we fail to maintain teh ponds, the village will and bill us anyway as part of our 100 year flood plan. The walkways are a different story but I feel most HOs favor the paths. A mile walkway through the development may be our redeeming value.

For seven years, the assumption has been that any expenditure> $5K required a community and approval.

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