Recall BOD

Unless your CC&R's allow recall by petition you haven't recalled or "fired" the Board. Not all CC&R's are the same but generally how you would do it is to secure the amount of signatures of members in good standing that are required to call a "Special Meeting" for a specific purpose i.e. Recall of existing Board (any or all - be specific) and election of their replacements. You would present that petition to the Board in the manor prescribed in your CC&R's. The Board president would then have X number of days to call the SM and notice it to the homeowners. If he fails to do that then the homeowners have the right to notice and call the meeting. At the SM the homeowners would vote to recall the Board and replace them or reelect them. Then you would need to transition from the old to the new, including bank accounts, secretary's books, etc. Then after all that mishigas the new Board would have the power to discontinue the lawsuit.

Connie

You mentioned the Declarant.

Does the Declarant still play a role?

How did the present BOD get in office?

If BOD elected, when are the next elections and for how many positions?

If new elections soon, it might be easier to run a slate for the BOD and get them elected rather then go the recall route.

With 28 of 40 (70%) owners in agreement, you may have enough to pull off a recall and replacement but as others have told you, there is a procedure. You just do not march in and take control.

Thank you for your input. We are going to follow all ths suggestions closely and get this matter over with. With your informationn to follow, we will are now in a better understanding of what we have to do and do it correctly.. Thanks you all.

Lynne unless your CC&R's or State law is vastly different than the rest of the country the power to initiate or settle lawsuits is vested in the Board; which is why the OP wants to recall her BOD.

This is a chart explaining the differences between H/O vote and Board vote that I downloaded years ago from (I think) davis-stirling.com but I can't find the link now. The line about assessments is specific to CA. (emphasis added)

Powers of Board and Membership
Associations are not pure democracies where members can vote on all issues. Instead, they are representative democracies where powers are delegated to elected representatives (the board of directors) and certain limited powers are reserved to the membership. Representative democracy is the model used throughout the Western world.

Membership Authority. The rights/powers reserved to owners are described in the governing documents and are generally limited to the following powers:
to elect a board of directors
to remove directors from the board
to call special meetings of the membership
to amend the CC&Rs and bylaws
to approve regular assessments over 20% and special assessments over 5%
to attend open meetings of the board
to access their property
to use the common areas
to inspect the association's records

No Veto Power. Because of the division of authority between the membership and the board, members do not have a direct veto over the board's actions (except for rule changes). Rather, the power to veto is indirect. If members are unhappy with board actions (or inaction), the membership can remove the board or wait until the annual meeting and elect a new board.

Board Authority. By law, corporations must have boards of directors. The powers delegated to boards generally include the following:
manage the association
adopt and enforce rules and regulations
enforce the CC&Rs and bylaws
contract for services
levy and collect regular assessments
levy and collect special assessments up to 5% without membership approval
levy and collect emergency special assessments
pay expenses incurred by the association
prepare and adopt budgets
repair and maintain the common areas
insure the association
disburse reserve monies
invest funds
call membership meetings and appoint inspectors of election
appoint and remove officers
appoint directors to fill vacancies
establish and dissolve committees
initiate and defend litigation

Judicial Deference. Courts will defer to board decisions, even if the decisions are not the "best" decisions, provided the board made a reasonable investigation, and its decision was in good faith with the best interests of the association in mind.

Dang no edit:

My HOA had generic SC HOA Bylaws and we owners cannot do as you advocate.

That number can vary depending on ones Covenants and/or Bylaws. 75% is not the same for all. As most have never read their, they often quote "bad" numbers.

Hope this helps.

Connie:

Not familiar with laws or your documents but here the petition must spell out exactly what is the purpose of the special meeting being called. Then under our documents the Board is obligated to set a time and place for that meeting and notifiy the owners. Simply presenting the peptition does NOT remove the Board. This has to be done through an election. And the same is true for putting a new Board into place.

As far as now obtaining property records from the current Board, as they have not been officially removed I would consider the possiblity they will be less than coopperative in meeting your demands. Sometimes, during this process those serving will put up quite a fight and withholding documents and information can and has occured.

Just curious how many Board members currently serve? And your petition seeks to remove them all? Why do you think the Board President would initiate a lawsuit have the support of the Board (or are they asleep?) and then pursue a course of action many feel is not in the best interest of the property? Most people act in a predictable manner and their goals and motives can be seen. I don't understand what if anything your President stands to gain.

I hope for your sake you follow the requirements under the laws and regulations to the letter rather than making assumptions that a majority supports your efforts therefore you decide what's right and how it should be done. Because this can become a long hard fight in some cases.
Some people just don't ride quietly off into the night.

I know about this because we went through a recall attempt a few years ago. The leader of that group read the by-laws and saw what she wanted to see. She pushed through a petition and then held her own meeting and election the results of which SHE determined were in favor of her efforts.

In the end she was not within her rights to call the meeting, set the terms of the meeting or as she did demand the Baord attend HER meeting.

And yes in NY the purpose of the meeting must be specific if it says to remove the entire Board then the vote would be to remove the entire Board yes or no.

Many times people come to the belief that when they now have a majority they get to set the rules. And IF this ends up in court, which it could when the court finds out you missed the requirements of the by-laws or state laws you fail.

I just have to wonder what the other members of this Board are doing? How did this President get into their position? And I wonder what the details and amounts of the lawsuit cost and what it seeks?

Hopefully, the OP keeps us informed so others might see and learn from their efforts.

Jon,

I know we must follow the procedures and we will be having another meeting of our owners who are the 28 owners we have. I have passed along all the information given to me through this HOA talk, and we are all considering what you have said. We have 9 board members, one of which resigned about three months ago, because she did not agree with the board and did tell them so. The BOD is suing the developer/declarant for five years of past dues which he does not owe. He was developing the land, making all the improvement needed by law and all of the agencies needed in order to sell lots. He has not been granted all the deeds as yet from the attorney general, and therefore only has one lot deeded to him for the entire piece of land. as we understand, he does not pay dues while making the improvements, and when he finally sells a building lot to a new owner, then that owner begins to pay dues to the HOA. We need to remove them all because none of them have come forward to give their own opinions as they are follwoing the BOD president in all that he says and does. We think the BOD president has a goal to get the funds from the treasury (after they win the lawsuit) to invest in his company which is options trader, glean the commissions and broker fees, and registered rep fees. He has already tried to get a credit line from a local bank, and was turned down. Our HOA is a non-profit corp., and therefore we only have the dues we collect. We do not own any of the common land or systems, such as water wells, pumps etc. However the HOA does maintain them. The developer owns all the common land. The BOD president has also added to the balance sheet, an accounts receivable figure of $174000 which represents the amount they are suing the developer for. When the opinions of the board member who resigned were told to the BOD regarding putting the A/R amount into the books was not the right thing to do because it would never be collected, she was told that by not putting it on the books would be wrong, and the owners want to see a successful board, and the premise of collecting this "bill" and that it is "owed" would look good to a bank. It was then asked, "why do we need to have a bank loan or a line of credit"? I think this is the question "what does he have to gain?" What would we want to be in debt for, and for what? Our HOA has always made all ends meet with the maintenace, mowing and landscaping along with snow removal as well as system maintenance. We have a capital asset account to fund major repairs and have been successful with that. This is for Phase I of the development, as Phase II is still in development by the developer without individual lot owners, and therefore not using the roads, or getting mowing landscaping or snow plowing. This BOD has raised our dues 45% in order to fund the legal fees from their law suit against the developer. They did not have a special meeting to discuss this law suit, they just did it without a majority of 75% of the owners approval. It was estimated by the attorney this legal suit would cost in excess of $50,000 in the first year. They did not take into consideration the developer would file a counter suit against the HOA which is in the amount of over $3,500,000. The BOD did not disclose this to the HOA owners, and we found out because the developer did disclose this to an owner. We went to the county courthouse and verified it. Now all of the owners here are in a quandry and all are angry because we cannot afford the $3.5 million plus all the legal fees to go with it, The BOD needs to be fired, and we must follow the correct procedures. I am thankful for all the information and it is a real education. We need to get back to where the owners here can get back to normal, drop the lawsuit against the developer, deal with the developer to drop his suit, and get back to business as usual. We need to stop the madness. We will be calling the attorney general's office in Concord NH to find out if NH has any laws to follow to get this done. I don't think we can wait until next June to elect a new board, and get rid of them.

This precisely why it is designed to be so difficult to recall a Board, to prevent knee jerk reactions to half understood facts and rumors and innuendo. Although in lieu of recall I'm assured tar and feathers along with riding them out of town on a rail works just fine to remove a recalcitrant Board.

Riding the rail (also called running out of town on a rail) was a punishment in Colonial America in which a man (rarely a woman) was made to straddle a fence rail (usually the triangular split-rail rather than the modern machine-milled) held on the shoulders of at least two men, with other men on either side to keep him upright. The victim was then paraded around town or taken to the city limits and dumped by the roadside. The punishment was usually a form of mob extrajudicial punishment, sometimes imposed in connection with tarring and feathering. It was intended to show community displeasure with the victim so he either conformed his behavior to the mob's demands or left the community.

Yes and this is the result of all of our anger. But we will calm ourselves down, and just go with what is the correct procedure. I thank you for you advise.

In our covenants it specifically says that the declarant does not have to pay assessments on any property they owe in our development. It also states that if they sell the land to another builder (which they are about to do), that builder does not pay any assessments either. My whole point is that is all spelled out very clearly in the covenants. No attorney would touch that with a 10-foot pole.

There are major missing pieces in this whole scenario. I don't even understand how you even have a functional board when your builder is still developing the property. Someone correct me if I'm wrong, but isn't it usually the standard to have some homeowners on a board run by the builder until they are finished with the developer. That's how it's done in the neighborhoods around here. Our board had absolutely no power until the builder completed the last phase.

Obviously you want to also follow any rules in your CC&Rs about elections, petitions, special meetings, etc. Couldn't your group of 28 homeowners just go to the board and find out what the heck is going on from then, and if the answer isn't sufficient, then move forward? While there seems to be all kinds of shady going on, I'm not always a huge fan of throwing the baby out with the bathwater.

Sorry I wasn't much help. Just wanted to add what I knew from my personal experience. Like I said, I am still stuck on the fact that your builder even lets you have a functioning board if they're just starting Phase II.

Laura if you read Connie's first post, the original Declarant went bankrupt in 2007, new developer bought remaining lots to finish development. What I get from it is while the Declarant was not responsible for assessments, the Board is saying the new developer doesn't have Declarant rights and is responsible for assessments.

http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/143452/view/topic/Default.aspx

OK, that clarifies it a little bit BUT I'd still double-check those CC&Rs. Like I said, our original builder is getting ready to sell several undeveloped lots to a new builder and our attorney already told us that we are not going to get any assessments until there are certificates of occupancy. Yours might be written different, but these builders all seem to use boiler plate information for the governing documents.

Mjoe,

Welcome to the site. Discussions on the merits and facts are great to have and can be very beneficial to all. I for one welcome such discussions.

I've never seen such language requiring developers to pay assessments. Would you be willing to cite that section of your CC&Rs?


That's typical. Typically, the CC&Rs (the deed restrictions) only specify that an Association be created and specifies the obligations and powers of the Association. It may or may not specify that the Association be ran by a Board of Directors.

The election and potential removal of Directors from that board is typically defined in the Articles of Incorporation and/or the Bylaws.

Additionally, most Associations are incorporated. As a corporation, the Association must comply with the States applicable corporate laws in addition to the States HOA/COA laws. If the governing documents are silent on how Directors are elected or potentially removed from the Board, Corporate law will typically specify the authority and process.


I truly believe that people discuss the facts as they understand them. If there is a misunderstanding of the facts, misrepresenting those facts occur. The fix for this is to fully disclose the facts as much as possible (which I understand isn't easy when things escalate to litigation) and as quickly as possible (through newsletters or special meetings).

Based only on what is in this thread, you may want to call a special meeting of the membership for a presentation and Q&A on the issue. Perhaps with the attorney present. This may be the quickest way to address the concerns of the membership.

Hope this helps and again, welcome to the forum.

Tim

Mjoe

When you say the BOD cannot be "replaced" that is generally correct. One cannot storm in with any type signed document to do so but there often is a procedure to recall specific BOD Members or the entire BOD. The procedure is usually in the Bylaws, not in the Covenants. Failing it being either the Covenants or Bylaws, then the NH Articles of Incorportion would take control.

I wish you luck in collecting what you consider past dues from the developer. One association I was in looked at when should a developer start paying dues. Our HOA lawyer (who specialized in HOA's) said we might could make a case that once the lot was platted dues should commence (versus when the home was closed on as we were doing) but that the developer had deep pockets to fight it and we would have to consider if it was worth it to us. The BOD decided it was not worth persuing for economic reasons especially when our lawyer told us the developer had let the words "counter suit" slip out.

Also when you say a "home lot" I assume it means the lot has been platted, not just shown on a developers "map". Our developer had "brochure" maps numbering the lots but he had to get each lot platted/approved before building on it so prior to platting, it was not what I would call a "home lot". It was nothing more then a "potential" lot number on a map.

Hope this helps.

Interesting wording. I have to ask:

Is there language elsewhere in the CC&Rs or other governing documents that specify the developer is exempt from those assessments?

TimB4,
There is no language in the CC&Rs or other documents that specify the developer is exempt from those assessments.

Mjoe,

Based on what you posted, I certainly can see an argument that the Declarant should be paying assessments. It's not normal but every Association is different.

Have you filed leins on the property he owns?

None of the CC&R's I've seen over the years specifically spell out how to remove a sitting Board but they've all had provisions on how the homeowners can call a Special Meeting. At a Special Meeting the homeowners may conduct any business that can be conducted at a regular meeting i.e. hold an election.

Difficult and time consuming you bet, it's designed that way to prevent knee jerk reactions and give homeowners time to cool off and think rationally but it can be done. And any Board who thinks themselves immune to the process perhaps should be the first to go.

It seems all of the verbalizing of rumors, inuendos, etc. has clouded the original intent of the "28 owners" out of 51 owners,who are disagreeing to the law suit against the developer (declarant)in the amount of five years of unpaid dues on land that has recently, after five years of working, finished the imporovments and complliance with all the state, local and federal agencies, and is now approved by the Town. At this time the developers documents are in the hands of the attorney general and are awaiting that approval. The association has filed a lien againt the developer's property, along with the lawsuit. In return the developer has answered the suit with a "countersuit" in the amount of $3,000,000 plus againt the owners association. The 28 owners are reeling with the fight against a very wealthy familiy with very deep pockets and are trying to get the board to hear them. They believe this legal fight will result in legal fees much too expensive for the owners to afford to pay. Legal suits take a long time to settle and can and do go on for years. This requires ongoing fees to be paid out by the the entire ownership of the association. Some of the owners, at the annual meeting, were represented by signed documents/petition, (25%) to not sue the developer, because it would be much too costly to fight for what would be gained and not worth it, before the owners assoc filed suit. Other owners agreed to sue because the developer would most likely agree to a settlement and pay something. However, that did not happen, and a countersuit was filed by the developer. They protesting owners want the board to drop the suit against the developer, then hope the developer drops the countersuit. The 28 or so protesting owners are angry about the financial burden about to come about. Should the developer prevail, then liens will be placed against all of our properties further putting owners in financial jeopardy. We all agreed to the CCR's when we purchased our property, and most owners follow them. We all pay dues for the maintenance of our systems, plowing and mowing, as the covenants require. Legal fees of this expected proportion are not a part of them. These 28 owners are willing to put themselves forth to help all the owners in the association. They believe if this matter is left to go on, and no one speaks out then we will all be very sorry for not speaking up before the "giant" wakes up. The 28 owners have spoken, the board needs to listen and seek some resolution as all of us are in this together. We all need to talk calmly and not out of fright or anger.

It is true "the louder you speak, the less it is heard"...................!

Connie:

As a party who has no skin in this game I will offer my observations.
It appears you and Mjoe live on the same property but in different worlds.

And I have read through all of your posts carefully and YES I have gone down the lawsuit road 4 times as a Board member. In some cases it is required and necessary.

Now as to what you post. It appears to be full of fear and based on assumptions and fortune telling. Either the documents require the developer to pay dues or not. You cannot posssibly determine what the cost of such a lawsuit would be. You cannot now determine just what the judgment in any the court might award in the event the suit is lost. As for the amount you claim was filed in the countersuit anyone can sue for ANY amount that does not serve as a prediction of what the court might find.

IF the case is filed. IF the case goes on for years. IF the cost goes so high as to become unafforadble for the property. IF the case is lost liens will be filed against the owners. Bad Bad and Worse.

IMO sounds like you are simply repeating information that has been passed on to you. My suggestion make sure you have FACTS not speculation and predictions o back your opinions.

I just have to wonder Connie where is it you get your information from?
I have an issue with you being told things by the developer's or the association's lawyers in reagrds to onging litigation. Have you in fact read ANY of the paperwork yourself? Do you have any real understanding of what is contained in your operating documents? Seems you and Mjoe see what is actually contained in the documents differently.

Just WHY would the Board be hellbent to sue when according to you they have no case? And please the suggestion the Board President is planning to use the proceeds of a suit they can't win to make profit in their business that's thin.

I would hope this matter works itself out in the best interest of ALL the property owners because in the end you might all remain neighbors and co-owners in the property you all have taken for a needless ride.

I just have to wonder LynneV did you in fact read this post? Seems to offer another point of view from that presented here by Connie. Now as you claim to value and recognize logic then how do you disregard what Mjoe says in favor of the version Connie presented?

And Connie's suggestion that the Board President is pursuing this lawsuit, which Connie seems to suggest cannot be won, with the plans to take the proceeds from the lawsuit and somehow funnel them into his investment company to create profits for himself. Does that really make sesne to you? It makes no sense to me. But that was Connie's explanation as to what motivated the President's actions.

Just interesting what thought process some people operate under.