BOD ignoring Crrs and By Laws

Started by LauraW4 • 15 replies • 2041 views

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LauraW4 (Colorado)
Posts: 16

Posted:

My first concern

ur By Laws and Covenants, etc specifically call for a seven member Board of Directors, for almost a year there has been only 6 members on the HOA BOD as they removed a director from office who had three abscences from meetings, per covenants. They have not replaced him with an appointment to fill out his term on the Board, per covenants. They are now passing policy decisions without the proper number of directors that are effecting all homeowners- have brought this up in conversation with BOD president and nothing has been done to rectify this- I understand that they may be having a hard time filling the position ,as we have a very apathetic group of homeowners,but is any decision this board makes really leagally binding?
The other problems are just piling up- lack of covenant enforcement, no stating conflict of interest at matters brought before the Board by BOD members when dealing with some homeowners, no hearing standards, etc. All of these we have existing policy in place but this BOD just doesn't seem to go by them. They have been told by their attorney to follow all rules and stick to them, but nothing is happening.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Laura,

Does the language about the number of Directors say shall have 7 or does it give a range of numbers (no less than x but no more than y)? Can you provide it?

Does the language about vacancies require the board to fill a vacancy (example: shall fill) or is it an option (example: may fill)? Can you provide the language?

A Board must have a quorum to conduct business. For a seven person board, the quorum requirement is typically 4 (a majority). Providing a quorum existed at the meeting when the decisions were made, the decisions are likely binding and legal.

As for the other problems that are piling up, you did state that there is apathy within the membership. When this happens those who are willing to serve typically will be the ones who serve. The best way to ensure that the rules are being followed is to become part of the decision process. Are you currently a member of the Board? If not, have you volunteered to fill the vacancy or submit your name to the nominating committee for the next election?

It's imperative that the members remain active in the development and actually take an interest in how the Association is governed. If apathy sets in (and, per your posting it has), it becomes that much more difficult to change things when issues are discovered.

Hope this helps,

Tim

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Laura

Usually a BOD has an odd number of members but remember that with 6, it still takes 4 (66.6%) agreeing to pass anything. With a BOD of 7, it would still take only 4 (57.1%) agreeing to pass anything. Thus if the present BOD of 6 is in lockstep, a 7th member would have little to no effect.

Usually Bylaws say the BOD can fill a vacancy and how to do it. Few Bylaws say the BOD must fill the vacancy.

If you disagree with how the BOD does things, the solution is not adding another member even if yourself. The solution is replacing existing members on the BOD with those that think like you do.

Hope this helps.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Laura,

I noticed that this thread is similar to your earlier thread.

Based on the two threads, I will offer the following additional advice:

In general, the CC&Rs (deed restrictions) are considered a civil contract between all owners of the properties that have the same deed restrictions attached. Associations are formed to maintain and/or operate the common area and fulfill any services (trash/recycling, snow removal, street lighting, etc.) required by the CC&Rs. Per the CC&Rs, the Association is also given the authority (in addition to the owners) to enforce the covenants, restrictions and conditions of the deed restrictions (contract). Typically, Associations are incorporated (usually as a nonprofit) as this provides them certain advantages. As a corporation they must comply with corporate laws in addition to any HOA/COA laws.

As you know there are civil laws and criminal laws. Criminal laws are usually enforced by the State. Civil laws are usually enforced by the individuals involved and they do this through the court system. Since contracts, hoa/coa laws and corporate laws are considered civil laws, there is typically limited governmental authorities to "oversee" or enforce those laws.

Sure the State corporation commission may fine for not filing the annual report on time. The IRS will certainly go after the Association for failing to file taxes. The District Attorney will prosecute if criminal laws are broken (example embezzlement). However if the Association doesn't comply with the Bylaws or a civil law, it's up to the membership to hold the Board accountable. The easiest way would be to recall the board or not reelect them to the Board. The more expensive option is to go through the court system.

Since you have previously served on the board and your Association requires time to pass before you can serve on the board again, your best option is to use this time to educate the membership on why it's important to become and stay involved with the running of the Association. Gather support and vote the people who are not following the rules out of office and replace them with those that will.

LauraW4 (Colorado)
Posts: 16

Posted:

Yes Article 5 The Board
5.1 Numbers and Terms:The affairs of the community shall be governed by an executive Board that has 7 members.
5.4 Vacancies : Any vacancy on the Board for any reason other than removal by special member voting, must be filled by appointment of a majority of the remaining Board.

Yes I have been on the BOD in the past, and currently on the ARC, but can not get the BOD President to abide by Covenants, Rules, etc.- Have explained quietly and patiently what "should" be done,( Colorado Law, Covenants, ByLaws, Incorporation, etc. but falls on deaf ears. When I have said that following the Policy for x, y, or z in our Policy book differs from what she is proposing, she states- that was the "Old Board". However true that might be, no "new" policy was ever enacted- and those which she is trying to change are in direct conflict with our Covenants. Have had Our legal reps talk to the Board and have told them to stick to the law and apply the same to everyone but ...nothing happening.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Well, I agree that per the language you provided, the board must have 7 people and vacancies must be filled. Could the issue be lack of qualified volunteers?

If there are no qualified volunteers, the board is left with the option of leaving the chair vacant or appointing someone who isn't interested, will not attend the meetings and will likely be removed from the board for lack of participation (like the last one was).

If they aren't willing to follow the covenants, in addition to the options I mentioned previously, you could cause legal issues by seeking a court order to force them to comply (but it will cost both you and the Association money) or go through the process of recalling the board for failure to comply with the governing documents. Of course, you need to have volunteers willing to serve and a membership educated in the potential issues failing to follow the documents can cause them (i.e. paying legal fees) in order for the recall to be successful.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Laura

You said:

Have had Our legal reps<.b> talk to the Board and have told them to stick to the law and apply the same to everyone but ...nothing happening.

Please define our legal reps.

Thanks

LauraW4 (Colorado)
Posts: 16

Posted:

Our Associations Lawyers are the legal Reps that I was speaking about. They came to a meeting and discussed everything with the Board and told them from now on you have been told the Laws, from here on out make sure you abide by all the CCRs and apply them equally etc as you may open up the Association to litigation if the laws, etc are not folllowed...and nothing. Actually one person said- well we don't have to listen to the lawyers. I don't think these people are bad per se.. they are just ignorant and are not looking at the broad scope of their actions. The frustrating part is trying to get them to realize this.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By LauraW4 on 09/20/2012 10:12 AM
Actually one person said- well we don't have to listen to the lawyers.

That's not good thinking. If the board behaves contrary to the advice of the association's attorney, their D&O insurance may not cover the cost of defense if they are sued (even if sued individually as a result of an action as board member) nor will the insurance likely cover any damages arising out of a judgement.

LauraW4 (Colorado)
Posts: 16

Posted:

Exactly, and does anyone have any good ideas , short of going to court, to get these people to realize this? This is one of the reasons I did not run for the Board again- trying to get people to understand what to do legally and equitably was such a nightmare, like talking to a brick wall- generally people in our community volunteer for the Board because they want some portion of the CCRs changed, then find out their "pet" project is in violation of either City Ordinances, etc. So once they figure that out they quit and give up enforcing anything- when the ARC has tried to get HOs to comply with CCRs the Board invariably sides with the HOs even in instances where the rules are spelled out exactly- no wiggle room- so do I bring this up to our management company, as they sit and listen to all of this at Board meetings- we had a great Manager, for 6 years, who always read and explained the CCrs and Law to the Board when questions arose- now have a new one, actually 3 in the past 2 years, who are either too inexperienced or intimidated by BOD to explain all the consequences of this . I mean, if they actually won't listen to our own Lawyers- then what??

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By LauraW4 on 09/21/2012 9:37 AM
Exactly, and does anyone have any good ideas , short of going to court, to get these people to realize this?

Educate the membership and recall the board or at least don't reelect them.

Bluff - have an attorney write a letter challenging a decision that was in violation of the governing documents. (I don't like to bluff when it comes to legal matters but it may work).

LauraW4 (Colorado)
Posts: 16

Posted:

Ok now it is really getting out of hand. Our HOA President is also on the ARC ,(Arch Control committe) we had a request from a homeowner for a deck. Decks are allowed. Only restrictions is they must be an integral part of the landscape and home and must match color scheme of the house, Everyone on the ARC read the request and blue prints, read the CCRs Guidelines and Policies...it was a valid request, the ARC voted on it and it passed- by quorum, only the President didnt like it. She requested a meeting of the ARC to discuss, the ARC chairman said according to CCRs Guidelines and Policy, we followed everything to the letter- and documented such- we do not need to have another meeting on the issue. There are at least 14 other decks just like the proposed one in the community- all were approved. She in fact sent out an email stating the person requesting the deck is a pain and he is doing this to upset his neighbor, also a Board member and who has made three large,inacurate allegations against the HO wanting the deck, She has now called a meeting of the Board to remove the chair and all members of the committee stating " you do not have the communitee's best interest in mind" She has slated this meeting for 1 o'clock in the afternoon on a Tuesday. Everyone she is removing works and can not attend the meeting. All other board meetings are held in the evening so anyone who might need or want to attend can. The meeting is scheduled for Tuesday - 3 days away- now what?? She is totally out of control.

PaulT6 (California)
Posts: 409

Posted:

Unless she is in direct violation of your GD's or State law, which may not matter anyway, it appears that about the only thing you can do is to boycott the meeting.
If enough Direstors agree they can try to remove her, or the recall issue?

Paul T

LauraW4 (Colorado)
Posts: 16

Posted:

she is ignoring quite a few of the CCRs when it was explained clearly to her what she was doing in violation she said she did not care. Also some state stuff too- she has run 7 out of 12 people either of the board or the ARC she is very difficult person to work with-the remaining 4 board members are somewhat cowed by her - I am sure none of them would go against anything she has said- the person requesting the deck is getting ready to see an attorney because he is tired of being singled out due to his neighbor who is one the board and they have some sort of personal animosity thing going-I can not understand why our management company is sitting quietly by- so disheartening, and I am afraid she is going to end us all up in a lawsuit.

PaulT6 (California)
Posts: 409

Posted:

Quote:

Posted By LauraW4 on 09/29/2012 12:06 PM
she is ignoring quite a few of the CCRs when it was explained clearly to her what she was doing in violation she said she did not care. Also some state stuff too- she has run 7 out of 12 people either of the board or the ARC she is very difficult person to work with-the remaining 4 board members are somewhat cowed by her - I am sure none of them would go against anything she has said- the person requesting the deck is getting ready to see an attorney because he is tired of being singled out due to his neighbor who is one the board and they have some sort of personal animosity thing going-I can not understand why our management company is sitting quietly by- so disheartening, and I am afraid she is going to end us all up in a lawsuit.

Not sure how much help the Management Company could be as they probably report to the Board. If she has the other four Directors in her pocket, legal action is probably the only alternative unless your Membership recalls her, or all of them.

Paul T

JohnC46 (South Carolina)
Posts: 14,265

Posted:

I agree with Paul. She seems to be in control of the BOD. Either recall or sue.

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