Rules or order in Homeowners meeting

We have a small group of homeowners (11) and we try to follow the agreement and covenants filed with our deeds in 1987. This agreement spells out how to have a meeting, designating a Chairperson, Secretary and how to establish and collect road maintenance fees. A quorum is needed and votes are taken. We have changed it a bit in that we do not send out certified mail designating the time and place, use email instead. We also have added a Treasurer to the group. We additionally accept Proxies like many of the Homeowner Associations do.

The agreement designates that once a maintenance/snow removal assessment is voted on and agreed to, the members have 30 days in which to pay. If they do not pay the said assessment shall thereafter accrue interest at the rate of one and one half percent per month and be retroactive to the date of mailing (or email of minutes and decision made by quorum). The agreement also says such unpaid payment shall become a lien on the property. The Secretary shall be authorized to institute suit in the name of and for the benefit of the owners of all parcels to collect the same in any court of law, including attorney's fees. We have two people who have not paid for a year. We have not filed a lien because this person would likely sue us all is we did. At this time he wants to apply $250 he says he spent to improve the road on the amount he owes. However he is unable to provide us with a receipt.

As a group, firstly, since he is not contributing to the road fund, do we have to invite him to the annual meeting? I understand he should receive regular reports and we have done that. He wants to come to this meeting and I'm wanting to ask him to not come until we as a group can discuss his proposal and vote on it. He is very nasty and a bit unpredictable, so if someone votes "NO" (against him), he might do something nasty to that person....so I think we should vote anousmously (sp?) and he should not be present for this discussion or vote. Can we just do that even though it does not spell this out in the agreement? Is it just considered Rules or Proper Order in Running a Meeting?

Thanks so much for any reply.

Peg

Thanks Melissa,

But would you please address my other questions? Thank you.

Peggy, can you tell us the exact title of the document that you're calling an "agreement"? Is it a different document than the one you're calling "covenants"?

I don't work in the legal professions. Does either doc say what privileges (if any) can be suspended if homeowners are behind on their assessments? Our CC&Rs, for instance, do say that among other activities, their rights to vote can be suspended. If your documents do not state that AND if your state HOA laws do not state that, then you cannot keep them from voting.

Melissa replied re: boards being sued that, "Most of us have here." I've served on an HOA Board for 7+ years and our Boards never have been sued. But I certainly would not speak for others. Unfortunately, Melissa often generalizes from her own experience. As is often the case, her reply is off base quite a bit.

She is correct, though, to say that you may need to revise your governing documents to keep homeowners like these two from voting on things like electing a Board. The document that you want to revise will say in it what percentage of Homeowners is needed to approve a revision or to amend that document. If your document(s) don't stet that, your state laws about HOAs might.

But, Peggy, I'm not sure you have the correct number of directors and the correct number of officers on your Board. What do your documents--probably your bylaws- say about that? I'm also not sure that your state laws or your own documents say that you are permitted to communicate with homeowners on such matters by email.

I know that it must be difficult wondering about legal questions when you are in such a small HOA and don't want to hire an attorney to answer your questions.

BTW Unless your documents forbid it, you can hold secret ballots, that way the H/O won't know who voted for or against him. That is unless it is 10 to 1, then he might have a clue.

Unfortunately Glen, our Covenant and Agreement can not be amended without 100% agreement from the homeowners. The two offenders would never agree to any Amendments, so we're stuck. We have consulted an attorney about this. Really, can't do much, got any other ideas?

Peggy:

No matter how many times yout ask this question my answer is going to be virtually the same. This time you want to exclude a member from the annual meeting ... that is NOT generally allowed by most state laws. All members are to be notified of meetings ... most especially annual membership meetings.

Again, if your documents do not specifically state that an owner not in compliance cannot vote, then I would recommend NOT denying them. This can also vary depending on different State Statutes and some states specifically say in their laws that you cannot deny voting rights to any member.

Again, you have to keep in mind that some items which an HOA votes can sometimes affect the value and marketability of property and to deny anyone who owns any property the right in any way to protect it or not have a say or vote, can get an HOA in a heap of legal trouble.

In my opinion yes. This was also answered in your other thread.


So take steps to have an off duty sheriff or local police officer at the meeting. You will need to pay them for their time (as it's a private function) but the Officer will still have full police authority.


So use written ballots.


I understand your concern. However, everyone should be able to present their side of an issue and, it's probably better if that individual is there to answer any questions the members may have.


As I posted earlier, in my opinion, No.

If this is something you want as an option in the future, you will likely need to amend your private road agreement.

Do you know for a fact that these people won't vote for any changes or is it assumed? If you were to make these changes, how would they be worded? You may be surprised that they may not be paying their share on these issues because they have NOT been updated or changed. Don't assume a no vote on everything if you have not asked.

You may ask what qualifies as a "vote"? Sometimes a "No response" vote is counted. With apathetic HOA's out there, you find that the power of not voting speaks just as much volumes as voting. You may have people who decide not to vote or to attend any special meeting requirements to attend to vote. I would ask your lawyer what one may consider a "vote"? Sounds a little odd but to a degree it's not when you deal with so many non-participating parties.

BTW: I stated that most of us (NOT ALL) have been THREATENED with a lawsuit. I did NOT state that we had been sued. A threat of a lawsuit is different than being sued. My 3 years in my HOA not one ever followed up on a lawsuit. So don't jump into panic mode and run to a lawyer or pay out tons of money to "prevent" a lawsuit is my advice. A court system can ONLY make one "whole". So you could be tossing money out the door when the money if ever awarded would be much less than all the prevention or legal advice costs.

I know for a fact these Homeowners (2 out of the 11) will not support any, and I mean ANY changes to the agreement. They won't even agree to amend it so we don't have to spend over $5.00 times 11 to notify Homeowners of a meeting. Seems pretty stupid to me. I keep asking the same question regarding how we could amend this agreement with less than 100% support because I know there has to be a way. The attorney who said we have no alternative may not be aware of the statute. How do I check Michigan law regarding this to see if it supports a lesser number in order to amend....and how do I implement this statute in our agreement? Does anyone know?? Thanks again to all of you for your help in this matter. I appreciate it greatly.

Peggy

The only way I am aware of would be if a higher controlling document (law) had control. However, it is more likely that the higher document will defer control to the original contract.


Well, you do get what you pay for. However, most attorneys are fairly versed in contract law.


To read Michigan laws see Michigan Legislative Website at:

http://www.legislature.mi.gov/%28S%28qbx10545nbu2co55iziu12a4%29%29/mileg.aspx?page=chapterindex

To help learn how to read and understand statutes see this thread titled "How to Read a Statute":

http://www.hoatalk.com/Forum/tabid/55/view/topic/postid/103015/Default.aspx

For general HOA information specific to Michigan see:

Community Associations Network
HOA-USA


1st - be sure that the statute is actually applicable to your Association. This typically is spelled out within the statute. If you are unsure, check with a local attorney. It's unclear if your actually a Homeowners Association or simply a corporation or association that was formed to administer the private road agreement. An attorney versed in contract law will likely be able to tell you after they review your documents.

2nd - be sure which document controls. As I posted earlier, many statutes will defer control to the governing documents.

3rd - If a statute overrides your governing document, you don't need to do anything but reference the statute when you conduct business. To amend the agreement, even if it is to say that this section is unenforceable, you will still need to comply with the procedures to amend. In your case, 100% of the owners.

So, thank you, but what you are saying is, it doesn't really matter if the statute overrides the governing document, we would still need to comply with the procedures to amend, needing 100% approval from the owners, right? Looks like I might as well give up. Depressing.

Thanks again,
Peggy

No. I'm saying that if the Statute overrides the governing document, there is no need to amend the governing documents. You just need to comply with whichever document controls the situation. However, the statute only overrides if it clearly says it does or if there is a conflict between the statute and your governing documents.

It is possible for the statute to say one thing, the agreement say something different and that you still have to follow the agreement.
For example:

Hypothetical If the Statutes say that the agreement can be amended with 2/3 membership approval and the agreement says that it can only be amended with 100% membership approval, there is no conflict and you must comply with the percentage outlined in your document. This is because, by requiring 100% approval, you are complying with the 2/3 requirement set by the statute and now need to comply with the amount established in the document.

However, if the statute said 2/3 membership approval is needed and your documents say only 1/2 are required, then there is a conflict because the document is not meeting the requirement outlined in the statute. Therefore, you must comply with the number set by the statute.

Typically, an Association's document may be more restrictive than a Statute but if it's less restrictive, then there is a conflict and the Statute must be complied with.

Obviously, it would depend on the actual language used in the Statute.

So, if you are able to find a statute that you believe the attorney may have missed, make sure you understand the legalize and if the statute is in conflict with your agreement or if it is simply outlining an option.

Regarding HOA laws in CA, the best site I've found to use is Davis-Stirling.com as they not only provide a menu driven plain language explanation but also provide links to CA laws. If you just want CA codes see:

CA Civil Codes here

CA Corporate Codes here

However, since your Association is in MI, it doesn't matter what CA law says. You would need to comply with MI laws.

Forgot to add, that I have seen statutes grant additional authority and specific powers to the Board that was not mentioned in the governing documents.

Hi Peggy:

I would recommend you contact your Congressmen and Senators and get them to implement all or parts of the Uniform Common Interest Ownership Act (UCIOA). You can click here for link to latest info: Uniform Law Commission UCIOA

Some of the states who have enacted all or parts of various versions of this act include: Alaska, Colorado, Connecticut, Delaware, Minnesota, Nevada, Vermont, West Virginia … It potentially would be much easier to get your legislators to adopt legislation which many other states have used for a period of time.

Keep after your legislators not only via letters but also on other media such as their Facebook pages, comment sections in news articles, etc. Eventually you hopefully will get positive results and I wish you best of luck.

Peggy,

The "nastiness" you experience in dealing with his homeowner reflects strategic thinking more than instability. If you're following your rules on collections and applying it evenly to all property owners, then proceed with your action. There doesn't seem to be anything to discuss. At worst, the issue heads to small claims court and, in this case, it's worth the battle rather than to fold ( I don't say that very often).

This person should be allowed to attend the meeting and given the choice to discuss his matter either openly before his neighbors or in Executive Session.

Yep, it's a private road agreement and not really an HOA. However, it may end up being classified as an HOA if MI ever adopts an HOA law.

They are very similar. The main difference, as I understand it, is that a PRA only deals with the road.

Here is some info I found about forming a "road association" (as the document called it):

A Guide to Forming Road Associations

Janet,

Yep, I knew that the document was from Maine. It was the best document I could find that shows what is a private road agreement. They are indeed very similar to an Association.

BTW - The OP is from Michigan. I believe that you are quoting a NC statute. Michigan doesn't have an HOA statute. They only have a condominium statute.

Thank you for you opinion. What you say is partially true, however, here are additional facts. The one Homeowner who is not paying is experienced in these court matters. He is also finNciay secure and says he would immediately take his case to a higher court if we tried small claims court. This is just one fact. Also the 1987 road agreement states notices must be sent out by certified mail ate set two weeks before a scheduled meeting is called by two members who have gotten together and decided the road needs attention. We are a small group, most of whom have limited funds so we have emailed notification of the meetings to neighbors. We have also named a Chairman/President and a Secretary/Treasurer who serves one year and it changes to the next neighbor (usually) each year. We communicate quite a bit by email and for a few years even voted by email. So we have adhered to the "letter" of the agreement but instead to the "spirit" of it

I would like to amend the agreement to allow us to use regular mail etc. and not have the expense if 22 certified mailed letters etc. You see we would have not much of a case and would easily be dismissed in a cout of law for not Adhereing to every detail of the old agreement.

So maybe we should justly the road fall I to disrepair and see how long that lasts. There are really no good solutions and I was hoping someone migh know or suggest something we could do. But I think we are stuck! Thanks!

Larry,

I want to thank you for your excellent advice. My husband and I are thrilled that there is some recourse to his smug threats. We had no idea there was a body of common law that obligates one (who has a private road agreement that is a covenant to his deed) to pay for maintenance and upkeep. Bringing a claim of unjust enrichment against those who don't pay bypasses the lien idea, correct? Are we not bound by the agreement in that it instructs us to file a lien after unpaid for 30 days, and start assessing interest on that amount at 1.5 percent per month. If we don't file a lien, can we assess the interest? Can we do both, file the lien and sue him, or is it wiser to just sue and forget what this 1987 Agreement says? In other words, comply with the agreement as far as notification for meetings, having a quorum and road maintenance and snow removal assessments voted on etc. Subsequently if a Homeowner refuses to pay the assessment, bring suit against him (for unjust enrichment) after he has been given 30 days to pay the amount due. Is this correct?

Again, you are so kind to provide us with this useful and much needed information.

Thank you so very much.

Peggy

John,

I understand what you are saying, but you need to understand we are a very middle class community without much money. Owing $300 in moneybag's world isn't much and he has even told me he would be thrilled to spend $500 (to an attorney) just to see me lose. Nice, eh? The 9 of the 11 homeowners are mostly wonderful hard working people who are great neighbors and care about each other.

The group was not willing to file liens because they feared a long, expensive law suit that somehow he might win. He has a history of suits, won some, lost some. He enjoys the ride and isn't happy unless everyone does what he says and if they don't, he doesn't pay. Larry has provided us with some really sound advice, information we had not heard before. We saw an attorney years ago when he was causing us problems and the attorney said we really didn't have any recourse as amending the agreement required 100% agreement. Filing a lien required 100% compliance with the instructions set forth in the road agreement and we had and have been doing things like emailing where the meeting is, information about the road and maintenance issues etc.

We have our annual meeting on Tuesday and I was ready to basically ask the group if they wanted to comply with the Agreement 100% so we could file liens with a little teeth in them, or should we just carry on as we have for the past 27 years and continue to take care of the road with or without these two losers. I was pretty sure they would chose the later as again, no one has much money.

Thanks to all of you for taking an interest in our problem and helping us in so many ways.

Peg

Using somewhat gentler language even if I could say it differently, I must agree with Larry-- especially his latest.

Peggy

I am not nor do I play a lawyer.

In SC the Articles of Incorporation (which every association uses as they are corporations) allow for proxy usage. Thus if an associations doc does not specifically ban proxies then they are allowed because the Articles of Incorporation allow such.

I take the route that if something is not directly banned/not allowed, then it is allowed.

Again this is in SC.

OK Larry and anyone else who might have a suggestion or idea.

Lots has happened since my last post. We had our meeting. And to make a long story short the offending homeowner offended nearly everyone at the meeting and went home and saw his attorney and sent us all copies of his attorneys letter with a note attached from him that he was following his attorneys advice. Mind you, much of what he told his attorney was not factual, but his interpretation of what happened at the meeting.

The attorney took our 1987 Covenants for Roadway Right-of-Way for our private road and repeated what it said. It lays out how to have a meeting, certified letters to everyone naming place and time and reason for meeting, quorum of 50% attending, chairperson and secretary selected. If majority determines maintenance, repair, improvements are needed, then the secretary is authorized to determine the cost involved which is shared equally and payable within 30 days. If the payment is not made, it provides for the placement of a lien on the property. He states "there is absolutely no provision for a fund to be established for future maintenance, therefore, no fund can be instituted or maintained."

The attorney further states in his letter to the disgruntled homeowner, "there is no provision for the election of any other individuals, if a meeting was held and notice of the meeting was not sent to all owners by certified mail it is an invalid meeting.... If funds are being held by an owner or a number of owners, those funds should be immediately disbursed to the owners." He says "the agreement speaks for itself...there are no provisions for "informal agreements" nor are there any provisions for deviation from the agreement. The Agreement is clear on its face and he believes would be enforceable in Court." And he proceeds to offer Mr. Moneybags representation etc.

Mr. Moneybags sent a copy of this letter and an attached note of his own to all property owners. He now claims he was not provided the meeting agenda in advance of the meeting and because of this he didn't have an opportunity to address his issues. As a result he "mistakenly agreed to some items that he has now been able to research.....namely instead of 11 parcels, we really have 14 parcels covered by the road agreement, so a quorum would be 7. He says because of the lack of information provided and the misinterpretations of the Road Agreement, he will follow the advice of his Attorney.

Now here are the facts:

1. We have not sent out certified letters for probably 20 years because of the cost. This has been accepted and agreed upon amongst the homeowners. It would cost close to $80 each time we wanted to convene a meeting and attempt to do something with our road. We could not afford to do that.
2. An account was established more that 16 years ago for funds to be deposited into for road maintenance so it would be there when the work was completed. It has worked well, probably for at least 20 years as well.
3. We have established annual meetings to address road issues.
4. An attorney was consulted years ago to determine how many actual parcel owners belonged to the road agreement and it was determined after a title search there were 11 owners. Our disgruntled parcel owner has never accepted this and continues to insist there are more owners.
5. Mr. Moneybags was allowed to insult, argue, complain to excess in our meeting. We all attempted to be tolerant and polite.
6. We have a bunch of wimps living on this road, very nice people, but scared of the word "attorney." My husband and I think we should seek the advice of an attorney even though none of us have much money. I think we need some direction as to what we can and should do.

Can we?

1. Ignore the Agreement??, set it aside since it is impossible to abide by for many common sense reasons. Anyone can easily call all our meetings for the past 20 years invalid. AND establish a private group with 9 homeowners who informally get together and make decisions about the road and implement them without including Mr. Moneybags or the other homeowner who is his neighbor and doesn't pay either.
2. Petition the court with our majority to declare the agreement null and void based on it's ancient requirements which are impossible to follow in this day and age?
3. Our newly elected secretary/Treasurer is quitting because of this letter and is ready to just refund everyone their money and not do anything to the road ever again. Am sure we can probably do this, but I don't think this
is a good alternative.

At this point, we don't know what to do. We are in the process of collecting fund to do some Spring grading and maintenance work on our road that a majority of homeowners agreed to at our last meeting (March). Some homeowners have all ready paid their assessments.

What should we do? Thanks, as always for the kind and helpful advise you have given me. It is much appreciated.