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HOA Elections and Budget Reports

Started by MikeJ14 • 15 replies • 1798 views

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MikeJ14 (Illinois)
Posts: 2
Posted:
Hello all,

My name is Mike,
I have lived in my current house for almost 15 years, in a community of about 240 homes. In that time we have had only one election. The board members rarely ever have publicized meetings, I believe I have been notified of only 3 in the last 15 years.

I have requested several times for an election, as the members themselves will "nominate" or choose their buddies to be on the board. I think it is safe to say at least 90% of the board members were never elected to their current positions.

The board members are very secretive as to who is even on the board. I have had to go thru our management company just to contact the president of the board, who rarely ever responds.

They pass budgets for the incoming year without any input from the residents, and it appears that some of the monies ($1200 for a block party) is constantly being "lost" as there is no accountability or records of where it went. (Not very many people even know of the block party, it is considered very secretive as well).

My questions are these:

1. Is there a way to "force" an election? I am pretty sure it takes at least 51% of the residents to be involved, but in the past proxy votes were allowed so that residents did not even need to show up.

2. Can an audit be requested of where this money is going to? If so, how does one go about it so that it is done legally?

Sorry, but I am one of the few residents who have been in the neighborhood since the home were first built, and have watched this board run it into the ground.

Thank you

Mike

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

Are you saying that you are having annual meetings but not having elections (due to quorum requirement)?

OR

Are you saying that you are not having annual meetings?

Also, is the builder/developer still in charge of the Association?
MikeJ14 (Illinois)
Posts: 2
Posted:
No annual meetings (only meetings behind closed doors, I assume from the budget meeting)

The builder turned over the properties to the HOA about 14 years ago. He has since went out of business and cannot be located. Ironically, a lot of the files and documentation concerning the homeowners (permits, permission granted type forms) have all since disappeared.

Wouldn't the proxy votes (those homeowners who granted permission for another to vote in their place) should be enough if the owners are not physically attending?

I know at the first election they were accepted even thought there was not 51% of the owners actually attending the election.

Thanks

Mike
BobD4 (up north)
Posts: 1,002
Posted:
Quote:
Posted By MikeJ14 :
I have lived in my current house for almost 15 years... In that time we have had only one election. The board members rarely ever have publicized meetings, I believe I have been notified of only 3 in the last 15 years.

. . . 1. Is there a way to "force" an election? I am pretty sure it takes at least 51% of the residents to be involved, but in the past proxy votes were allowed so that residents did not even need to show up.

2. Can an audit be requested of where this money is going to? If so, how does one go about it so that it is done legally ?

MikeJ14 (Illinois)

TimB4 gave good advice above, particularly that "calling an owners Meeting" is far short of "having a lawfully sufficient number of Owners present and /or proxied to convene and hold an election. It is also far short of a scenario where nobody wants to step forward to be a Director.

( How should any legislature deal with failed quorum attempts ? Shouldn't owners agree to a lowered quorum to the extent possible under the state law ? )

Why not research from your documents whether your community is subject to Illinois'Common Interest Community Association Act 765 ILCS 160 http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=076501600HArt.+1&ActID=3273&ChapterID=62&SeqStart=100000&SeqEnd=1850000

OR to Illinois Condominium Property Act (765 ILCS 605/) http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2200&ChapterID=62

Both you will notice require ( an attempt to try to lawfully hold ) an ANNUAL owners meeting but no way force a quorum to convene such including for elections. 765 ILCS 160/1-40 and 765 ILCS 605/18

If you can enthuse enough other owners to attend or proxy a quorum without getting yourself
targetted as a trouble-maker from Hell, maybe an attempted Meeting could reach quorum and maybe produce replacement help for the usual Board members. Respectfully, watch for toxic backlash.

How many annual Owners meetings have been called ? If the Board hasn't been bothering to attempt annual meetings ( ? ) maybe there are no records of attempts to convene such annually.

But if yours is a condo community & you have tons of time & a thick skin, the Condo statutes' 765 ILCS 605/19 legislates a statutory records access.

Again , respectfully, try get others onside in a positive way and try to minimize toxic retaliation.

The Board may turn out to actually welcome help but fear disruptive troublemakers.

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

All of the below are typical yet can vary:

1. By state law here must be at least an annual meeting of the corporation (ala the HOA).

2. Elections to the BOD will be held at this annual meeting assuming a quorum is present. The quorum required will be in you association documents/Bylaws.

2A. If a quorum is not established thus no election can be held and the existing BOD stays in place. This will be in your documents/Bylaws.

3. Some documents dictate how often a BOD must meet, but not all do so.

4. Owners do not get to vote on a budget. A budget can be overturned by owners but it will require a specific quorum to do so. This does mean a quorum to accept the budget but one to overturn it.

5. A BOD or any members of such can be recalled but there is a procedure one of which is replacements must be part of the vote.

6. Any owner can ask for budgets, financial reports, etc. but as to how detailed and the time/cost for such can vary.

Most of your questions can be answered by reading and understanding your documents. This is usually the first step to making changes verus just bytching. Changes are not easy to make but they can be made with hard work and determination.

KerryL1 (California)
Posts: 14,550
Posted:
Yes, Mike, follow JohnC's advice and read your own governing documents. Your bylaws probably say the most about elections. But IL state law probably does too. Or ask you PM.

Someone else from IL posted recently and it sounds like his board has open meetings. Is that a law in IL? Or can Boards choose to meet behind close doors?

Does you PM work on the premises each day? Or just visit sometimes? You should be be able to get a lot of info from your PM.

It's not unusual, btw, for Owners to need to go through the PM to ask questions of the Board of the President. That's how it is here in my HOA. And JohnC is right again: most HOAs in most states don't need h'owner approval for their budgets.

But it's possible that your state requires an annual audit; CA does, or at least a review by someone who's certified.

I have to admit; I don't know where to start to think of what might help your situation improve.

I also think BobD's advice contains a lot of good tips!
BobD4 (up north)
Posts: 1,002
Posted:
Quote:
Posted By MikeJ14
2. Can an audit be requested of where this money is going to? If so, how does one go about it so that it is done legally ?

Mike J14 : about an AUDIT : whether compulsory : again check whichever your state law above & your goveRnance documents.

If compulsory : apply whichever records access requirements.

As to AUDIT content / professional standards of preparation : your jurisdiction may - like mine - have professional accounting & auditing standards for auditing these shared ownerships & condos .

Auditors are at the mercy of the integrity of accounting record, their own professional ethics, their willingness to verify competently . .
NpS (Pennsylvania)
Posts: 4,216
Posted:
3 types of CPA engagements - audit, review, or compilation - in decreasing order of depth and cost. Audit (the highest) not usually required by statute but may be required by HOA docs.

Sikubali jukumu. Read all posts at your own risk.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By MikeJ14 on 12/28/2015 12:49 PM
1. Is there a way to "force" an election? I am pretty sure it takes at least 51% of the residents to be involved, but in the past proxy votes were allowed so that residents did not even need to show up.


Most states have provision in their non-profit corporation statutes allowing members to call for a special meeting. The percentage of members required varies from state to state but it is often a fairly low number, like 20%. You will need to read your statutes. This usually involves circulating a petition and presenting it to the board or to the association's registered agent.

If the situation is as dire as it sounds you ought to consult an attorney versed in corporate law before diving in.

ArtT5 (Illinois)
Posts: 84
Posted:
The community I live in is governed by the Illinois Common Interest Community Association Act. I'm guessing yours is also, but that would be the first thing to confirm. My guess is based on (1) your mentioning living in a house, which makes me think this is probably not a condo association, which would be governed by a similar but different law, and (2) your statement that there are about 240 homes in the community, which probably (but not necessarily) means the association isn't exempted from this law due to size. To be exempt it would need to be organized under the Illinois General Not for Profit Corporation Act and have annual budgeted assessments of less than $100,000, which seems low for a community with 240 homes (annual assessment of about $420 or less). If this law doesn't apply, you would have to look for rules under the General Not for Profit Corporation Act. The following statements assume you're under the Common Interest Community Association Act.

Your association's board is required to meet at least four times per year, providing advance notice of those meetings to members of the association and affording them an opportunity to attend the meetings and offer comments during the meeting. The board is not allowed to take any action outside an open meeting and, under a recent appellate court case known as "Palm II," cannot even meet privately to discuss board business except on restricted topics such as pending or threatened litigation. The board can't do business via email or other means that avoid open meetings.

By law, board elections must be held at least every 24 months. (Chances are that your declaration or by-laws requires them annually.) If no election has been held, you can call for one with a petition signed by at least 20% of the members. You would need 20% of the members to attend the election meeting, but attendance by proxy would count for this purpose.

Illinois law does not require an annual audit, but it includes requirements for the board to provide detailed financial information to the members of the association. It also requires the board to maintain minutes of its meetings and make these available to members of the association.

If you want to take on the task of reforming your association, begin by determining what laws apply. If your annual assessment is more than about $420, it would appear that you're under the Common Interest Community Association Act, because this would mean total assessments of over $100,000. You should also obtain copies of the declaration and by-laws. You should have received these documents when you bought your home, but I'm guessing you no longer have them if you ever did. The association is supposed to provide a copy upon request, or you should be able to obtain them from the county recorder's office. Some counties make it easy to find and view these online, but others may require you to pay for a copy.

It's possible the existing board members will be amenable to reforms that bring them into compliance, but you should be prepared for the likelihood that those who are running things will resent the notion that they should be accountable to the community or required to comply with the law or the governing documents. The property management company will understand that the board is acting improperly but will be loath to take any action contrary to the board's direction. Wresting control from the current board may be difficult if most of the community is complacent or just doesn't want to rock the boat. Given the 20% standard, you'd need to get owners of at least about 50 homes on board with what is likely to be a challenging and unpleasant but potentially rewarding reform project. In addition, you'll need people who are willing and able to serve on the newly elected board: you can't kick out the old board members without having new ones to replace them.
KerryL1 (California)
Posts: 14,550
Posted:
Mike, you've received some excellent advice and Art has given you a fine summary of IL laws that you can read for yourself.

I think he's right about the PM wanting to protect its job, but they still may be willing to give your copies of your governing documents. Or perhaps they're online at your HOA web site? If you have one?
GenoS (Florida)
Posts: 4,276
Posted:
Quote:
Posted By ArtT5 on 12/29/2015 5:18 AM
It's possible the existing board members will be amenable to reforms that bring them into compliance, but you should be prepared for the likelihood that those who are running things will resent the notion that they should be accountable to the community or required to comply with the law or the governing documents.

Boy, ain't that the truth? Good job ArtT5 in relating all that information about Illinois condo and HOA laws.
KerryL1 (California)
Posts: 14,550
Posted:
You know, Mike, Larry's suggestion about consulting an attorney seems to be a good idea in your HOA's case. It sounds like soooo much is wrong, unless you're just misunderstanding the situation.

If you know 1-3 other Owners who're even a little concerned you could all chip in and pay for a hour of advice. I'm not sure the best kind of attorney in IL. If it were CA, I'd say an attorney who specializes in CA HOA law & documents.
ArtT5 (Illinois)
Posts: 84
Posted:
Plenty of lawyers with that specialty here, too, and not hard to find, at least in Chicagoland. But before talking to a lawyer, make sure you have some other homeowners bought into the idea, because if this is where you're heading, you'll need people willing to serve on the board.
KerryL1 (California)
Posts: 14,550
Posted:
I hope Mike has at least another owner or two to work with him. But, Art, sometimes we never hear again from these troubling cases because, I'm only guessing, the original poster feels overwhelmed.
CfD (Virginia)
Posts: 265
Posted:
Quote:
Posted By ArtT5 on 12/29/2015 5:18 AM
The community I live in is governed by the Illinois Common Interest Community Association Act. I'm guessing yours is also, but that would be the first thing to confirm. My guess is based on (1) your mentioning living in a house, which makes me think this is probably not a condo association, which would be governed by a similar but different law, and (2) your statement that there are about 240 homes in the community, which probably (but not necessarily) means the association isn't exempted from this law due to size. To be exempt it would need to be organized under the Illinois General Not for Profit Corporation Act and have annual budgeted assessments of less than $100,000, which seems low for a community with 240 homes (annual assessment of about $420 or less). If this law doesn't apply, you would have to look for rules under the General Not for Profit Corporation Act. The following statements assume you're under the Common Interest Community Association Act.

Your association's board is required to meet at least four times per year, providing advance notice of those meetings to members of the association and affording them an opportunity to attend the meetings and offer comments during the meeting. The board is not allowed to take any action outside an open meeting and, under a recent appellate court case known as "Palm II," cannot even meet privately to discuss board business except on restricted topics such as pending or threatened litigation. The board can't do business via email or other means that avoid open meetings.

By law, board elections must be held at least every 24 months. (Chances are that your declaration or by-laws requires them annually.) If no election has been held, you can call for one with a petition signed by at least 20% of the members. You would need 20% of the members to attend the election meeting, but attendance by proxy would count for this purpose.

Illinois law does not require an annual audit, but it includes requirements for the board to provide detailed financial information to the members of the association. It also requires the board to maintain minutes of its meetings and make these available to members of the association.

If you want to take on the task of reforming your association, begin by determining what laws apply. If your annual assessment is more than about $420, it would appear that you're under the Common Interest Community Association Act, because this would mean total assessments of over $100,000. You should also obtain copies of the declaration and by-laws. You should have received these documents when you bought your home, but I'm guessing you no longer have them if you ever did. The association is supposed to provide a copy upon request, or you should be able to obtain them from the county recorder's office. Some counties make it easy to find and view these online, but others may require you to pay for a copy.

It's possible the existing board members will be amenable to reforms that bring them into compliance, but you should be prepared for the likelihood that those who are running things will resent the notion that they should be accountable to the community or required to comply with the law or the governing documents. The property management company will understand that the board is acting improperly but will be loath to take any action contrary to the board's direction. Wresting control from the current board may be difficult if most of the community is complacent or just doesn't want to rock the boat. Given the 20% standard, you'd need to get owners of at least about 50 homes on board with what is likely to be a challenging and unpleasant but potentially rewarding reform project. In addition, you'll need people who are willing and able to serve on the newly elected board: you can't kick out the old board members without having new ones to replace them.

Great Post.

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