Working AGAINST an Association while serving on the Board

I have had the displeasure of serving on our HOA Board with several Board members that have had a hidden agenda. These individuals misrepresent themselves at annual meetings to get elected, but privately they state they want the association to be dissolved and will work toward that goal.

My question is this. Can people be brought up on some sort of civil or criminal charges for doing this? Especially when they intentionally act to harm the association. Or harm it from inaction by failing to perform their duties.

I have looked into things like Sarbanes-Oxley but from my understanding of it, that law only governs public for profit corporations.

Is there anything in federal law that governs not profits and HOA to protect an association from people like this? Also maybe something in Washington State law?

Thanks Glen. This isn't a current problem but was a prior problem. As recently as last month we had 2 Board members actively harming the association. Even though they are now gone they still caused damage to the association.

I am looking more to the future to keep it from happening again. If people with the intention to harm the association can be shown a law that may be used against them, they may think twice before even running for the Board.

Well wish them luck and have them find out how one can actually go about it. Bad mouthing a HOA doesn't disband one. You have to really take some legal steps to make it happen. So until your HOA decides and votes for to pay a lawyer to disband your incorporation status and other aspects, their talk is just a lot of hot air to keep things in a drama state. They are just drama queens.

Read your documents. It will spell out how you disband. With us, if we disbanded, we would have to be turned over to a Management company. That means we ALL lose our right to vote, be on a board, set our dues rate, and have any real say in how our property is taken care of. Do you want to use your dues to pay someone to tell you what to do with absolute no input or control? You mention that and maybe more will learn what they have.

Most people who want to disband really are just ignorant to what a HOA is. They still want the control and the rules. It's just they don't understand they already have that power. They get lost in the "Drama" and urban legends of HOA's than the actual reality. I'd suggest bringing your HOA documents to each meeting and actually reading them. Break it down to if you must. Do a little HOA education and things may change.

Not any attorney but it would seem to me that step one would be proving a dollar amount that they caused. Step two would be proving willful negligence on their part. Something else for you to ponder, while the HOA would have to fund its side of the litigation, unless you can prove willful negligence and not just a difference of opinion, the HOA's D&O insurance would pay for their defense and any settlement.

Now tell me how you're going to sell this as a good idea to the rest of the Board and the HOA. My advice, learn from it and move on.

Well I am not asking in order to start litigation. I was just wondering if there is a law that specifically addresses this that can be shown to people with agendas to harm the association. More of a deterrent affect.

But just FYI this goes beyond just difference of opinion. One of the worst examples is the Secretary removed a bunch of corporate records from the office and never returned them, even after repeated requests. That is one of the biggies. Now we don't have meeting minutes for two+ years and are having to hire an outside party to reconstruct them from audio tapes. This is also causing a big problem with our annual audit.

Is their language in your states corporate laws that mention a board member's fiduciary responsibilities to the corporation?

Florida statute 617.0830 deals with this some what. There is a document called legal requirements of board association directors. That with the statute would allow reporting to the florida attorney general office - I'm told they investigate and sue on behalf of the state and the board members are fined. - I found the statute under corporate non profit law hoa law is under that in Florida

If I understand your question, you just want to have some type of written proof that you can show new board members what not to do, or worse attempt to do. You could use it as a case study/example that would be presented to the new board members when you go over their responsibilities, ethics training etc at their orientation.

re: fiduciary duty

non-feasance = failure to perform one's duty or not using ordinary business judgment)

mis-feasance = trying one's best (using ordinary business judgment) and 'screwing up'

mal-feasance = knowingly or willfully 'doing wrong' (or going against ordinary business judgment))

D&O Insurance only protects against mis-feasance.

Corporate law prohibits 'indemnification' against mal-feasance.

Let the directors in question beware as they are probably (like most) ignorant of the facts. Personal liability for non and mal feasance actually does exist.

Proving it in a court of law is an entirely different issue.

CAVEAT EMPTOR

Gnome,

It appears from all of your posts that your HOA is in a unique situation and you have 2 opposing views from your members. Some who would like to see the HOA dissolve and those who do not. There are issues with both options. When you first posted, I was eager to take the side of dissolution but you have the roads, the club house, and some green belt areas that must be maintained. There may be others but am going by memory. Your HOA cannot exist as it was originally intended therefore the dynamics of the HOA has changed. You seem to have adapted to those changes in that you see the necessity of maintaining these common areas and have stepped up to the plate to see that it happens. You have faced some major opposition to this even having board members going so far as sabotaging these efforts.

It appears to me that the membership wishing for dissolution see no value in keeping the HOA active. I am making an assumption here but am I correct? It also sounds like you have a wide spectrum of income levels in your development and some members have fallen on hard times. The last thing some members will pay is their HOA dues especially if they see no value in the dues.

As I see it, you can only do what you can and you are causing yourself an undue amount of stress because of the HOA situation. IMO hiring a parliamentarian at $400 is a bit paranoid. I also see that trying to scare new board members to conform to lawful behavior as a bit overkill. I commend your efforts at following the Washington statutes when it comes to budget changes. Hey you can only do so much. Sometimes we need to accept things as they will be even if not perfect or the way we wish them to be. Maybe you can learn to accept that. I have learned to accept that my HOA is unique too. It was created back in the 1970’s and I am certain it is not what it once was because of situations beyond the HOA’s control. The developer went bankrupt. We have no CC&R’s anymore because of their expiration, but we do have common areas to maintain. I did not know many of things that I know now when I bought my property. I was sued by my HOA, but I have come to accept that my HOA board is facing some difficult challenges beyond their control. In saying that, I believe that compromise and communication are always the best options.

I see Carole’s situation as far different than yours. The president was given advice by two attorneys and even mediation was involved. Carole did what she felt was the right thing to do as you do. It is not for us to judge that. Please be respectful of other peoples’ decisions even if you don’t agree with them.

Hope things go better for you in 2014. - Banks

the issue is 'publicly traded'

an HOA would, by definition, be excluded

state law would apply

the problem (as you well know) is the well meaning but totally unqualified well meaning (at best) volunteers

best of luck

" Especially when they intentionally act to harm the association. Or harm it from inaction by failing to perform their duties."

Lol Gnome unfortunately you could be describing a large percentage of board members across the country with that statement.

Don't know if this would help as enforcement would be difficult, Gnome. But there are Codes of Ethics by various sources, CAI, for instance, that new directors would be asked to sign. Ours includes something like directors agree to abide by our governing documents, which are, of course, Association docs.

In addition, candidates for the Board could fill out a brief form, which also includes something like: If elected, I promise to fulfill my fiduciary duty of loyally and care to XXX HOA.