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PatJ2 (North Carolina)
Posts: 14
Posted:
NC Condo HOA Board of Directors

Our board is down to 2 Directors of 5. They are not interested in appointing anyone. They continue to hold board meetings and vote on motions. What can be done to stop them?
LarryB13 (Arizona)
Posts: 4,099
Posted:
Organize an election. Organize a recall. Petition the court for an injunction and/or a receiver.

Without a quorum the board cannot legally do business.

PatJ2 (North Carolina)
Posts: 14
Posted:
We are starting the petition for recall process.

Do we need a lawyer to petition the court for an injunction in NC? I'll research more, but was wondering if anyone knew.
TimB4 (Tennessee)
Posts: 21,059
Posted:
Pat,

Some comments on recalls.

1) You are not getting a petition for a recall.

You are getting a petition to hold a special membership meeting for the purpose of a recall (yes, they are different).

Even though you are not in CA, Davis-stirling has an excellent example of how such a petition should look (just modify to reference your statutes and governing documents: http://www.davis-stirling.com/tabid/1866/Default.aspx#axzz3j5RWVty3

2) Get more than enough signatures.

This will ensure that you will still have the amount needed to call a meeting if the Board disqualifies a few of the signatures. Additionally, if there is a clear majority who have signed onto the petition, the Board may simply step down.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By TimB4 on 08/17/2015 8:35 AM
You are getting a petition to hold a special membership meeting for the purpose of a recall (yes, they are different).


Tim,

You have a habit of overly complicating recalls. How it will work for the OP will depend on her state laws and her association's bylaws.

In the real world, a recall election is triggered by sufficient voters signing a recall petition. The resulting election is not an election to decide whether to hold an election nor is it an election to decide whether a to recall an office holder. The petition itself answers those questions. The recall election itself allows any candidate, including the incumbent, to run for the office.

What I see proposed on this forum too often is the idea that they must first have a meeting to decide whether to hold a recall election, then hold another meeting to decide whether or not to recall the incumbent, and then have a third meeting to elect a replacement for the recalled office-holder.
RichardP13 (California)
Posts: 3,868
Posted:
Below is the link to an article about recalling or removing Board members in North Carolina, covering both the Condominium and Planned Unit Acts. Item # 34

http://communityassociations.net/wp-content/uploads/2013/02/CCAL-Project-NC-revised.pdf
PatJ2 (North Carolina)
Posts: 14
Posted:
Thank you Richard. Even before I posed this questions I had to determine whether we fell under the Condo or Planed Act. We actually fall under NC Non-Profit State Statutes because of our age.I may have spoken incorrectly about "filing a petition". My head is spinning from all the research I've been doing regarding this. Although we are not in CA I find davis-sterling.com very helpful and have referred to them.

I was asking this question because it's going to take a little bit of time to gather the signatures on the petition to give to the "Board" demanding the Special Meeting to re-call current board members and elect new memebers., but I'm reading that injunction might take longer.

This brings up another question. If a Board of 2 can no nothing except appoint another Board member, can they even call the Special Meeting?

RichardP13 (California)
Posts: 3,868
Posted:
Yes they can call the meeting.
TimB4 (Tennessee)
Posts: 21,059
Posted:
Quote:
Posted By LarryB13 on 08/17/2015 11:11 AM

What I see proposed on this forum too often is the idea that they must first have a meeting to decide whether to hold a recall election,

Larry,

I think you misunderstand what I'm posting.

In the governing documents and statutes I've seen, the membership may recall an individual director or the entire board at a meeting held for that purpose. To obtain such a meeting, again per the governing documents I've seen, the members petition the Board for a special meeting of the membership for a specific purpose. The right to call a meeting is typically specified (along with the required percentage of members signatures) in the governing docs.

I have also seen stories, though I can not find them, of Boards who denied recall petitions because procedures were not technically followed (i.e. the petition said that the undersigned desire to recall the board vs. the undersigned are calling a meeting to recall the board). The Board said we would take it under advisement (as they saw the petition as a request vs. technically calling a meeting of the membership).

If you truly have jerks on the Board, then it's important to follow procedures to minimize their ability to be jerks.

As an example, this is from our documents:

From our Bylaws:

Article III - Meeting of Members Section 2. Special Meetings. Special meetings of the members may be called at any time by the President or by the Board of Directors, or upon written request of the members who are entitled to vote one-fourth (1/4) of all votes of the membership.

Article IV - Board of Directors Section 3. Removal. Any director may be removed from the Board, with or without cause, by a majority vote of the members of the Association.

VA Nonstock Corporation Act, § 13.1-860. Removal of directors: E. A director may be removed only at a meeting called for the purpose of removing him.

VA Nonstock Corporation Act, § 13.1-839. Special meeting

A. A corporation shall hold a special meeting of members:

1. On call of the chairman of the board of directors, the president, the board of directors, or the person or persons authorized to do so by the articles of incorporation or bylaws; or

2. In the absence of a provision in the articles of incorporation or bylaws stating who may call a special meeting of members, a special meeting of members may be called by members having one-twentieth of the votes entitled to be cast at such meeting.
TimB4 (Tennessee)
Posts: 21,059
Posted:
In reviewing NC Nonprofit corporation act, it appears to have similar language.
The members first petition to call a meeting of the members for the purpose of recalling the Director/Board, At that meeting the recall vote is taken.

Per the North Carolina Nonprofit Corporation Act:

§ 55A-7-02. Special meeting. (a) A corporation with members shall hold a special meeting of members:

(1) On call of its board of directors or the person or persons authorized to do so by the articles of incorporation or bylaws; or

(2) Within 30 days after the holders of at least ten percent (10%) of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date, and deliver to the corporation's secretary one or more written demands for the meeting describing the purpose or purposes for which it is to be held.

(d) Only those matters that are within the purpose or purposes described in the meeting notice required by G.S. 55A-7-05 may be acted upon at a special meeting of members.

§ 55A-8-08. Removal of directors elected by members or directors.

(e) A director elected by members may be removed by the members only at a meeting called for the purpose of removing the director and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Pat

A few general points:

1. It takes a specific amount of owners to call a Special Meeting. Usually about 10% or more.

2. A special Meeting can only be called for a specific reason like recall the BOD. It is not a general business session.

3. If a recall, it must be defined who is being recalled and who is replacing whom. It is not a General Election.

4. The BOD does not have to attend nor respond to a Special Meeting. It is not a method to force the BOD to call a Business Meeting.

5. The old BOD could legally fight the recall which can get messy and take years to resolve. They more then likely could spend HOA money defending themselves against the recall.

In the long run usually the easiest and most likely not to be legally challenged method to replace all or part of a BOD via the normally scheduled General Election. Throw the bums out and elect new bums.

JonD1
Posts: 2,350
Posted:
Quote:
Posted By JohnC46 on 08/17/2015 12:48 PM
Pat

A few general points:

1. It takes a specific amount of owners to call a Special Meeting. Usually about 10% or more.

2. A special Meeting can only be called for a specific reason like recall the BOD. It is not a general business session.

3. If a recall, it must be defined who is being recalled and who is replacing whom. It is not a General Election.

4. The BOD does not have to attend nor respond to a Special Meeting. It is not a method to force the BOD to call a Business Meeting.

5. The old BOD could legally fight the recall which can get messy and take years to resolve. They more then likely could spend HOA money defending themselves against the recall.

In the long run usually the easiest and most likely not to be legally challenged method to replace all or part of a BOD via the normally scheduled General Election. Throw the bums out and elect new bums.


John as always you make some important points.

There is a specific process in presenting a petition for a special meeting. There are requirements as to what the petition calls for and what the actual purpose of the meeting will be.

There are guidelines to how any special election will be handled. In our case the current board would be responsible to organize and hold the election.
The board can fight this process every step of the way if they choose to do so with the HOA funded lawyer.
If the Op decides to go this route they best have legal counsel. $$$$$$'
They better have determined whether they have enough support for the petition and even more support for the vote.
This is NOT we get a few signatures, we present them, the board resigns, we take over.
Far more complicated than that.
Regular elections, as John suggests would be an easier trip.
PatJ2 (North Carolina)
Posts: 14
Posted:
If they did hire a lawyer to fight the re-call, wouldn't they be using HOA funds they have no authority to use since it is only 2 of them? We are really hoping they buckle under the pressure.

We had 5, 1 resigned, they voted 1 appointed Board member off and then another resigned. Leaving 2 appointed Board members who haven't even read one sentence in the governing docs.

We haven't had a quorum at the Annual Meeting in years. We've always operated with appointed members. Community is falling apart and filled the owner apathy.

Don't know if we'll pull it off, but we are going to give it a try.

RichardP13 (California)
Posts: 3,868
Posted:
Tim,

Based on the last couple of comments, you question why I would be cynical?
MarkM31 (Washington)
Posts: 556
Posted:
The CC&Rs I have seen aren't that complicated in the requirements for calling a special meeting, and there isn't much to fight.
GenoS (Florida)
Posts: 4,276
Posted:
The recall process depends on which state you're in. In Florida, for instance, the law says, "Board directors may be recalled by an agreement in writing or by written ballot without a membership meeting," and that applies, "Regardless of any provision to the contrary contained in the governing documents".
TimB4 (Tennessee)
Posts: 21,059
Posted:
Quote:
Posted By RichardP13 on 08/17/2015 1:46 PM
Tim,

Based on the last couple of comments, you question why I would be cynical?

Yes. Only because you are making your living (or at least a part time job) from the Associations for management services.

One, well I, would expect that those who are making a living on the industry would be realistic but have a positive spin on the various issues within Associations.
JonD1
Posts: 2,350
Posted:
Quote:
Posted By PatJ2 on 08/17/2015 1:28 PM
If they did hire a lawyer to fight the re-call, wouldn't they be using HOA funds they have no authority to use since it is only 2 of them? We are really hoping they buckle under the pressure.

We had 5, 1 resigned, they voted 1 appointed Board member off and then another resigned. Leaving 2 appointed Board members who haven't even read one sentence in the governing docs.

We haven't had a quorum at the Annual Meeting in years. We've always operated with appointed members. Community is falling apart and filled the owner apathy.

Don't know if we'll pull it off, but we are going to give it a try.


That's exactly the sort of issue a court would be needed to decide if the two current board members don't simply pack up.

The fact two serving board members decided their best course of action was to leave seems to have allowed the sort of issues that now plague your property.

My suggestion you best understand the recall process and make sure you cross the Ts and dot all the Is.

If the other owners choose to sit this one out you have an uphill battle coming.
JonD1
Posts: 2,350
Posted:
Quote:
Posted By TimB4 on 08/17/2015 3:22 PM
Posted By RichardP13 on 08/17/2015 1:46 PM
Tim,

Based on the last couple of comments, you question why I would be cynical?


Yes. Only because you are making your living (or at least a part time job) from the Associations for management services.

One, well I, would expect that those who are making a living on the industry would be realistic but have a positive spin on the various issues within Associations.

Some might conclude it is then just a paycheck. Nothing more.

BobD4 (up north)
Posts: 1,002
Posted:
PatJ2 N Carolina : " Our board is down to 2 Directors of 5. They are not interested in appointing anyone. They continue to hold board meetings and vote on motions. What can be done to stop them ?"

The good digging above has taken you to big part of the answer.

But respectfully you need to read & understand your community's site specific documents. You may need professional help if you want to "stop" the remaining 2 Directors, IF at all they should be stopped.

Might consider also :

1- IF - IF - you genuinely are subject to "Chapter 55A: North Carolina Nonprofit Corporation Act", note that ch 55A-8-24 (Board)"Quorum and Voting" appears to legalize what the two remainers have been doing unless prohibited by one of 3 ways including site-specific bylaws.

It appears to legitimize a bizarre "floating quorum" unless prohibited in one of 3 other ways :

§ 55A-8-24. Quorum and voting.

(a) Except as otherwise provided in: (i) this Chapter, (ii) the articles of incorporation, or (iii) the bylaws, a quorum of a board of directors consists of a majority of the directors in office immediately before a meeting begins. In no event may the articles of incorporation or bylaws authorize a quorum of fewer than one-third of the number of directors in office.

(b) If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board unless: (i) this Chapter, (ii) the articles of incorporation, or (iii) the bylaws require the vote of a greater number of directors. . . .

2 Can Requisistioners ( folks seeking to call a their own grassroots meeting ) legally call a (special) members Meeting to unseat Directors or merely to elect enough replacements to outvote the 2 remainers ?

Check your bylaws and specific Articles of Incorporation again. § 55A-7-02. Special meeting literally by itself does not empower that specifically. Maybe your bylaws do.

3 - If you can legally call your own Requisition-type members meeting, follow absolutely unassailable proven numbers & required procedurals.

Further have eligible replacement Directors ready to go.

Think carefully about whether you should unseat the 2 remainers if you are able to place 3 more on the Board. Is it worth the humiliation effect of unseating the 2 if you will add a majority ?

2 months ago I watched a NFP Requisition meeting fill enough empty Director seats to regain majority, but then go much further to vote to unseat the remainers.

I abstained as to unseatings.

The unseated remainer Directors next responded by denying the procedurals, have defied the Requisition outcome totally, are calling their own members meeting, and are introducing draconian punishment including vote-stripping and member expulsion powers.

A defier-called meeting will select its Chair, have the membership rolls to dispute eligibility, and have legal counsel paid out of the assets.

A similar vote stripping bylaw in a similar struggle 15 years ago within our jurisdiction, was foolishly passed and immediately used to strip 1000 members of votes, leaving only a dozen voters. On a technicality such was struck down by the courts . . . .

Is this in your comfort & skillset zones ?

JohnC46 (South Carolina)
Posts: 14,265
Posted:
Pat

The bottom line of Bob's post was:

Is this in your comfort & skillset zones?
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By TimB4 on 08/17/2015 3:22 PM
Posted By RichardP13 on 08/17/2015 1:46 PM
Tim,

Based on the last couple of comments, you question why I would be cynical?


Yes. Only because you are making your living (or at least a part time job) from the Associations for management services.

One, well I, would expect that those who are making a living on the industry would be realistic but have a positive spin on the various issues within Associations.

You're right Tim and Jon, it's just a paycheck, nothing more.

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