No BOD for Annual Meeting - What to do?

Started by NjT • 20 replies • 1691 views

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NjT (Indiana)
Posts: 7

Posted:

Our board contracted a new management company in April then in May 3 of the 5 BOD resigned leaving us without a board quorum. The new management company has positioned itself as Acting Agent for our community of 184 PUD condo homes. Our annual meeting notice was just sent stating that we now need to fill 5 board positions. So this leaves us with no board at all. The meeting is set for June 23, and the MGMT company is running the show and has moved our meeting from our property clubhouse to their off grounds office and has changed the policy we've always used for board nomination forms.

I talked to a state Representative who said the management company has no authority to conduct BOD duties unless contracted to do so or specified in our by-laws. I've looked, there's no mention of it. The Rep. said we need a court ordered injunction to stop the managment company from running our community. There's little time as the meeting is in 8 days and I fear the MGMT. company would push for status of Receivership in the courts. I feel that our community and annual meeting has been hijacked.

At a loss and need help here.

TimB4 (Tennessee)
Posts: 21,059

Posted:

NJ,

How many Directors do you have?

One sentence says 5 resigned leaving no quorum, which can indicate that there were more than 5 Directors. Another sentence says that there is no board, period. Which is it?

If there are any Board members left, then the remaining member may appoint individuals to serve the remaining terms of the empty seats. However, since your meeting is next week, I think this is a mute point.

The easiest solution, in my opinion, is to volunteer to serve. Become nominated and show up at the meeting. Then vote for yourself. This places you on the Board and you now have the authority to undo what the MC is doing.

GlenL (Ohio)
Posts: 5,491

Posted:

I echo what Tim said, instead of wasting time and money trying to get an injunction, your time would be better spent collecting proxies (if allowed in your CC&R's) to make sure a Board is seated.

Studies show that 5 out of 4 people have problems with fractions

CarolR11 (Colorado)
Posts: 2,563

Posted:

IF the 5 resigned only verbally and your bylaws or state laws require written resignation, see if you can persuade one or more of them to stay in office till the annual meeting to preside and nominate and vote for you and others. This individual also can make sure the meeting is held in your clubhouse. Your bylaws may even specify where the meeting should be held.

Meeting at the MC's offices may dampen attendance.

Otherwise Tim's idea looks really good. As Glen says you, and try to recruit others--need to get as many owners as possible to attend the meeting.

NjT (Indiana)
Posts: 7

Posted:

We originally had 5 board members. Three resigned in May leaving two members and no board quorum. The annual meeting letter states we now need to fill five board positions which means the other 2 board members have resigned or intend to resign.

NjT (Indiana)
Posts: 7

Posted:

Thank you. I've started a campaign to collect proxies and have started an online community blog. I've put out flyers to all residents explaining the importance of getting a board in place. It seems the besr solution is to rouse residents to get involved for a quorum vote. I was hoping for plan B in case the quorum doesn't come together.

CarolR11 (Colorado)
Posts: 2,563

Posted:

Your MC wrote the letter, right? But do your bylaws say that 5 board seats are due to be replaced at your annual meeting? (might be in your CC&Rs, but most likely in your bylaws) Your bylaws supersede the instructions in your MC's letter.

If the two will stay on, they certainly can convene the annual meeting. If you look at your bylaws, it is a meeting of the HOA members. It's not a meeting of the Board of directors. So you need a quorum of HOA members (homeowners) present either in person or by proxy (or by mail in ballot if you have such a procedure).

Unless there's something really unusual in your bylaws, you do not need a quorum of directors at a meeting of the Association members.

Meantime, keep after your fellow homeowners to attend in person or by proxy. Make sure your bylaws permit proxy voting.

NjT (Indiana)
Posts: 7

Posted:

CarolR11 - Thank you! I overlooked that the annual meeting is not a routine board meeting, good point! Only one board member's term was up for re-election. The others simply resigned or have put in for resignation, and our by-laws call for 5 board members but at least 3 for a board quorum. I think only one BOD remains for the meeting.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By CarolR11 on 06/15/2014 7:58 AM

Your MC wrote the letter, right? But do your bylaws say that 5 board seats are due to be replaced at your annual meeting? (might be in your CC&Rs, but most likely in your bylaws) Your bylaws supersede the instructions in your MC's letter.

I suspect that with the resignations so close to the meeting date that the remaining Board members are, in accordance with the Bylaws or applicable corporate laws, allowing the membership to elect individuals to the vacancies rather than appointing them.

Quote:

Posted By CarolR11 on 06/15/2014 7:58 AM

If the two will stay on, they certainly can convene the annual meeting.

Or they asked, or the contract stipulates, the MC to run the annual meeting.

Way to many unknowns.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By NjT on 06/15/2014 8:17 AM
CarolR11 - Thank you! I overlooked that the annual meeting is not a routine board meeting, good point! Only one board member's term was up for re-election. The others simply resigned or have put in for resignation, and our by-laws call for 5 board members but at least 3 for a board quorum. I think only one BOD remains for the meeting.

Carol is correct. If you will read your bylaws carefully you will likely find that the quorum requirements for a board meeting and the quorum requirements for an annual meeting (of homeowners) are different. A quorum of board members is not required for a meeting of homeowners. Only a quorum of the homeowners is required.

Also, you should note that at a meeting of homeowners (annual meeting) the "board" has no special authority. The board members are just homeowners, the same as everyone else. Only the officers of the association have any responsibilities at a meeting of the homeowners. The confusion about this difference results from the fact that in many associations board members are also officers.

In reality, all you need at a meeting of the homeowners is someone to preside (most bylaws specify this is the president, or in the president's absence, the vice-president) and someone to record the minutes (secretary). In cases of the absence of one, or both, it might be permissible for the homeowners to elect a president pro-tem for the annual meeting, and a secretary pro-tem. You can then proceed with the business of the meeting and elect a new board.

CarolR11 (Colorado)
Posts: 2,563

Posted:

OK, NjT, Bruce flashes out the details about how to have the annual meeting in his last paragraph. And he knows a lot about such matters!

Do your bylaws (and/or state laws) permit nominations from the floor (membership)? If you can round up at least three to serve, you should have yourself a Board at the end of the meeting. We don't do this in my HOA, so I'm not sure about the procedure. Those three can subsequently appoint the two others if they can find folks who are willing and able.

I assume your state laws and/or bylaws permit you to read the contract with the new MC. Request a copy in writing to see how much power & control thy actually have.

Curiosity has the better of me. Why did directors resign after hiring this new MC? Did they suddenly find they made a horrible mistake? Or did they try to shift the Board's obligations onto the MC?

NjT (Indiana)
Posts: 7

Posted:

Thank you! I have 3 board candidates lined up and I suspect others might run too. Our community is divided and at odds. The by-laws don't specify anything about floor nominations but that's how it's always been done in the past. However, the Mgmt. company changed our policy so that the nomination forms have to be turned into them 3 days before the annual meeting. There's nothing I can see in the Mgt. contract that gives them this power.

We don't know why board members resigned. No explanation was given. Two of them moved away within a few weeks of resigning. Just before the resignations questions were brought to them about funds spent and 3 months of missing board meeting minutes that went missing shortly after receiving a $734.0000 insurance settlement for hail damage in the community. I've been adamant about the board and mgmt. company producing these missing minutes for the membership. To date they are still missing. It's a real mess and there's too many unknowns.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By NjT on 06/16/2014 7:02 AM

We don't know why board members resigned. No explanation was given. Two of them moved away within a few weeks of resigning. Just before the resignations questions were brought to them about funds spent and 3 months of missing board meeting minutes that went missing shortly after receiving a $734.0000 insurance settlement for hail damage in the community. I've been adamant about the board and mgmt. company producing these missing minutes for the membership. To date they are still missing. It's a real mess and there's too many unknowns.

It's not clear where the decimal point is supposed to be in the number above, but if it's 3/4 million dollars, that could explain a lot.

You still have board members, and the MC should be working at the direction of the board. The two existing board members should contact the MC and direct them how the election should be managed, not the other way around. Is the MC just collecting nomination forms, or are these also proxies? If the latter, who will vote the non-directed proxies?

Escaped former treasurer and director of a self managed association.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By NjT on 06/16/2014 7:02 AM

However, the Mgmt. company changed our policy so that the nomination forms have to be turned into them 3 days before the annual meeting. There's nothing I can see in the Mgt. contract that gives them this power.

Ignore the reason why the change occurred. Meet the deadline. I'd suggest even hand carrying them to the MC and get a signed receipt (that you prepared ahead of time) that they received the form.

NjT (Indiana)
Posts: 7

Posted:

It was seven hundred thirty four thousand dollars. I think there's only one board member left (the so called 'bully' of the pack who has been abusive to residents). Mgmt. says there's no board quorum which leaves them as Acting Agent to call the shots. You are right, we will get a signed receipt for the nomination forms. There's just too much information being withheld from the membership. And when we've asked to see some receipts for funds spent, mgmt. has replied they have no record of them and then faults the old mgmt. company for it. I'd think there would be hard copies in the BOD files. Some things just don't add up.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By NjT on 06/16/2014 10:06 AM
It was seven hundred thirty four thousand dollars. I think there's only one board member left (the so called 'bully' of the pack who has been abusive to residents). Mgmt. says there's no board quorum which leaves them as Acting Agent to call the shots.

No quorum of the board is required for an annual meeting. PERIOD!!!! You're management company is wrong. Ask them to show you in writing where it states their claim is correct. Most likely, they can't. Then, you refer to your documents and show them what the quorum requirements for an annual meeting really are. It sounds like your management company is the bully now.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By BruceF1 on 06/16/2014 1:35 PM

I agree.

CarolR11 (Colorado)
Posts: 2,563

Posted:

It does sound like the new MC is the bully now. It is possible, though, that it's trying to clean up the mess left by the previous one.

Bruce is right--make sure they comply with your governing doocs, state law and your contract with them.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Assuming there is no president, vice-president, or secretary, here is how I think the PM should do it. It would be the way I would do it if I were the PM:

1. The PM convenes the annual meeting (calls the meeting to order).

2. The PM notes if the quorum requirements for an ANNUAL MEETING in accordance with the documents are met. That is, the required number of HOMEOWNERS is in attendance.

3. If there is a quorum, the PM then holds nominations and an election by the homeowners for a president pro-tem.

4. The PM holds nominations and an election by the homeowners for a secretary pro-tem.

5. The PM turns the meeting over to the president pro-tem and you then continue with the business of the meeting.

NjT (Indiana)
Posts: 7

Posted:

Bruce1, Thank you. You are exactly right and I will try to see that this happens. Wish me luck!

CarolR11 (Colorado)
Posts: 2,563

Posted:

Bruce really is good at these meeting procedures. If your HOA permits proxies, then the number of homeowners present includes both those who are physically present and those who are present by proxie--most likely.

Yes, good luck! It's wonderful that you're willing to put your HOA back on the right path.

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