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ScottH14 (Washington)
Posts: 3
Posted:
I am the second President of our new small HOA. The developer turned over the association to the members a few years ago with no bylaws. There were Articles of Incorporation and CCRs, neither of which says one word about elections, terms, meetings, or Board Powers. At the Turn Over Meeting, the original Declarant sent out a letter announcing the meeting along with a suggested budget and elections for three Board members; two for two years and one for one year. The one year term board member was voted in as President, and the two year terms were for Treasurer and Vice President because she did not want to be a Secretary. This board did not adopt bylaws and I don't think anyone knew we needed any...HOA being new to everyone.

The Board set up and ran our HOA which was primarily hiring a landscaper, collecting our dues, and approving a few new houses to get built as acting Architectural Committee.
They announced an Annual meeting the following year where the current Presidents term was ending and elections would be held. I ran for President and was elected. The "VP" wanted to resign , which she announced at the meeting so another person was elected to the board, as Secretary this time. No term specified, but it was implied she would finish the original term of the person who resigned. The minutes of the meeting only say " elected to the Board as Secretary". Technically, she was really appointed due to filling a vacancy, but it happened like an election.

We waded through the duties of being the Board and doing our best, but after six months of trying to interpret state law for reserves etc, we realized we needed help so we hired a professional manager. This manager now wants the Board to adopt some initial Bylaws that were written for condominiums. It is a lengthy document with difficult to understand language and overly complex processes for elections, amendments, meetings etc. It gives the Board far more powers, practically unlimited, than the Washington State RCWs and reduces the owners rights and ability to effect change in every passage. The document also would extend all of our terms on the Board for three more years. I feel, as President, that forcing this far reaching governing document on our small association with no input or ratification from the members whatsoever is wrong. Plus, it feels like we are voting ourselves into office for three more years. I cannot imagine this complies with the state laws that say a board cannot elect themselves and extend their terms.

I pushed back and argued my point but the other board members follow everything the manager wants...which is feeling more and more about what's best for the manager, and not the association. The other two board members are going to vote this in very soon at our next meeting. Once they adopt these bylaws, the amendment procedure outlined in the new Bylaws is almost impossible to achieve, and again is far more difficult than the RCWs described amendment process. This is how HOAs get out of control and over step, allowing two people to substantially change what people thought they bought into. Instead of protecting home values, they become a liability and a negative. Instead of creating harmony in a small neighborhood, it becomes a source of frustration and contempt. When I ran for President, I promised honest communication and transparency. I only have one vote. I want the entire association to be allowed to vote on these new governing documents, whether that is standard or required or not, it is right. The other board members do not. And after they vote in the bylaws, the bylaws say the board can vote me out of the presidents to prevent me from calling for a special meeting.

Any ideas or help ?
TimB4 (Tennessee)
Posts: 21,059
Posted:
Scott,

Since your incorporated, your Bylaws will need to comply with Washington State Corporate laws along with the HOA laws. They also can not exceed any limitation on authority granted in the CC&Rs or Articles of incorporation. They also may not be in conflict with those documents.

My suggestion would be to seek out other Associations around you to get a copy of their Bylaws (as they are likely in compliance with State laws). This might be accomplished via internet searches. However, you will likely have better luck contacting the associations directly.

As for the MC, they work for the Board. The Board does not work for them.

I expect that you are using the same management company as the Builder. If this is correct, you should (at the very least) bid out a new contract. You may or may not have the best deal in town. However, you won't know it until you bid the job out. As a reminder, the least expensive isn't always the best deal.

Since your Association is new, you should also make sure that the Association and not the MC has control of your money. The funds should be deposited in a back under the Associations name and, in my opinion, the MC should not be on the signature card. The MC can still collect, track and deposit assessments without being on the signature card.

Additionally, who is serving as the Association secretary? Per the WASHINGTON NONPROFIT CORPORATION ACT, specifically RCW 24.03.125, "The officers of a corporation shall consist of a president, one or more vice presidents, a secretary, and a treasurer . . ."

Therefore, your Association needs 4 officers. Per that same statute, an individual may hold two officer positions except that the President and Secretary may not be held by the same person.

TimB4 (Tennessee)
Posts: 21,059
Posted:
Scott,

Regardless of what you desire, State statutes are fairly clear. Per RCW 24.03.070 [emphasis added]:

The initial bylaws of a corporation shall be adopted by its board of directors. The power to alter, amend or repeal the bylaws or adopt new bylaws shall be vested in the board of directors unless otherwise provided in the articles of incorporation or the bylaws. The bylaws may contain any provisions for the regulation and management of the affairs of a corporation not inconsistent with law or the articles of incorporation. The board may adopt emergency bylaws in the manner provided by RCW 23B.02.070.

Now, what you can do is, prior to adopting the initial set of Bylaws, you may hold a general membership meeting to have the membership provide feedback on the proposed bylaws. I would also suggest that you run any proposed bylaws by the Associations attorney for a legal review and comment.
ScottH14 (Washington)
Posts: 3
Posted:
Is it standard for Bylaws to have the Board Powers that include foreclosure of a lien after 90 days late? It does not specify judicial or non judicial. Either way, the HOA can take a home, or try, from someone who does not pay what the HOA says to pay...in 90 days?. Where is the due process. This is where HOA cease to enhance property value by allowing this two person government too much power....along with all the other enforcement options...entering the property...attorneys and collection agencies...ruined credit ratings. No other agency I can think can take your home and put you in the street while your mortgage is current and paid in full. Unbelievable really, here in America. I had no idea when I bought in a HOA what they can do.

Foreclosure of a lien is not stated in any State HOA RCWs, our CCRs, or or Articles of incorporation. The board wants to adopt this in the new initial bylaws.. I don't want it. Can they really do this?

TimB4 (Tennessee)
Posts: 21,059
Posted:
Quote:
Posted By ScottH14 on 08/06/2014 11:00 AM
Is it standard for Bylaws to have the Board Powers that include foreclosure of a lien after 90 days late?

The Bylaws may not be in conflict with the CC&Rs.
Typically the CC&Rs establishes the continuing lien.

Bylaws typically reinforce this aspect but don't go into the actual procedures (but they could).
The procedures (30 days late, 60 days late, 90 days late, hearing, recording of lien, foreclosure, etc) are normally included within a resolution. Since resolutions are adopted at the Board level, they are easier to modify when applicable laws change.

Quote:
Posted By ScottH14 on 08/06/2014 11:00 AM

It does not specify judicial or non judicial. Either way, the HOA can take a home, or try, from someone who does not pay what the HOA says to pay...in 90 days?. Where is the due process.

Some States have HOA laws that require due process.
However, prior to the actual foreclosure (as I understand the process), the member may contest the issue in court at the foreclosure hearing. Again, State laws vary.

Quote:
Posted By ScottH14 on 08/06/2014 11:00 AM

This is where HOA cease to enhance property value by allowing this two person government too much power....along with all the other enforcement options...entering the property...attorneys and collection agencies...ruined credit ratings.

I agree. However, what procedures would you recommend to ensure that members pay their assessments?
If members are unable or unwilling to pay, this means that the other members of the Association must pay more to make up the difference. The recording of a lien (as just being a member of an Association places a continuing lien on your property) and foreclosure of same is the main authority/power an Association has to force those unwilling to pay to pay.

Personally, if a member is communicating a hardship with the Board, I do agree that the Board should try to work things out (waiver of late charges, payment plans, etc.). However, there are those individuals who simply won't communicate with the Board and will play the system to avoid paying until forced to. This is why it's best to utilize the words "may" and "can" vs. "shall" and "must" in the collection procedures. The use of those words still leaves the Board the option of working with those who are in a true hardship vs. those who are simply unwilling.

Quote:
Posted By ScottH14 on 08/06/2014 11:00 AM

No other agency I can think can take your home and put you in the street while your mortgage is current and paid in full.

IRS
State Tax administration
Contractors (by foreclosing on a mechanics lien)
Anyone who seeks and is awarded a judgement against you in a court of law (as they may file a lien and foreclose)

All of the above have the authority of taking your home via foreclosure even if your mortgage is current or paid in full.

Quote:
Posted By ScottH14 on 08/06/2014 11:00 AM

I had no idea when I bought in a HOA what they can do.

The authority to do this is contained within the CC&Rs (the continuing lien I spoke of earlier).
If you can gather support, you may amend your CC&Rs and remove this authority.

Quote:
Posted By ScottH14 on 08/06/2014 11:00 AM

Foreclosure of a lien is not stated in any State HOA RCWs, our CCRs, or or Articles of incorporation.

Again, the actual ability of a having a lien is likely stated in your CC&Rs.

State Lien laws would be where the options of exercising the lien by foreclosing are contained. As you are discovering, there are many laws in addition to HOA laws that are applicable to your Association. For example, here are just a couple:

Chapter 24.03 RCW - WASHINGTON NONPROFIT CORPORATION ACT

Chapter 60.04 RCW - MECHANICS' AND MATERIALMEN'S LIENS

Quote:
Posted By ScottH14 on 08/06/2014 11:00 AM

The board wants to adopt this in the new initial bylaws.. I don't want it. Can they really do this?

Based on this thread, it appears that the Board, by majority vote, is allowed to adopt the initial set of Bylaws. However, they can be amended. Therefore, you can always gather support from the membership and amend those Bylaws after the initial set is adopted.
NpS (Pennsylvania)
Posts: 4,216
Posted:
Quote:
Posted By TimB4 on 08/06/2014 3:56 PM

It does not specify judicial or non judicial. Either way, the HOA can take a home, or try, from someone who does not pay what the HOA says to pay...in 90 days?. Where is the due process.


Some States have HOA laws that require due process.
However, prior to the actual foreclosure (as I understand the process), the member may contest the issue in court at the foreclosure hearing. Again, State laws vary.


Minor correction. All state have HOA laws that require due process. Whether responsibility is placed in the hands of a sheriff or other public official (non-judicial) or a judge (judicial), there is always a formalized notice of default and a procedure to appeal the action against you.

Sikubali jukumu. Read all posts at your own risk.
NpS (Pennsylvania)
Posts: 4,216
Posted:
Oops. Looks like I haven't figure out the blocks yet. Top box is by OP. 1st paragraph is by Tim. Last paragraph is by me.

Sikubali jukumu. Read all posts at your own risk.

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