Interim Board in GA

Our HOA stepped down in NOV of last year. A group of members started an interim board with no voting done. They then drafted a letter and took it to the bank that held the HOA funds and withdrew all the funds from that account. The self appointed board had an annual meeting that was full of drama and unsuccessful. The self appointed interim board is now refusing to hold an annual election until 2016 annual meeting. A couple of questions: Is it legal to self appoint a board? Can they require us to pay dues to a board that was not elected in? Can they go without holding an election for an entire year?

Without knowing anything about your HOA's documents or GA law, and without being in the legal profession, I still answer "no" to all three of your questions."

Douglas' advice looks sound. If you don't feel you can understand the language in your bylaws or CC&Rs ( also known as: declaration, covenants) try to find another owner who's good at that type of thing. Usually the answers to your questions are in your bylaws.

But you probably will need legal advice so gather a group of others who think the current arrangement smells really bad, and pool your reserves to hire the right kind of attorney.

Jacque,

My understanding is that when an association has become dormant that any group of owners may hold a meeting open to all members for the purpose of electing a board. Until they are voted in by a majority of a quorum of members their authority to act on behalf of the association is questionable.

Among your remedies is to organize another meeting for the purpose of electing a board. My first guess is that no one in your association really cares, which is why the HOA went dormant to begin with and why they could not muster enough votes at their last annual meeting.

So what you have is one group calling itself the board of directors and when they held an annual meeting not enough members voted them in or out. Most corporation laws hold that when an election fails to reach a quorum the existing board remains until the next election. That next election could be the next annual meeting or it could be at a special meeting called for that purpose.

While I do not like their tactics of taking control without first holding an election, the members had (and still have) the opportunity to unseat this board and have failed to do so.

In answer to your three questions:
1. Considering that the members have stood by silently when they had an opportunity to reject the self-appointed board and no one else is claiming to be the board, their actions are probably just barely legal.
2. Yes. The association can require you to pay assessments regardless of how the board of directors was formed because your CC&R's require it.
3. Personally, I would not wait until 2016 for another election. As I pointed out above, the remedy is to organize a special election.

Kind of scary that a bank would release funds to people just because they provide a letter saying that they are authorized.

From what you have said, and unless your docs state otherwise, the old board is the only authorized board, and they would continue as hold-overs until a new election. The interim board has no authority whatsoever if they were never elected by the membership or selected as replacements by the old board. Have you checked the meeting minutes to see what action the old board took, if any, re the new board?

The last voted in board sent a letter stating that as of NOV 2014 they were going to step down and let a new board be voted in at the annual meeting in JAN 2015. They stated that they would provide a cashiers check to the new board once voted in. A group of members decided to self appoint themselves as the interim board and take a letter to the bank saying that they were voted in. The bank then allowed them to withdraw all the funds. They are now holding the funds in a new bank account and putting a budget together for 2015 and do not plan on having an official 2015 election for a board to be voted in.

Jacque

There is one legal school of thought that says resignations by all of the board of directors without the appointment of replacements may constitute a breach of the resigning directors’ fiduciary duties and they can be sued for such.

I was elected to the board, and then elected treasurer about a year ago. We checked with the bank to see what was needed to change the name(s) on the account. All we needed was a letter on HOA letterhead signed by the president to get my name and another new officer on the account, and the old people off. Luckily ours was an orderly turnover, the old treasurer turned over everything and gave me some assistance to get started, so I had the checkbook and such when I went to the bank. From what I could tell though, all we really needed was the letter.

It does seem like it would be fairly easy to fraudulently take over an HOA account.

From a bank's point of view, I'm not sure more they could realistically ask for to "prove" an HOA board member's authority.

In my HOA, we do business with a couple of banks. Our Treasurer and our Prez are the only people who have contact with these banks. If there are going to be any changes, our Treasurer or Prez contacts the bank. Even if both Prez and Treasurer were stepping down, and even if both were being forced out, one or the other would notify the bank in writing where the authority is being transferred. Our fiduciary responsibilities as directors would make that mandatory.

IMO, both the old board and the new board could be personally liable.

Jacque

I do not know how far a petition can go or what legal standing it would have. In most cases they are nothing but a suggestion to a BOD.

What you could do is call a Special Meeting with the stated purpose of electing a BOD. Typically as few as 10% of owners can call a Special Meeting and the BOD cannot stop it nor do they control it. It is controlled by those calling for such.

Study up on Special Meetings.