Should I be concerned that all Board Members changed roles since my conflict discussion with President

Started by JosephS21 • 29 replies • 1821 views

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JosephS21 (South Carolina)
Posts: 54

Posted:

I recently noticed some alarming budgetary spending and what I viewed as conflicts of interests pertaining to a Board Member (Treasurer) and our Management Company. Since the election of our Treasurer he was awarded services that increased our spending by almost 300% and our Management Company's Spouse was awarded a separate contract that increase spending by 25%. I also notice an extremely large sum spent from reserves with an additional large sum taken from our CDs with no explanation.

I immediately contacted my Board President and strongly stated my concerns of the conflict and missing money. I was taken by surprise when he told me "I cannot watch everything", "The Management Company Handles that", "We have done a lot of things (could not name one)", "The conflicts are not conflicts because we voted on them" - I fired back that it was his responsibility and they are conflicts. The phone call lasted 40 mins and was cordial. What happened next alarms me.

Almost immediately after my call the entire Board changed roles! Contractors have been addressing everything I pointed out (Everything), the CEO of the Management Company dismissed themselves from our property and placed another staff member in charge. The Treasure is changing his business name out front.

These actions alarm me as if there is a deeper problem and I caught them with their hands in the cookie jar.

Any thoughts appreciated as I intend to approach at the next meeting to demand answers and real change or resignations.

Thanks

KerryL1 (California)
Posts: 14,550

Posted:

Are you saying that the Board voted to award certain contracts to the treasurer and the treasurer didn't recuse himself from the vote? Are you on the Board?

And the "management company's spouse": does that mean the spouse of the owner of your MC?

Are you on the board, Joseph? If not, how did you learn about these issues? I understand SC is a closed meeting state, but apparently you're able to get HOA record and inspect them?

What you've related does sound problematic at first glance, but your narrative is a little disjointed with, it seems, some missing pieces.

How many are on your board? What size is your HOA?

EmmaH1
Posts: 674

Posted:

Joseph,

From what you said, I certainly see your reason for concern, are you on the BOD? if not how did you notice the alarming spending going on? did you request a statement? or were your dues just raised? In my opinion you do have the right to get those answers. They hopefully can explain themselves and prove they are not guilty of what you suspect.

Good luck,

I'm sure you'll get some good advice on exactly what to do here.

JosephS21 (South Carolina)
Posts: 54

Posted:

Thanks for responding..

The Treasure did recuse himself but sat opposite the Board and sold his services with his partner. This information was declared and was obtain by requesting the minutes.

Yes it is the spouse of the owner of MC.

No, I am not on the Board but intend to run given my findings. This has been pointed out at annual meeting and and thru discussions of other concerned owners.

There are 5 Board Members and our HOA is 608 units.

EmmaH1
Posts: 674

Posted:

Sorry Kerry our posts got crossed, we seem to be asking some of the same questions

JosephS21 (South Carolina)
Posts: 54

Posted:

We are handed a very vague budget with no real break down. When we look at it we see savings in one area while a similar increase in those we feel are conflicts. Again it was enough of a pointer when discussed with the President that stirred the hornets nest.
Thanks

JosephS21 (South Carolina)
Posts: 54

Posted:

Given that SC is a closed meeting state, they say I can request to be present at meeting but must submit items to discuss 72 hours in advance.
Can they deny me time in front of the Board at the meeting?

NpS (Pennsylvania)
Posts: 4,216

Posted:

Hi Joseph

Percentages aren't very helpful. A $25 expense that goes up almost 300% is still less than $100.

A large sum taken from reserves and an additional large sum taken from CDs doesn't help much either. Were they part of the same transaction? Where did the money go?

It sounds to me that your call to the Pres was effective in getting people to take action - So I don't understand why you would be troubled by what happened afterwards.

Not sure what you mean by treasurer changed his business name out front.

It does appear that your board was asleep at the switch to some extent, but I would be more concerned if no action was taken at all.

Nothing you have described indicates that fraud exists or that the potential conflict of interest was not addressed properly. Certainly there are concerns when the spouse of the management company is awarded a contract, but if properly disclosed and the contract was properly vetted, then you should be ok.

"Hands in the cookie jar" may be an extreme allegation at this point in time. But if you are getting results by turning up the heat, then go for it.

Sikubali jukumu. Read all posts at your own risk.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By JosephS21 on 11/29/2014 7:04 PM
Given that SC is a closed meeting state, they say I can request to be present at meeting but must submit items to discuss 72 hours in advance. Can they deny me time in front of the Board at the meeting?

In a closed meeting state, the board can invite you to speak but exclude you from the discussion of your issue, or some parts of it. So the question is, is this the best forum to present your concerns? Or would a Special Meeting of homeowners be more appropriate?

Either way, you will need to get yourself better informed. I'm sure that your CC&Rs allow you access to the HOA records at the MC's offices. Take advantage of that opportunity.

You already have the board and the MC on the defensive. It's highly unlikely that any further shenanigans is going to take place in the near future now that a bit of sunshine has been shed on the situation. You have time. Use it wisely.

You do want to give the board sufficient time to investigate and fix things. The last thing you want to do is put them in a position where they can say "we'll look into it" and then you have to wait indefinitely for a response.

Keep the pressure on. But also recognize that constant pressure can backfire. Best of luck.

Sikubali jukumu. Read all posts at your own risk.

JosephS21 (South Carolina)
Posts: 54

Posted:

I certainly agree that getting results is a good thing. By all means I do not intend to accuse anyone of fraud as there is no sufficient evidence of that. Their actions appear self serving and not in the best interest of the Members, and for this reason I feel the Board has been soured and need to move on, and feel that conflict is in order.
Just to clarify percentages using rough numbers $25K at 300% = $95K, and $150K at 25% = $188K - this is substantial in my mind.
Thanks for your response..

JosephS21 (South Carolina)
Posts: 54

Posted:

Thanks for the advise.
I do want to keep the pressure on, but do want to see change as the lack of trust is in place.
I intend to be patient but don't want to be to lax...

EmmaH1
Posts: 674

Posted:

JosephS,

I lot of problems exist in my HOA, a lot needs to be changed. It is hard to deal with and it won't go away if not addressed. (It's not going to fix itself) It is hard to get others involved even if they agree with you for various reasons. Don't get discouraged I'm trying not to. I'm in SC too, seems to be a lot of posters from here. You found a good place to get guidance. Good Luck and keep us posted I'm interested in your outcome.

Have you been on a BOD before? you mentioned you planned on running.

Emma

JosephS21 (South Carolina)
Posts: 54

Posted:

Emma

I have never been on a Board and absolutely intend to run, several owners are amazed with the response I have been able to get by just one phone call as they have been trying for years to do the same. So, there are some supporters and word is traveling. Getting others involved is evolving given the current events, keeping them focused is where it gets tricky as everyone thinks they can just pick up the phone and get what they want. They fail to realize that my approached was weeks worth of sleepless nights creating the agenda which had direct and meaningful concerns that offered solutions (even if they were mine). It was stern but cordial for 40 mins. that had substance and not a gripe.

I will not get discourage, nor should you or anyone. My next move will cost myself and others some money that will be well spent in mailings to the other owners educating them to get involved and why, also "TO VOTE" and not allow someone to fill in the proxy. Owners have a way of becoming complacent until the Special Assessment hits them. I am trying to get there before the problem.

All it takes is a handful of people with an agenda to work together to get results. Stick together and spread the work, a few results even if they are small will peak interest.

There has been some great responses. Helping to keep me focused.

Good luck to you also, would be interested to hear your success..

Joe

TimB4 (Tennessee)
Posts: 21,059

Posted:

Joseph,

As others have said, you apparently had enough specifics to shake things up and have some changes made. That is a good thing.

To me, the next step would be to request to review the financials. This would be allowed under SECTION 33-31-1602 (scroll down, it's near the bottom) of the SOUTH CAROLINA NONPROFIT CORPORATION ACT. You won't be able to see individual assessment ledgers, but you should be able to see deposit slips, checks written, contracts, etc. (i.e. the specifics) which should help answer your other questions as to what did the Association get for the money spent.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Joseph

Is the issue the fact that costs have gone up and/or who the contracts have been awarded to?

Awarding contracts to Members of the BOD and/or their families is not improper if done correctly. That said, I personally do not like such and I warn against such. If for no other reason, then it is to easy to question who knew what. Even when right, those deals can "smell".

Based on the fact that some quick changes were made as a result of your enquiry, I would take my questions further. Typically you will not be allowed to participate in the BOD meeting once it commences. You can observe, record, take notes, but not speak unless spoken to. Some BOD's do have an open Question and Answer session directly before of after a BOD Meeting. Not that they have to answer, but at least you can ask the questions to get things out in the open.

SC does not have "open BOD" meetings but that does not mean the meetings are closed. It means the BOD does not have to notify owners when BOD meetings are. One way around this is to request the meeting schedule and attend. Annual Meetings are open to all and all must be notified when and where they are.

You also have the ability to call a Special Meeting. Understand it must be limited to a specific subject which it was called for such as Contract Awards. It cannot be a general bytching session. How to call such a meeting should be in your Bylaws.

Tim

Good link. Shows that even in little regulated SC there are ways to get thing done.

JosephS21 (South Carolina)
Posts: 54

Posted:

Tim
Thanks.. We have been asking for certain financials as well as meeting minutes to compare (spotty response). However, there is much resistance when we ask for Contracts and we are told we are not allowed to see them. We had one rogue member bombard them with requests of documents without substance which angered the MC. I backed off to let the air clear.
My anger toward this Board and MC happened after I noticed some spending habits that in my opinion represent something fishy. I flipped my lid when the MC told me "You are not allowed to talk the Board Members directly, you must go thru us." This tells me the Board has lost control and the members need to be concerned.

Joe

JosephS21 (South Carolina)
Posts: 54

Posted:

John

Yes,the issue is that costs have gone up substantially in those areas I consider to be conflicts. If I had seen a savings or improved services I would not be alarmed (i.e. Landscaper destroyed own lawns with a tractor rushing to do other things, who pays for the damage? In my conversation to the President I warned I did not want to see that repair in our expenses.). I feel they use these tactics to charge more as it repeats itself.

It appears that I need to just attend the next meeting and be a fly on the wall vs. trying to get floor time. Asking for a Special Meeting seems to be the consensus and with take the advise. All have been very helpful here.

I agree bytching session gets you nowhere and I think is why my "concrete facts and solutions" conversation with the Pres created such a flury. I am by far done with them as I keep uncovering more as I probe other neighbors and spread the word.

Thanks for your input..

CyrstalB (Maryland)
Posts: 457

Posted:

Quote:

Posted By JosephS21 on 11/30/2014 6:38 AM
...I flipped my lid when the MC told me "You are not allowed to talk the Board Members directly, you must go thru us." This tells me the Board has lost control and the members need to be concerned.

Joe

John, kudos for approaching the board in a manner that resulted in changes, whether for good or bad.

If your MC actually said that to you verbatim, you should first confirm that with the President of your board that they, the BOD issued such an order. IF they didn't actually say that, I would caution you, your HOA and the BOD that you need a new MC.

Those words say more than meets the eye and that is the MC wants full control over the BOD, not necessarily a bad thing in most cases, but in this case that is the wrong stance. It's very possible this MC is misleading your BOD, on purpose or not, on this and possibly other stuff. Such as the conflict(s) you've mentioned, not illegal, but also not done in a correct manner and in my opinion, that is why an HOA has an MC, to guide them to do it all the right way.

I'm not saying the BOD is not responsible, however we were handled this way with an MC and we found out the hard way he didn't know much of what he was talking about, but since we the BOD didn't know any better either, we took him at his word because he was the MC>

Good luck,

CyrstalB (Maryland)
Posts: 457

Posted:

PS. Since you will be running for the board, before you ask a question, stop and think about how you as a Board member would like to be asked that same question etc.

JosephS21 (South Carolina)
Posts: 54

Posted:

Crystal

It is verbatim. I was shocked, lost control and blasted the MC manager for her comment. Sorry, couldn't believe what she said. As soon as the President contacted me I cordially read him the riot act. His comment was "Maybe she was just fielding the call." - And, yes our exact fear that the MC is in control and our aging BOD is tired and have become complacent.

The more I dig the more I am finding, all seems to coincide with a recently elected (younger) Board Member who we believe is very friendly with the MC. Again, we have no concrete evidence of this and these are suspicions. It is just very fishy, especially after I touched a nerve with my phone call. They are also going out of their way to do things in front of me as if they are probing for my next move. They'll never get it... Almost 2 months now and they are still running because they don't know how I am getting my sources. I will keep them on their toes until they quit or I get in.

My objective is about protecting our members lively-hoods and others investments - this should always be a BOD's position - not reward.

I spent many sleepless nights thinking before I speak. Very tough when angered.

Thanks for you thoughts..

CyrstalB (Maryland)
Posts: 457

Posted:

Your welcome, and with empathy of your sleepless nights, your stating, " It is just very fishy, especially after I touched a nerve with my phone call. They are also going out of their way to do things in front of me as if they are probing for my next move. They'll never get it... Almost 2 months now and they are still running because they don't know how I am getting my sources. I will keep them on their toes until they quit or I get in..." Well that is one way to look at it, here's another:

Could it be that you absolutely hit a nerve with the board members, and now they are aware of said complacency or whatever has affected them, and they want to make sure you see that they "heard" your concern just as they should of? It is not unusual for many boards to want things ran via a MC, and they put all their blind faith in the MC because that is what all previous boards have done. And now thanks to you they got a dose of medicine that was necessary.And perhaps this friendly relationship with the new board member is for a purpose other than a nefarious one? Do you know the new board member? Maybe they are just friendly people and we just aren't used to that in today's society. I could talk to you at a board meeting and you would never know from my actions if I disliked you.

Finally, some hopeful helpfully advice on sleepless nights...remember that although we are all invested in our HOA and want or need it to be "perfect", you shouldn't take on the weight of the world or HOA to the point where it prevents you from living your life. Save that for something like terminal illness when you really don't know what tomorrow will bring, but in an HOA environment, I know I can speak for all when I say, all of that BS will still be there tomorrow and the day after that and the decade after and so on. <

>
Go to sleep!

JosephS21 (South Carolina)
Posts: 54

Posted:

Crystal Thanks again..
Started a normal sleep pattern after the phone call.

Unfortunately with regards to the Friendliness of our newest Board Member with the MC does not sit well with us as they are both of what we are considering conflicts. I am a new owner of just a year and do not know any of the Board Members or MC - I sure we will be on first name basis soon - LOL. As we continue to research we are also finding information on the state website that is not soothing. As far as like or dislike, while we are conducting business concerning the HOA it is business, friendship/or not comes later.

JerryD5 (Colorado)
Posts: 218

Posted:

Joseph, I currently the president of our board. I was intrigued about your question to the MC about addressing the board directly. We also require residents contact our MC if they have any questions/requests (or they can come to our quarterly board meetings). We did that because we had a particular homeowner who was upset at the action we took as a board against their lot. Because she was a previous committee member and her husband was a former board member, they had our email addresses and she continually demanded immediate answers on issues/decisions we (the board) made. Through our MC, we responded that we would not entertain anymore discussion of the matter(s). She continued. It got so bad, she would track down board members and contact them at their place of work. In one instance, she gave out our email addresses and my personal, unlisted phone number in a media press release. We all ended up having to change our email addresses. She finally understands that any future issues/complaints have to be addressed at our quarterly board meetings (during the open homeowner forum). Other homeowners have no issues addressing any issues/complaints to through our MC. Our MC is very good about passing on issues if they are extreme and need our immediate action.

BillH10 (Texas)
Posts: 1,217

Posted:

Joseph, I will add to JerryD5's response to you, from two perspectives:

We own a small HOA management company. None of the associations we manage discourages property owners from contacting board members. Their names, telephone numbers, and e-mail addresses are printed in every issue of the newsletter, as are those of the committee chairs, if any. This is partially due to the fact that the Governing Documents of most associations require board member information to be communicated to property owners following the annual meeting. However, with some exceptions, when such contacts take place, the board member either asks the property owner to contact us or asks us to contact the property owner. The exceptions are general items such as how to find the Association website or how can one address the board at the next meeting. In many cases, the board member simply does not know the answer.

In the association in which we live, it is much the same, but somewhat more pointed. As a board member, my fellow board members and I receive telephone calls, are stopped when out for a walk, or receive e-mails from property owners who wish to provide their input to the board on a variety of issues. Some of these we pass along to the property manager, others we simply note as "information received" and move on, knowing the property owner will generally bring up the same subject in the open forum at the next board meeting. We do not discourage such contacts, were we to do so we would be roundly, loudly, and publically chastised for not listening to our constituents.

On a side note, I know many people have less than respectful attitudes toward Texas. I have to comment I am appalled at some of the issues which are brought up on this forum. The Texas Legislature, in 2011 and in 2013, introduced significant changes (or at least codified the rules and processes) regarding the ways in which HOAs must conduct business. Two prime examples are open meetings and open records. We operate under Property Code mandated processes for notifying property owners of all meetings (except emergencies), similarly we must provide reasonable property owner access to all association records, except legally privileged information and account specific information, other than that of the requesting party. While Texas is a solidly conservative state, my belief is it is as progressive as any with respect to how HOAs, POAs, etc. must do business. While there are some differences, condominium associations fall under the same guidelines.

Were we, as a management company, or a board, to conduct ourselves as many of you in other states describe the ways your boards (or MCs) conduct themselves, we would be the lead story on the 6:00 PM news, probably in court or at least served with some kind of order, and rightfully so.

JosephS21 (South Carolina)
Posts: 54

Posted:

Jerry
I completely understand, and do not condone such actions but unfortunately it happens. As I indicated above, I had formed a commitee based on an agenda on how we would approach both Board and MC with me as the lead. Well, one decided to attack on her own as you described, I had to shut her down. I had already made progress although more needs to be done, she was a liabilty to ours and the Boards possibly renewed dialog.
Our problem however, was that the MC blocked everyone or never relayed messages or said "we'll get back to you" and failed on the delivery. In this case I feel the MC has too much control. If the MC does not communicate with the Board and it is left unattended the Board takes the heat. There truly is no glory to being a Board Member and Kudos to all that take it on. We live in a world full of technology that allow our personal lives to be hidden and allow communications to pass thru giving an owner the sense of availability. MCs and Boards should have a communiction protocol for members to get thru - edudacting members is key. I can't get that from ours, just I'll get to you and I wait. Altough it might bite on my turn, I'm not a fan of the MC fielding.
My success is I think that I was the only one that gave concrete evidence with solutions vs. the usual bytch that a Board hears over and over.

Thanks for your insight. I will keep in mind when I take a seat.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

My HOA recently interviewed 3 Management Companies. One reason we chose the company we did is they use an "electronic job ticket" file system. If and when an owner phones in a complaint/comment, a "job ticket" is opened. The owner is given a job ticket number,

That "job ticket" is kept open and the BOD is notified of open job tickets monthly. The job ticket remains open until the BOD or Management Company closes it and gives a reason for closure.

Granted the opener of the job ticket may not agree with the reason for closure and wishes to pursue it and that pursuit will open another job ticket.

Yes it could be a circular argument as in job ticket after job ticket but so be it.

JosephS21 (South Carolina)
Posts: 54

Posted:

Bill
Thanks for that. If only our Board and MC acted in the manner as you do, then no matter how bad the issue we would be able to discuss it and come to an agreement no matter who is right. This would build "Trust" that creates constructive dialogue vs anger.

I believe the length of time our Board has served combined with age (not holding it against them but seems to interfer with effectiveness) and the MC control taking advantage of the Boards complacency has jeapordized our sense of security. Without getting into details, my guard is on financials that have been impeccable until recent. Getting our answers have been tough. By all means I am not saying fraud but have suspicions on wasteful spending in areas of conflicts.

Transparency is truly a big problem. There is no change for access on website, no updates but once a year etc. Our MC has been around a long time with well over 100 propertiies many high profile. Hard to believe the infrastructure is lacking.

Thanks again.

JerryD5 (Colorado)
Posts: 218

Posted:

John, that is a good way to address issues. Typically we do not have that many issues the board has to be involved in. Most are corrected by the MC. For example, the last complaint dealt with fall cleanup by our landscaping company (they missed some spots). Our PM contacted the account manager and it was fixed within a week.

I truly don't mind if people were to call me on the phone (several neighbors have my cell #) or even stop me while I am out walking my dogs if they have a legitimite concern. One part of the job I enjoy is meeting people in our association. I have made it a point to stop by and contacting people if I see them them in their yards. I always introduce myself and ask them if they have any concerns (usually about landscaping concerns). I always invite them to our quarterly and annual meetings. I have met at least 50% of the residents (not including the renters we have in our community).

JosephS21 (South Carolina)
Posts: 54

Posted:

John

Thanks.
This at least allows a member to communicate and create accountability and a way to follow up.
Shows the HOA wants to listen.
Gonna keep this on my list.

Joe

JosephS21 (South Carolina)
Posts: 54

Posted:

Jerry

Great efforts. In my mind this would give me a sense of commitment knowing I can talk to you vs getting angy while I was trying to track you down. Communication, communication, communication.... Perfect

Joe

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