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MarionR (California)
Posts: 16
Posted:
We are electing an entire new 5 member Board for the first time in over 10 years. This is critical because we have had no financial reports during that time either. We have 6 candidates and have just learned that one candidate (who was generally thought would be elected) may decide not to accept the position because she has recently determined she cannot get along with one of the other candidates. If she does not accept at the election, would the 6th candidate simply be elected? Or would the election have to be held over to give those who voted for her the opportunity to have a valid vote?
Question arises as there is yet one more candidate who would be willing to run in her place if she refuses... election in 8 days.
JohnB26 (South Carolina)
Posts: 1,569
Posted:
if she quits - she quits

if she is 'cherry picking' the bod, do you want her in the first place ?
MarionR (California)
Posts: 16
Posted:
Our concern really is what happens if she just does not accept the position at the election meeting... what happens to that fifth spot... does it just automatically go to the remaining candidate? Or must there be a new election to allow those who voted for her to decide between the sixth candidate and an alternate ready to be nominated? Our by-laws do not address this issue.
RichardP13 (California)
Posts: 1,767
Posted:
If the individual quits before or at the meeting in which the ballots are counted, the person received the next highest votes would be elected. IF the individuals after the annual meeting or meeting in which the votes are counted, then the board has the opportunity to appoint a replacement, as they are no longer bound by the results of the election.
MarionR (California)
Posts: 16
Posted:
Richard, that means those who voted for the person who rejects the position really never got to vote? Or does it just mean they got their vote but didn't choose very well. The reason we are concerned is that the sixth person may have a severe conflict if interest that we have not been able to determine as yet.
Would there be an option to simply consider a 4 man Board? Or is that a no go?
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By MarionR on 01/17/2014 10:45 AM
Richard, that means those who voted for the person who rejects the position really never got to vote? Or does it just mean they got their vote but didn't choose very well. The reason we are concerned is that the sixth person may have a severe conflict if interest that we have not been able to determine as yet.
Would there be an option to simply consider a 4 man Board? Or is that a no go?

If your bylaws require a 5-person board, then you should not have only 4.

If someone wishes to vote for a person knowing that they may refuse the seat if elected, then the risk of losing a voice is their own. They would be wise to vote for someone who is a bit less fickle. It is not your job to protect your members from voting foolishly.
FredS7 (Arizona)
Posts: 927
Posted:
Seems to me the board is (very) likely to appoint #6 who is known to be willing to accept the position.

RichardP13 (California)
Posts: 1,767
Posted:
As Fred pointed out, it would normally be protocol to appoint candidate #6, but we all know that's doesn't always happens, and as you point out, there may be the suspicion of a conflict of interest.

That being said, you could go with a board of 4, but remember, in California, if the board fails to appoint a fifth, the members have the power to call for an election to vote for the fifth member.
MarionR (California)
Posts: 16
Posted:
To add just one more twist if I may: The only existing member of the current Board who is running again is the 'Developer' who also owns the management company, collects the dues, rents out unoccupied units, has failed to provide financial statements for the past 10 years, and refused to disclose the master list of current owners to the current owners (which we all needed to send ballots). We fear the sixth candidate (an atty) is actually going to act as his attorney in many instances... and has only owned a unit for a year or so. The by-laws do call for a 5 man Board. But has been operated with only three members for the past many, many years... as this 'developer' has refused to hold elections. Owners finally revolted and demanded an election after he raised the dues by about 25% in the past year with no accounting.
The other two current Board members have decided to get out of the mess. We know the 'developer' will end up as one of the new five and we fear that if his atty is in the mix... it will get ugly.
Any comments? Advice?
RichardP13 (California)
Posts: 1,767
Posted:
My advise..Run like hell
MarionR (California)
Posts: 16
Posted:
Might be too late. My husband is a retired firefighter and I'm running into the burning building! Running for the Board as well.
CarolR11 (Colorado)
Posts: 2,563
Posted:
Marion, I agree with Richard's 1st reply to you. See if you can persuade that candidate who now doesn't want to serve if she will accept the position as director and later resign.

That way, the Board can choose someone other than #6. If you're then on the Board, you might be able to convince a majority to pick someone who's willing & able whom you all (including the woman who doesn't want to serve) think is suitable.

Check your documents (probably your bylaws) first to make sure that it is the Board who appoints individuals to fill vacancies.

With a majority, perhaps you'll be able to get the developer to turn over documents to you that you're entitled to have. Vote to require that he do that at an open meeting so that other owners in attendance can witness the Board's action.

The Board, of course, also can vote to interview other management companies. The new Board, in addition, can demand that Mr. Developer recuse himself when you tie action of any agenda item that is a conflict of interest. Let's say, for instance, the board does want to interview management companies. Mr. Dev. should not be permitted to vote on that motion!

I do think, too, that the new vote needs to vote to hire an auditor to see where your HOA stands financially.

(I take it given your HOA's age that the developer no longer is in control. Is that right?)

JohnC46 (South Carolina)
Posts: 14,265
Posted:
Quote:
Posted By MarionR on 01/17/2014 11:48 AM
To add just one more twist if I may: The only existing member of the current Board who is running again is the 'Developer' who also owns the management company, collects the dues, rents out unoccupied units, has failed to provide financial statements for the past 10 years, and refused to disclose the master list of current owners to the current owners (which we all needed to send ballots). We fear the sixth candidate (an atty) is actually going to act as his attorney in many instances... and has only owned a unit for a year or so. The by-laws do call for a 5 man Board. But has been operated with only three members for the past many, many years... as this 'developer' has refused to hold elections. Owners finally revolted and demanded an election after he raised the dues by about 25% in the past year with no accounting.
The other two current Board members have decided to get out of the mess. We know the 'developer' will end up as one of the new five and we fear that if his atty is in the mix... it will get ugly.
Any comments? Advice?

Is your association developer or owner controlled?
JoK2 (California)
Posts: 198
Posted:
Posted By CarolR11 on 01/17/2014 4:18 PM
Marion, I agree with Richard's 1st reply to you. See if you can persuade that candidate who now doesn't want to serve if she will accept the position as director and later resign.

That feels like the board is being hand picked as well. "just don't do anything till after the election"? It's a tough situation to be in, that is for sure. It seems to me that the only above board way to do this is to allow the election to take place, and if it means #6 get's it by default, then so be it. Welcome them with open arms and just wait for them to give you the reason to be voted off. Then the board can appoint someone of their choosing. IF that is what your governing docs' say.

You may be surprised in what candidate #6 has to offer the HOA, and that there really isn't a conflict, but that it was all assumptions and innuendo that led to the "conflict". These day's people do more talking about people than they do getting to know people. I've been surprised a # of times when getting to know people.

CarolR11 (Colorado)
Posts: 2,563
Posted:
JoK, Marion has told us of the illegal (in CA) activities of her HOA's Board. It doesn't even adhere to the HOA's bylaws. Assuming Marion is correct with her accusations, the quickest and easiest way to get the Board to comply with its own docs and the laws of CA is to create a Board that wants to do those things. That's what my suggestion is about.

Though not exactly "above board," it's certainly not illegal nor in opposition to Marion's HOA's governing documents.
MarionR (California)
Posts: 16
Posted:
CarolR, That was our plan. By demanding an election (and it took two years to accomplish) that was 10 years too late... we get to fill two vacant positions. Of the three current members, two have had enough and are not running again, the remaining member is the developer, management co, and handles all finances.
The HOA should be the governing body but the developer in fact has had full control always. There were some units never sold and many owners who defaulted. All of those units are being rented out by the developer with no accounting to the HOA. We have had no financial reports at all in almost 10 years... we believe the property has no liability insurance now or for probably the past 15 years - which resulted in a lawsuit against the development with a default judgment which was passed onto the HOA many years ago. Prior to 2013, the HOA dues were collected by an individual who had been involved in the development in one form or another since at least 1990. She was also a travel agent who used the HOA list as a client list for her business to solicit flights, accommodations, tours, etc. She was relieved of her duties in 2012, proceeded to maintain her travel agency for another year. During that time, she confirmed travel for hundreds of clients who eventually found that their money had been taken and they had nothing. She filed bankruptcy in Oct 2013 with an admitted creditors list totaling over $1,000,000.00. One particular creditor was listed as being owed $20,000.00 when in fact he was owed $188,000.00 (he was a travel agency consolidator who had been given forged credit cards). He simply refunded all credit card owners as he was advised of the true owner. This woman admits to owing our HOA $82,000.00 in dues which she did not forward as she collected them. At the bankruptcy hearing she stated under oath that she had an 'arrangement' with the developer - and that he was aware those monies were not being forwarded. She was never bonded as the by-laws demanded and we will never see a penny of that money we fear.
The only bright note to this story... I was able to attend her bankruptcy hearings as a creditor and was able to supply the trustee with enough facts to prove intentional fraud and disposal of her wealth just prior to her filing bk. Her bk filing was denied and she will always be liable for those debts. We have been unable to secure a prosecution of her as of this date. But it has only been one month since the bk waiver was filed. We know the money exists. But without a prosecution we are tied.
Back to the HOA... we know legal action against the developer is a must - he is very elderly - and we simply need so much guidance. We are only beginning this adventure to regain control, we hope.
CarolR11 (Colorado)
Posts: 2,563
Posted:
So, Marion, per your governing documents, probably your CC&Rs but perhaps your bylaws, is the developer still "in control"? Or are the homeowners? Usually, the homeowners gain control after XX # of units/lot have been sold or at a certain date.

Whether or not he still is in control, how many lots/homes does he own? How many are in your HOA?
MarionR (California)
Posts: 16
Posted:
Carol, We do not know how many units are left unsold, nor do we know how many have gone into default... without the owners list which we have been denied, we cannot determine that. What we do know is that the travel agent I spoke of was one of those aiding in the renting out of the vacant units and much of the rental money was kept by her as well.
I will re-check the by-laws for the sell-out number for HOA control.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Marion

Like it or not, you might well be at the disposal of the developer/declarant.
JoK2 (California)
Posts: 198
Posted:
Quote:
Posted By CarolR11 on 01/19/2014 8:26 AM
JoK, Marion has told us of the illegal (in CA) activities of her HOA's Board. It doesn't even adhere to the HOA's bylaws. Assuming Marion is correct with her accusations, the quickest and easiest way to get the Board to comply with its own docs and the laws of CA is to create a Board that wants to do those things. That's what my suggestion is about.

Though not exactly "above board," it's certainly not illegal nor in opposition to Marion's HOA's governing documents.

I'm sorry to point this out, however this approach is why HOA boards get the bad rep they do. It's inside maneuvering and if the board is breaking the law, then there are options available, least of which is the police should be called. It's this type of "below board" actions that leads to BS that so many people deplore regarding how the board makes decisions. It will only look like a power hungry move by a power hungry board when it gets out.

Nature takes care of itself if human beings would just leave it the heck alone. We have proven that within our own HOA after being forced to let someone back on that we had "removed". It was difficult, it was awkward it was a huge hold up for hour HOA, but within three or four months, they resigned, and we did everything above board.

I'm not trying to be considered an HOA saint here, I still consider myself a newbie, however, I am trying to fight the awful reputation that board members get.

A litmus test that I have been learning to use is whether or not the boards action or reaction of any one issue can be published on the front page of the local paper. Would this board member post this idea of how to get around one person's action or reaction?

MarionR (California)
Posts: 16
Posted:
We are not trying to accomplish anything 'under the board' - we are just really just looking for some advice and guidance as to the legalities of obtaining the fifth director. We actually have no guarantee that the 'refuser' will even refuse the position. She has simply had a falling out with one of the other potential directors and has stated that she may simply sell her unit, resign (if she takes it in the first place),and wash her hands of this whole thing. Taking a position on this board is truly a daunting task. Every involved member of the HOA and current board (except the developer) has at one moment or another felt none of this was worth it.
It is true that we have not been able to get to know the last candidate at all because he came out of nowhere. Nobody that we know has ever met him or spoken to him... he has some sense of notoriety in certain circles and just could be a delight to have on the board. Our concern is that he is a newfound personal friend of the director, and an attorney - with the developer's current attorney approaching or past the 80 y/o mark. This last candidate (an atty) has not made any effort at all to discuss pending issues and concerns and would not offer to correspond with owners for election discussions. That in itself should not be construed as a bad trait but we really will need his input on all matters if he is actually on the board.
We now only have 5 days to even meet the quorum... not an easy task when you have no list of owners who are current on their dues... we will do our best and let the chips fall where they may.
Thanks for all your input.
CarolR11 (Colorado)
Posts: 2,563
Posted:
How many owners in you HOA need to vote for directors to achieve quorum, Marion? In our HOA it's 25% of Owners. This should be in your bylaws or maybe CC&Rs.

In CA, you also should have "Election Rules" but given what you've written about the so called Board, I suspect you do not.

Are you sure you're conducting your election legally in CA? The legislation that shows requirements for HOA elections is in the Davis-Stirling Act. Visit davis-stirling.com and go to "Elections." The site was set up by HOA attorneys and there's a whole lot more on it about the kinds of problems your Board has caused for you and other homeowners.

It might not be a "sell-out number" that determines if the developer/declarant still is in control. sometimes, it's a date. Units that went into default that he bought back do not count toads his sell-out number.

On various threads, others have advised folks to go to the county hall of records to see who owns each lot/unit. They've pointed out those records might not be up to date, but it might be your best shot though time is running out. How do you even knew who received ballots????

JoK, when Marion & I have said that her Board has been acting illegally, it's not the kind of lawbreaking where one calls the police as you suggest. There are lots of HOA laws in CA that should protect owners. One, for example, is that upon written request, the Board or its agent should give an owner a list of unit/low owners. Also an annual budget should be sent to owners every year, etc., etc. Marion's Board has ignored those laws.

A new Board who'll follow the laws and Marion's governing docs can cure these problems. If she & other owners, on the other hand, try some kinds of legal action it can take months or years and cost everyone in the HOA money.

Having said that though, Marion, it seems to me that you and a few others should pool some funds and get advice from an HOA attorney. I'm not saying you should sue; just get some advice. One visit might cost $250-350.

But again, how many lots/units are in your HOA?
JoK2 (California)
Posts: 198
Posted:
Marion, I'm sorry, I am not stating that any laws are being broken by anyone here, and I completely understand your plight, as our HOA has been there. However, the one suggestion of asking one to stay on and then quit is although perhaps for the better good, it can and will be seen as a power move and back handed.

These kinds of decisions are difficult at best, so put your self in another members shoes, and if it was explained as to why you did what you did, would you be satisfied?
JohnB26 (South Carolina)
Posts: 1,569
Posted:
one accepts the nomination

after one is elected, one quits the position

if she quits the new BOD is empowered to fill her spot by appointment

they probably 'should' choose the next candidate who was on the ballot

IMO
MarionR (California)
Posts: 16
Posted:
JohnB,
I think you are probably correct. But at least we will have met mysterious #6 and may have had a little time to discuss his thoughts on the future of the HOA. To my knowledge, nobody has met, e-mailed, or spoken to him. It is getting close now - we were advised that there are 363 units currently owned, the quorum is 1/3 and that has been set now at 120. We are very close to meeting it... but cannot know for sure as most of the ballots have been received by out of towners and one cannot know if the ballots have been prepared correctly for the count. We'll see.
CarolR11 (Colorado)
Posts: 2,563
Posted:
I doubt that Marion's bylaws or CA Civil or Corps. Codes state that the Board "must" or even "should" appoint the next highest vote-getter.

We had a very lopsided election a few years ago. Two open spots: Top 2 vote getters each received around 80 votes. 3 & 4 received something like 12 & 14 respectively. Both were new to our HOA and hadn't even bothered to attend Board meetings, seek to be appointed to committees, etc. I'm certain our board would'e proceeded as I and maybe one or two others have suggested.

For me, JoK, the real "litmus test" is what best serves the HOA. Remember that it's in terrible shape!
JoK2 (California)
Posts: 198
Posted:
Quote:
Posted By CarolR11 on 01/22/2014 10:37 AM
I doubt that Marion's bylaws or CA Civil or Corps. Codes state that the Board "must" or even "should" appoint the next highest vote-getter.

We had a very lopsided election a few years ago. Two open spots: Top 2 vote getters each received around 80 votes. 3 & 4 received something like 12 & 14 respectively. Both were new to our HOA and hadn't even bothered to attend Board meetings, seek to be appointed to committees, etc. I'm certain our board would'e proceeded as I and maybe one or two others have suggested.

For me, JoK, the real "litmus test" is what best serves the HOA. Remember that it's in terrible shape!

Whatever let's you sleep at night! :>)

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