Illegal election of board members

Our HOA has by-laws which dictate how, when and who in regards to voting in new board members. At our June board meeting we called for a vote of the board to fire our grader operators who are employed by the HOA on an hourly basis and use HOA owned equipment. The grader operators decided to cut an improper ditch on a homeowner's property because they felt that homeowner was causing flooding of their shed and garage. They literally put the grader blade at least 2 feet onto this homeowners property and cut a trench 12 inches deep leaving a sharp drop-off on that property to the road. So the board voted 4-2 in favor of firing them. When the vote didn't go the way the treasurer and secretary wanted it to go they immediately resigned and handed over the books and minutes to the president and turned in their keys to association property. A week later the board was meeting with a contractor for clarification on his estimate to repair the roads and a group of homeowners showed. This was not a regular meeting and no minutes were kept. It was simply to get answers from this contractor so we could make an informed decission at our next regular meeting and vote on it. The homeowners interrupted our discussion with the contractor after they had been told this was not an official meeting and insisted on listening to our conversation with the contractor. After our discussion with the contractor one of the homeowners spoke up and said they were going to have an election of new board members on the upcoming Sunday at 2 pm. Our by-laws state that elections are held the 3rd Sunday in October at 6 pm provided there is a quorum of homeowners present to hold an election. Once again it is the board who calls the meeting to order, verifies there is a quorum and then hands out ballots to all registered homeowners with 1 vote per lot in the association. This group of homeowners conducted the election and had homeowners sign a sign-in sheet. The votes were by a show of hands and only one board member who was on the board prior to this election was present and not voting but unable to verify who was voting for who and if more than one person in the household was voting. The board president(the one prior to the illegal election) contacted the HOA attorney prior to the election and was advised not to turn over any HOA property, books, minutes, etc to this newly elected board because it violated the by-laws in every sense. Once the newly elected board was finished with their meeting they called upon all the homeowners to park in front of the ousted presidents house and demanded the HOA property. The ousted president called the sheriff's dept to have the crowd leave and the deputy advised both sides that it was a civil matter and both sides would have to get an attorney to clear the matter up. The HOA attorney advised the ousted board that he would review the by-laws once he returned from vacation the day before the next regular board meeting. The ousted president called the bank to advise them not to do a new signature card until after the next meeting on July 9th, 2013. The ousted president happened to be on vacation out of town during the same time period as the HOA attorney and when she returned was informed the illegally elected board busted the lock on the association building and changed it so the legal board members could not have access to it. They also went to the bank and presented made up documents declaring themselves as the newly elected board and got the bank to open a new account. The newly elected board also cut the lock on the HOA dues drop-box and took all the monies collected for the month of July out of the box. The ousted president took a signed copy of the by-laws to the bank today and the bank is now investigating the legality of this board and if they cannot make a comfortable decission they are doing the right thing they are going to freeze both accounts and get the FBI involved. The ousted board feels this would be the right thing to do given the circumstances. There was not a quorum of homeowners present for the vote. There were 16 voters present out of 60 homeowners. That is not a quorum. There was no way of validating the votes. The registered attorney who advised the ousted president not to turn over any records to this group has since decided it is a conflict for him to say anything and advised the ousted board to seek legal counsel elsewhere since the newly elected board contacted him and wanted him to represent them. So is this the biggest mess ever in an HOA and where do we begin to put the pieces back together? The resigned secretary from the ousted board has resorted to posting a sign on her property asking people to "honk if the ousted president is a B" with the ousted presidents name in place of president in the quotation.

I don't see any reason to hold a recall election since your by-laws specifically state when, where, and how to conduct an election. I also don't see why your attorney would see a "conflict.". He is the BoD's attorney and some homeowners attempted a coup and asked him to be theirs. He should have said no and continued serving the rightful board.

The police should have been involved immediately when the property was busted into and the locks changed. Breaking and entering is not a civil matter and these homeowners should be held accountable and if your attorney is unwilling to I would find another to start taking these individuals to court immediately. The longer you wait the more power these individuals accumulate. The courts need to be involved right away.

And I thought my neighborhood was a mess!

There's more! The ousted president is the owner of the property that was damaged by the grader operators. It was malliscious intent because the grader operator's 2 properties are directly across the road from the president. The president of our board does not vote on matters unless there is a tie. There are a total of 7 board members.The board members asking for the vote to fire the grader operators wanted them fired because they also cut a ditch to drain water from our roads onto another person's property in an entirely seperate HOA and the board wanted to get that corrected before somebody else decided to sue our HOA for damages. The intent of the legal board was to then get the problems fixed and sue the grader operators for damages. The grader operators who were fired initiated the illegal election for the purpose of protecting themselves from a lawsuit. Both fired grader operators are on the newly elected board with one voted in as president. He lied to all the homeowners he managed to get to listen to him when he was circulating a petition by stating he wanted to get rid of the president because she was going to sue the HOA. This is far from the truth. The ousted president is going to sue the grader operators for damages including punitive damages. I might also add that 1 of the grader operators rents the property and thus does not have a vote in our HOA but that didn't stop him from voting and getting elected as a board member. The legal property owner retains the right to vote in all matters.

Mickie,

What is your goal, that is, how do you think it should be resolved?

Am I to understand that you hired operators from within your own Association (vs. using an outside contractor)? You also indicated that the operators are hired on an hourly basis and use the Associations equipment. This may legally make them employees of the Association. Check IRS website to see how they would be qualified.

As a general rule, your only recourse against an employee is to fire him. By definition, an employee is someone who works at the direction of someone else. Since you paid the grader operators by the hour and supplied the equipment they used, no court would find them to be anything other than employees. If they did something wrong while on the job, you are liable for whatever damages they caused. You should have supervised them more closely.

As to the election issues, normally I would suggest going the injunction route but since the scheduled election is just 3 months away it might be best to forego that option and start a vigorous election campaign. That means knocking on doors, talking to owners, making them aware of your position and why they should vote for you. I would also remind friend and foe alike that the bylaws require an election on the 3rd Sunday in October and ask them to show up on that day.

I would still gear up for election but I wouldn't stop there. Also, if and when an injunction is issued, I would also make sure to make it known that every homeowner (even the rebels) must abide by the C&Rs, by-laws, etc. If they do not pay or become current, if your documents grant voting rights to members in good standing only, then be sure to invoke that. I am sure that these homeowners that were party to the coup will think that their time in power absolved them from their obligations to the legal HOA at that time but it doesn't. If they are still unwilling to cooperate I would also proceed with collections or whatever the process is as outline by your governing documents and state law. These people need to be dealt with a harsh hand. And as for the homeowners that were lied to I would also pursue action against them. They had access to the governing documents. They should have known better. Ignorance is no excuse.

Mickie,

Do you currently serve on the Board?

Mickie

I have several thoughts:

1. Based on what you have said, what the New BOD did was illegal.

2. The fact that the damage was done to your property might you have not acted more personally then professionally in handling the issue?

3. The fastest and least expensive course of action might be for you to stop fighting and turn everything over to the New BOD. Then concentrate on getting a legal/proper BOD elected in October which is only 3 months away.

While you are right Mickie, you might be doing more harm then good.

I agree.

Everybody on the ousted board has served for years, myself since 2006 when I was nominated by a board member and elected to fill the position when the previous president resigned at our annual meeting. For years everybody out here knows that the election is the 3rd Sunday in October and it's stated in the by-laws. We would even post notices of the annual meeting and voting and you might get 1 or 2 homeowners to show up which does not make a quorum. So we would not have an election unless a board member resigned and then we would hope we could get somebody to let us nominate them and fill the vacancy. Most of us have done our civic duty and made our sacrifices of our time and donated services for the good of the community and without pay. Now this newly elected board is only thinking of themselves and has shown in the past that they do not do anything without being paid for it. Overcompensation for projects should not be tollerated by any homeowner. This is the homeowners money that is spent to insure they have properly graded roads for them to drive on. The association has it's own private water system that requires a licensed operator and inspections from the state. It's a 40 year old system that has required considerable upgrades to meet IDNR standards. We have had homeowners without water for 3 or 4 days at a time and I have gone so far as to go into town and use my own credit card to secure a hotel room for some familys until we could get the water restored and hoped these people didn't run up a bill for extras on my card in the meantime and then get reimbursed by the HOA. I have hauled as much water as my truck could hold to deliver water to homeowners. I have even gone against IDNR regulations to get water hauled in by the volunteer fire department to our resivoir and shocked it with chlorine and posted boil notices. I have also opened my home up to homeowners without water to come take a shower and provided the towels and electricity for hot water at my expense. There is not one homeowner in this community that could say with a straight face that I have not gone out of my way to do the right thing for everybody.

I did get one good piece of news this morning from the bank. They have decided to put our bank account on hold except for making the automatic payment withdrawals. They have also put on hold the new bank account that the illegal board was opening. The bank decided they did not want to get caught up in the HOA business and end up with the feds knocking at their door. I told the bank officer that was the best decision they could make. They will be waiting for a legal decision before proceeding.

You mentioned that you are a nonprofit. Are your bylaws pursuant to Iowa 504, the nonprofit corporation act? There should be a statement near the beginning of the bylaws. The nonprofit act has additional provisions that will help you.

Did the secretary and treasurer resign as directors, or just as secretary and treasurer? Assuming you have two vacancies on the board of directors, the board can fill vacancies on the board by appointing HOA members to fill the positions, or by holding an election for those two vacancies. Since the secretary and treasurer resigned, the board should elect a new secretary and treasurer at the next board meeting.

You can check your bylaws, but I don't think you will find a "recall" election. In general, you can hold an election for vacancies on the board. If you want to hold an early election as Tim suggested, the board will have to resign effective when a new board is elected at the time of the election. I like this idea, since it will save the legal fees of going to court. You can take this issue right to the homeowners, who will have to pay the legal fees.

I think you can expect more lies and dirty tricks. Get some information out to the owners. When the next election occurs, you need to get out ahead by thoroughly understanding the process, and going door to door to get proxies or ballots.

our by-laws state we are a 504(A). The secretary and treasurer resigned from the board and threw all their HOA books keys, etc on the table and walked away at our regular June meeting all because a vote didn't go their way. It was the legal boards intent to nominate and elect new members to fill the unexpired terms of the secretary and treasurer at the July 9th regular monthly meeting per the by-laws. I talked to the registered attorney for our association on June 28th and advised him they were going to hold an illegal election and he was just minutes away from leaving his office for a vacation and wasn't going to be back in his office until July 9th. He told me on June 28th that if they asked for the HOA property I would be in the wrong to hand it over to them. So when their posse showed up at my door after the illegal election I called the sheriff's dept to get them to leave me alone because I was not giving them anything per the attorney's advise and without a court order to do so. When the attorney came back on July 9th he had received a call from the newly elected illegal president wanting him to represent them and then the attorney advised myself and them it would be a conflict to represent either side. So now my understanding is the illegal board has retained an attorney but has not presented myself or the other board members with any court order to stake their claim as legal but yet they continue to change locks, take the money, etc as if they have a legal right. Seems to me when the sheriff's deputy told both sides it was a civil matter that it would be up to them to prove themselves as the legal board before they could proceed with the changes they are making and let the legal board conduct business and make sure the bills get paid, etc. So the bank account is frozen by the bank, the illegal treasurer has all the funds people paid for the month of July. The locks have been changed on the association building and money drop box. The locks have been changed on the well houses which by the way is a public water supply and there are federal regulations in regards to tampering with a public water supply. So when I called the sheriff's dept today to ask about whether they are breaking laws and this is becoming a criminal matter I get chewed out by the chief deputy I guess because I was asking them to do their job and investigate this matter. He also said the illegal board was at the sheriff's dept wanting to file complaints on me and gave them witness statement forms to complete and return to them. I have no idea what they are saying I did wrong other than to try to protect the HOA. But I guess it's ok for one homeowner to put a sign in his drive that reads "Honk if 'ICKIE is a B". This is not worth it for me but all I want is a legal election and a board with legal members, not a renter on the board. Through all this I have also tried to find legal counsel since the HOA attorney bailed on us and so far have been unsuccessful in getting anybody to take our case.

Mickie,

With the statement from your first posting (first quote), I thought you wanted to resolve the issue so life in the Association would return to normal. This is why I suggested holding a special election and, I believe, why John suggested turning things over and wait three months for the annual election.

The second, third and fourth quote has me think the issue has become more personal than professional.

My suggestion, even though it is difficult, would be to put your personal feelings aside and make decisions to resolve the issue by asking what is best for the Association.

Yes, based on what you posted, it would appear that the law is on your side. However, if it can't be resolved quickly, the issue, as Matthew pointed out, will become mute in three months anyway when the annual election occurs.

Good job Mikie!

The Feds say "follow the money" and in this dystopian corrupt world of HOAs the money is everything!

Kudos to you!

Well at least my sister has a connection with the FBI and she is going to consult with him on this matter and see if she can get them to nose around a bit. At this point it can't hurt and the illegally president with his extensive criminal record would probably crap his pants if the feds knocked at his door.

Mickie, The Feds have been quite busy investigating corrupt HOAs in Nevada.

Nevada is undergoing one of the biggest corruption and conspiracy investigations in its history...involving HOAs!

3 of the HOA honchos who were going to offer States evidence in this investigation have been found dead! Thats right dead!

You think you have a sleezy HOA scandal on your hands?...well you are NOT the only one.

This is a routine occurance in HOA land where there is little to no law that applies to these places.

There are federal laws regarding tampering with a public water supply. There are also federal laws regarding bank fraud. This illegal group managed to convince the bank they were legit to get them to open a new account for them. However once I presented them with a signed copy of the by-laws they decided to take a step back and put both accounts on hold until they received a court decission as to which board is legal.

The Feds.....

The only reason the Feds got involved in Nevada was because law enforcement there was "in on it"...police, judges even the AG's office there was corrupted by the scandel.

So the Feds stepped in.

Your issue is more than likely a State AG issue.

There are other issues that are going to come into play if this isn't resolved very quickly. While I stated before the bank has put both accounts on hold with exception for automatic payment withdrawals for the bank loan and the utility company; once that money has depleted the account and if the illegal board is not depositing the funds they took from the payment box then the utility bill does not get paid. Since we are on a private water system operated by wells which require electricity there are going to be 60 homeowners without water. If nothing gets most of the homeowners in this matter to this point then lack of water for all will certainly draw some harsh critizism and legal action to this ilegal board. Given that we live in a community where most of the homeowners do not want to be involved in the daily running of the association which has been evident for years by a lack of a quorum for the vote each year on the 3rd Sunday in October; I think their minds may be changed soon.

As a member of the legal board I am quite aware of what this is doing to every homeowner. I was advised by the registered attorney prior to this illegal election not to turn over anything to this illegal board. This attorney has since decided it is a conflict to serve either board because the illegal board contacted him for representation. I have been told the illegal board has since hired an attorney but the legal board has not been served with any kind of court action. I have to believe that any attorney after reviewing the by-laws could not in good conscience tell this illegal board that they have acted in good faith for the community. Since the legal board has not received any notice from this illegal board I can only assume they are waiting for the legal board to take the first step to challenge their election. It sets a terrible presedence for this community and makes our by-laws null and void if this illegal board stands. I agree this is a no win for everybody.

CAI = Community Association Institute
You can do an internet search to learn more about them.

From what I've read, they are an international organization that support having COA/HOA and lobbies for HOA/Condo laws. They also provide information about various issues and varied resources.

Since they do support having Associations and lobby for laws, many individual homeowners see them as the enemy. Regardless of how you see them, they do have some good resources available that are free.

For the record, I have never been, am not currently and have no plans to become a member of that organization.

Not sure by your post but are you insisting that the BoD is to blame for just not giving in to this mob or are you lambasting the homeowners for trying to take over the HOA illegally causing this whole mess? Or the apathy of the neighborhood in general that allowed for this coup to take place?

You say "You elected these people" but what Mickie has posted was that he was the officially elected board member and that the reason why bills may not get paid is because some homeowners decided to break into HOA property, change the locks and steal the cash, and fraudulently open up a bank account, which resulted in not only their account being frozen but the legitimate account being frozen.

@Mickie

Is there a state filing of your HOA (corporate filing)?

Couldn't you try to bring a state document, such as an annual filing, to the bank showing that you and your fellow board members are the people the state recognizes to try and reactivate your account?