Board meetings

Nancy,

As you pointed out, the North Carolina Planned Community Act would be applicable.

Per § 47F-3-102 of that act, the Association (i.e. the Board of Directors) has the authority to Adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from lot owners. Per that statute, this authority is only limited by what is in the Articles of Incorporation or the CC&Rs. Per your posting, your CC&Rs are silent on the issue.

I may have missed it but I do not see any requirement in the NC Planned Community Act for the membership to approve the budget. Would you please specify where that requirement is located?

Nancy,

I found that same section of the statutes and it sounds like the board is required to hold a meeting for the owners to ratify the budget. Who was it who told the board about this requirement 4 or 5 years ago? Is this a case where the board is aware of the requirement and deliberately ignoring it or are they just all ignorant of this requirement?

If your board is deliberately ignoring this statute, you have somewhat of a dilemma. Your only lawful course of action would be to seek a court order requiring the ratification meeting. That would be an easy win in court as they would have no defense. The problem would be that for all the effort to require the ratification meeting, you still need a majority of owners to attend and to vote against the proposed budget. That is a very high hurdle. You could easily win the battle to require a meeting but lose the war to prevent adoption of the budget.

Well, I see why I missed it. I wouldn't expect budget info to be under that heading.

It appears that the Board is using the Board meeting as the ratification meeting.
Perhaps the time to complain was prior to the Board meeting or when you received the budget. Perhaps the Board simply needs to better explain the process and when the ratification will occur.

If your intent is to simply make the Board comply (vs. actually having a problem with the budget) would be to ask the Board to explain the steps used when adopting the budget and how those steps satisfies compliance with that statute.

Janet,

I think the issue will come down to if the membership was properly informed that the budget would be ratified at that meeting. If they were properly informed, I agree with you. If they were not properly informed, then there is an issue.

Also, the ratification appears to have happened at a Board meeting vs. a general membership meeting (which is what I believe the statute refers to). There are likely specific notice requirements for a membership meeting.

The easiest way I see for the Association to correct this issue is to plan the budget so the ratification takes place as part of the annual meeting. They may or may not need to move the annual meeting date to make this happen but I do think that this would be the easiest way to comply.

Perhaps, Nancy could make that suggestion to the Board.

Hi Tim:

Per the OP’s statement:

“This is what I question: The 2014 Budget was presented to all homeowners with the Annual Letter mailed with the 2014 Coupons.”

This statement led me to believe that ALL owners who are members were informed. However, I do agree with you that the OP has not really clarified whether the situation took place at just a regular Board Meeting or a Membership Meeting. I would have thought if it was an “Annual Letter” then said letter would have been for an Annual Membership Meeting.

It appears we potentially need more information from the OP as to whether the meeting was actually a Board of Directors Meeting vs. Annual Homeowners Meeting.

Thanks Larry:
I told the Board about this and they did nothing. I also sent a letter last year with a copy of the law to them and the Board is deliberately ignoring it. From the minutes it seems they think they can ratify the budget because they didn't hear anything negative from the homeowners and it would be OK to do it the way they did. This is why I ask is this an "illegal" motion and vote. From a prior meeting minutes they did the same thing, they ratified the budget then. Don't know why they did it again. Anyway, if I wrote them a letter would the proper wording be the motion and vote were illegal? All I want the Board to do is to uphold the Laws and to run our association by our Declarations and By-Laws which they are not doing.

Tim - Nothing has ever been sent to the membership calling a meeting to ratify the budget. Membership has never been properly informed.

The ratification did happen at a Board meeting.

I agree it would solve the problem if done at an annual meeting if it could be voted on via proxy as we never have a majority in persons. Tim I will make this suggestion.

But for now, would it be an illegal motion and vote. If not, what would you call it?

Janet The ratification took place at a Board of Directors meeting. What happens is the Budget and our coupon books are mailed out annually in December for the January payment. No general meeting called to ratify the budget.

Hi Nancy:

I am not an attorney and can only give opinions based on experience. However, if as you stated the information and ratification took place at a Board Meeting vs. Homeowner Meeting I would most likely use your verbage because it violates the statute you presented and therefore violates the State Law.

Nancy:

Per your statement:

"There is a sign put at the entrance to our community which gives the day and date of the meeting and to call the secretary if you want to attend."

Was the sign placed for Board Meeting or Homeowner Meeting?

This sounds more like something done for a Homeowner Meeting.

Your stating you don't want to take them court.
Your stating for some reason they won't give you want you want.
Your stating you dont' want feelings that they are trying to hide something.
You state you simply want them to comply with procedures.

If you are not getting the answers that YOU want, then YOU should shut up and put up. Get on the board.

If you really feel they are doing something wrong with the money, then call the police and be done with it.

If your intention is to help the HOA and not satisfy some personal reason of your own, (such as how dare they not take my suggestions or show me the records I am asking for) then save yourself ALOT of headache and heartache and get a position on the board. Until you walk in those shoes, you've no clue and your HOA as a whole would be all for the better if you get yourself elected onto the board so that it can be policed properly.

IT's a fact that everyone views an HOA board member as being power hungry homeowners, money launderers, nepotistic SOB's who don't care about anything but themselves and their kingdom. They do not care about you or any other homeowner. Their job is to stick it to anyone who dares to ask a question.

No forum in the world will be able to help you if this is your view, so you may as well, call the police, the lawyer and the candle stick maker.

It specifically states Board meeting. The Board meetings are open to the homeowners, but only allow 5 to 6 people to attend.

The truth is a tough pill to swallow.

NancyG3,

A couple of questions and some comments. I am not an attorney, nor do I work in the legal field.

1. Approximately how many homes/units in your Association, and the year that the Association was formed.

I ask because the NC Planned Community Act (Chapter 47F) which became law on Oct. 27, 1998 applies to any planned community developed after January 1, 1999, which contains more than 20 residential lots.

Also it can apply to any smaller development which the developer chooses to subject to the act, or to any existing community which votes to incorporate the act into its existing declaration and bylaws.

So, if by chance your community was built before Jan 1, 1999, then Chapter 47F would not apply unless your Declaration or Bylaws were amended to make your community subject to the ACT.

Because you wrote: “Our by-laws and declarations do not cover anything regarding ratifying our budget, however, the NC Planned Community Act (47F) does.” – my question is to make sure that 47F does in fact apply.

2. Assuming 47F applies, with reference to 47F-3-103 (c), it may seem awkward (but it is the way that the requirement is written), to think, when you read it - this is what needs to happen in order to REJECT a BUDGET, rather than to think this is what is required, to ratify a Budget.

3. As has already been pointed out per 47F-3-103 (c) there are a number of conditions to be met. Obviously a properly noticed Association Members/Owners meeting needs to be held. But for this meeting to consider “ratification of the budget”, there is no requirement that a quorum of members be present.

Also, the sentence from subsection (c) that reads: “The budget is ratified unless at that meeting a majority of all the lot owners in the association or any larger vote specified in the declaration rejects the budget”.

Note that “A majority of all the lot owners”, is different from “a majority of those Owners in attendance”, either in person or by proxy. Typically, a majority if all Owners, will be quite a few more votes needed, than if the requirement was only for a majority at a meeting at which a quorum was present.

This requirement, that a vote is to reject the Budget (by a majority of all the lot owners), is I believe, rather common per the various State Statutes, in particular in the later ones. We have a similar requirement in Vermont.

4. So NancyG3, I agree with you, assuming that your Association falls under 47F-3-103 (c), that there should be a “proper” Association “budget” Meeting held yearly, even if it turns out that the Budget is automatically ratified, because (in all likely hood) you will not get “a MAJORITY of ALL Owners”, to vote to reject the Budget.

IMO even if the Budget never gets rejected, and so by default is always ratified, that is not a reason, not to hold the required Association Meeting.

5. Also, rather than a letter trying to make a case that the Board is trying to circumvent the requirement, by making a motion that because “no negative comments from the homeowners were received (and so assuming that IF an Association Meeting had been held, it would NOT have been rejected) - why not just a letter to the Board explaining what should happen per statute, and asking why the required Association Meeting is not being held.

6. Also perhaps suggest, that rather than a separate meeting, that the Annual Owners Meeting be held in the Sept, Oct, Nov, time frame. That way Board Members can be elected and the Budget for the upcoming year, can be considered at the same meeting.

Too late for this year – but maybe next year it can be done correctly.

As I understand, real world, unless the Board's Budget is way, way out of line, what is the possibility that it would be rejected at an Association Meeting?

The problem with needing a majority of ALL Owners to reject, is such a vote is just about impossible to obtain.

7. In case you might be interested, in Connecticut which has a similar requirement, a very large Association in that state, has tried unsuccessfully for a number of years to get that requirement changed in the CT Statute, because that Association has found that over the years, that it is impossible to ever get the number of votes needed to reject a Budget. There was a thread here, many months ago about that effort in CT.

Nancy

Tough love here but are you not beating a dead horse?

Ellie D there are 108 homes and we were developed after January 1999 and 47F does apply. I don't think the budget would be rejected. What a meeting would do would be to let some of the homeowners ask questions on how the budget is done and questions regarding the reserve. Thank you for your input.

Thanks Tim. I always enjoy reading your advice. You are one intelligent person. Keep up the good work, you have really helped me and I truly appreciate it.