HOA Being Illegally Ran, Need Help

Started by JenniferP8 • 36 replies • 1839 views

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JenniferP8 (Missouri)
Posts: 15

Posted:

So I moved into this subdivision a little over a year ago. I was the last home to be sold so the builder turned over the HOA to the community. Three people stepped up, volunteered, to take over as president, VP, and secretary/treasurer. Since then the president has paid himself to landscape our monuments, they've increased our dues, and now our secretary/treasuer wants to pay herself to be program manager for the community. They will not enforce the guidelines. They're citing people with citations that aren't recorded through the city. And then when people give them the finger they don't enforce anything. The president also rewrote the bylaws. They've moved bank accounts, they making decisions with our money that most people from what I can tell don't agree with. So after getting a copy of the original bylaws I realized this is all wrong. When the builder turned over the HOA there should have been an election to elect board members, members who are elected and reelected every so often. And they're prohibited from paying themselves. Also the board appoints officers. And the person who is both secretary and treasuer cannot be both. And now I'm being told that the president is stating our original bylaws did not have a recorder sheet therefore he refuses to except them as valid. But from what I can gather they didn't have to be recorded. And I don't know what the CC&R's are and if they supersede the bylaws. And how do I file a complaint to have our "officers" stop basically stealing our money?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

By-laws are corporate documents and most of the time do not require to be filed. It is the CC&R's and the Articles of Incorporation that are. By-laws are basically internal documents. If you want a copy of your CC&R's they are at your local courthouse. The articles of incorporation should be filed with the State. By laws may or may not be filed with the CC&R's if you check. CC&R's and Articles are considered PUBLIC documents.

I'd review those documents. It also sounds like this is a new HOA that's just been turned over. I am sure there is a lot of confusion going on. It typically takes about 2 - 3 years for a HOA to find it's footing after a turnover. You may be expecting too much at this point.

Former HOA President

JenniferP8 (Missouri)
Posts: 15

Posted:

I would agree except that the "president" read the bylaws and said they were invalid because they weren't recorded and had written his own. They're also paying themselves for duties outlined in the bylaws as expected. And when I brought it to their attention they ignored me and have proceeded to do as they please with access to our money. We literally have no say in be decision they're making.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Jennifer,

Welcome to the forum.

I have the following observations on your posting:

1) Don't blame the President. Associations are ran by majority vote of the Board. Your issue is with the entire board not that one individual. That person is simply seen as the face and voice of the Board (due to the position of President). However, the entire Board agreed to pay for the landscape service and the entire Board will make a decision to hire a PM or not.

2) Most Associations need to raise assessments when the members take control. This is because developers tend to artifically keep assessments low to entice buyers.

Now, to combat these issues:

1) gather support and attend board meetings as a group to voice your concerns.
2) Specify that if a PM is needed that competitive bids be obtained (perhaps you can volunteer to write the request for proposal (RFP) research the companies and compare the bids.
3) If the Board isn't willing to listen to your concerns, gather support and replace the Board (perhaps you will be willing to serve).

One thing to keep in mind is that if members are not willing to serve, they allow those who are willing to make the decisions that affect everyone. The decisions may be good, bad or indifferent.

Hope this helps,

Tim

JenniferP8 (Missouri)
Posts: 15

Posted:

Thank you Tim. My problem is we don't have a board. Not a single board member why-so-ever.

JenniferP8 (Missouri)
Posts: 15

Posted:

When the builder turned the HOA over to the neighborhood they were supposed to hold an election for the board. That was never done. Instead 3 people stepped up and said they'd be officers. They volunteered. No one had the bylaws so they assumed this was the way it was supposed to work. The president; however, had read the bylaws and new it wasn't supposed to work that way. But he's claiming because the original bylaws weren't recorded they aren't valid and he proceeded to write his own. Meanwhile we do not have a board. We do not get to vote. We do not get to elect anyone. The secretary is the treasurer. And they're dipping into the savings and paying themselves. And we're powerless because there's no board. No elected board to approve anything. I've tried to talk to the president and he is refusing to speak to me. A few years back someone else tried to speak to him and even confronted him on not following the original bylaws. And he became confrontational. So now those people want to move because he's literally taken over the neighborhood.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Your 3 volunteers are the Board.

TimB4 (Tennessee)
Posts: 21,061

Posted:

The other option is to petition the court for receivership until an election can be held.

The Articles of Incorporation, if your incorporated, are recorded and will likely specify elections are to be held.

DonA2 (Arizona)
Posts: 170

Posted:

Talk to the other homeowners. Get them on your side and then go as a group to confront the "Board".

JenniferP8 (Missouri)
Posts: 15

Posted:

They cannot be the board as the bylaws state the board it be elected by us which we didn't get a chance to do and contain 5 members, 3 of which are elected every two years and two of which every year. It also states the person that is the treasuer cannot be secretary and the 3rd officer is both. It also states the board is to appoint the officers not the officers appoint themselves. So they are not following the bylaws originally set in place and their excuse is that it wasn't recorded. I do have the support of the rest of the community.

JenniferP8 (Missouri)
Posts: 15

Posted:

Don, they've confronted them in the past to no avail even some of them becoming confrontational. I'm coming into the game late I guess and I don't take kindly to people taking advantage of others. When they started talking about paying themselves and increasing dues that's when I asked for a copy of the bylaws. People were upset about the treasuerer paying herself but when they protested in the last meeting they proceeded to do as they pleased. They know people are upset. We have this NextDoor app where people complain. And their response? To kick you off for speaking negatively about the HOA. I've asked questions they've refused to answer. I've confronted them. Others have. They wield all the power and they aren't going to give it up willingly.

KerryL1 (California)
Posts: 14,550

Posted:

What size is your HOA, Jennifer?

As at least one other wrote, you MUST read your CC&Rs. They also are called "covenants" or "declaration" or "deed restrictions." They MUST be recorded. They will tell you a lot.You should have received a copy when you closed escrow on your home. They often are quite lengthy, say 40-70 pages in a HOA like yours. It's in our CC&Rs, for instance, that members of the board of directors, officers or not, may not be paid.

Your bylaws probably say what needs to happen to amend them, usually a vote of the Owner. So, the prez cannot change them on his own. Bylaws generally say how elections must be held. They also say how often board meetings must be held. But so, probably, does your state laws, which vary from state to state. As Don & Tim advise, you and everyone you can gather together must attend. Keep the pressure on! I suggest you all politely ask that an election be held per your bylaws and state laws (if applicable). (Our Article of Incorporation don't talk about elections but perhaps yours do) Unless MO requires it, bylaws are NOT recorded.

It's possible that the existing "Board" is simply ignorant. It's just as possible that they're scammers out to make a few bucks off the rest of you. I wonder HOW they got the authority to sign checks, pay bills, etc.???

I think you and those who agree with you should cut to the chase and chip in to hire an HOA attorney now to inform you of what your rights are! There might be a way, for instance, that you owners can put together an election. But you'd have to follow your state laws and bylaws exactly and an attorney can help you. An attorney also might write a letter to the three individuals who call themselves "officers" and inform them of the steps they must take.

It's obvious that individual complaining won't make things right.

JenniferP8 (Missouri)
Posts: 15

Posted:

We have 62 homes so not large. We have the bylaws and the guidelines. The guidelines are lengthy and talk about rules we should follow. The bylaws state how the HOA should function, the election of the board members when it's turned over to then home owners, voting in issues, appointing officers, etc. Those are the only two documents I have. The president just responded to me stating the bylaws were never adopted by the builder and were created by their attorneys therefore not valid. Yet these are attorneys the builder was paying and created their other documents. Plus it is signed by the acting president at the time. So that makes it valid. Plus I believe he's not following the state statutes for incorportations. I agree with the president that the builder did did not follow their own bylaws when turning it over but now that the president knows we're onto him so I don't know why he's fighting it. Why he won't just adopt the bylaws and hold an election. When I confronted him he got very upset and refused to talk any further with me. I contacted the Secrtary of State and am awaiting a call from the lady that handled the non profit piece to see what she says. Also called an attorney and am awaiting a call back.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By JenniferP8 on 04/11/2016 12:47 PM
They cannot be the board as the bylaws state the board it be elected by us which we didn't get a chance to do

They can be the Board. They were appointed by the Developer prior to turning control over to the membership. Yes, elections should have been held but it's likely that your corporate laws have the directors stay in that position until the replacement is elected or appointed.

Typically, unless you are a condominium, Bylaws are not recorded.

Expecting that the previous Bylaws were published to the membership, you may want to consider petitioning the court to declare which set of Bylaws are to be followed.

BTW, here are the applicable statutes:

Missouri Condominium Property Act applicable if you are within a condominium development

Missouri Nonprofit Corporation Act applicable if your Association is incorporated as a nonprofit (most are but check to be sure)

There are no HOA statutes in Missouri

To check the status of your Association as a corporation see:

Missouri State Corporation Commission Entity Search page Note: before to select "any word" when doing the search.

AndreaB6 (Maryland)
Posts: 2

Posted:

Jennifer,

Take notes from day one of your observations. If you suspect illegal doings, contact the board's attorney for advice. Let the attorney package this thing up and/or contact your State or Federal prosecutors office for free advise and contact the Attorney General's office for more free advise. Contact the IRS for further advisement. check out www.caionline.org take the free online board training and get yourself on that board. Prior to the next annual meeting, go door-to-door, canvass your neighbors. Sell yourself without scaring the residents. Get their email addresses and keep them informed in a group email. Don't scare them with too much bad information. Just get on that board and make the changes needed. I have my own story and we are now a very successful community. You cannot allow an improper board to go forward. This board was appointed and that is not illegal, but, the annual election will determine who the residents will officially elect to serve on that Board. Find two or three others that share your concerns and canvass your neighborhood just like you were running for the office of the President of the United States. You can do it. Sounds like your community is heading down the wrong path from the start. If you hire a management company, find one on the Community Associations Institute website at www.caionline.org. Professional Management companies are certified and trained in helping the residents run the elections and all of the official things that go along with running a board. Your bylaws are your bible guidance to running that community!

Best Regards!

JenniferP8 (Missouri)
Posts: 15

Posted:

Thank you Andrea! The problem is we don't have a board. I tried to get the self appointed president to hold the election we were never given so we can elect our board members. He refuses. I explained per the bylaws we should have a board and they should be elected by us and every so many years reelected or new people elected. He said the bylaws aren't valid. And they most certainly are. They were filed with the county records clerk. But he won't adhere to them and instead is writing his own. That is my problem there is absolutely no board.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By JenniferP8 on 04/14/2016 1:41 PM
Thank you Andrea! The problem is we don't have a board. I tried to get the self appointed president to hold the election we were never given so we can elect our board members. He refuses. I explained per the bylaws we should have a board and they should be elected by us and every so many years reelected or new people elected. He said the bylaws aren't valid. And they most certainly are. They were filed with the county records clerk. But he won't adhere to them and instead is writing his own. That is my problem there is absolutely no board.

What I get from your posts is that the self-appointed Prez isn't doing things by the book - and you want him to go by the book.

You are asking for help, but if you can't get the support you need within your own community, it's unclear what kind of help you seek from this forum.

We can point you in one direction or another. But if your answer is that the Prez won't listen, then unfortunately I think you're stuck with what you've got.

Either gather support from your neighbors or move on.

Sikubali jukumu. Read all posts at your own risk.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By NpS on 04/14/2016 2:37 PM

Either gather support from your neighbors or move on.

Or take the issue before the courts

JenniferP8 (Missouri)
Posts: 15

Posted:

I hired a layer today. He agreed with me that they're committing multiple infractions and contract violations along with state statutes and corporation laws. The bylaws are clear and they're not following them. So we're writing a demand letter and if he doesn't comply then we are suing him and the secretary/treasurer.

TimB4 (Tennessee)
Posts: 21,061

Posted:

You will also need to bring action against the Association as a whole.

Board members typically have a built in defense of a bad judgement rule.
However, since they are being paid for their work, that defense might not be available.

Either way, you need to pierce the corporate veil to go after the individual Directors/Officers. Best to name the Association and the individuals in any legal action.

AndreaB6 (Maryland)
Posts: 2

Posted:

Jennifer,

Doesn't matter that the self-appointed president won't listen. If you have your copy of the bylaws, read them! Bylaws tell you when to hold the specific meetings. Board members are usually elected at the Annual meetings. In the meantime, gather support from your neighbors by creating a spreadsheet, collect email addresses and keep them informed. Find out if you have a management company or if your community is truly being self-managed. The bylaws will tell you. Some communities bylaws require the community hire a property management company. You can self appoint yourself to the board too. You need a secretary, namely you, start your notes taking. Ask the Prez for any copies of "minutes" or start your own "minutes". Every board has an attorney. Find out from the developer who the attorney for the board is and work with that attorney. Contact the Community Associations Institute www.caionline.org for tons of information about running a community and what the roles of the board officers are. Study, study, study. CAI offers free board certified online training. Read your bylaws, regardless if they are valid or not and trust me, they are valid. It takes a lot to rewrite bylaws and they absolutely have to be registered with the county or property tax division for any county/state. Look at your copy of the bylaws. Every resident receives a set. Look for a weird number on the front page or anywhere on each and every page.

You can do this Jennifer. If you are going to stick to the notion that the appointed Prez is not a board, you are wrong. He is appointed which means, he is your board. Add yourself to that board. He is not doing anything by the book so it won't matter. Call yourself a board member and do what you have to do.

Sorry to be so pushy, but, this breaks may heart and I've just overcome a horrible situation in my own community. We are very successful now and with a good management company to oversee all of this and hire our contractors and train us to understand the financials and anything else we need. It starts by working with whomever the board attorney is and trust me, there is one.

Take Care!

JenniferP8 (Missouri)
Posts: 15

Posted:

According to the attorney him and the treasurer are not the board. I read the bylaws with a fine toothed comb, that's why I posted on here. We were to be given a written ballot to elect a board when it was turned over and we never got that. Therefore per the bylaws we never elected a board. And then the board is to appoint officers. They cannot simply appoint themselves. They're also supposed to be producing monthly bank statements and invoices, etc to full fill their fiduciary duty. They're not. We are supposed to have annual member meeting every November where we elect/reelect board members. That canceled the HOA meeting last November. As far as I know our HOA doesn't have an attorney. Nor do they carry liability insurance as the bylaws state they should. Not sure they're filing annual reports either as is required for a corporation. They're also compensating themselves which per the bylaws they cannot do. And the decisions the president is making himself were supposed to be voted on by a board. He also cannot change the bylaws or any restrictions which he's doing without 67% vote from the members. We are not required to hire a management company, the treasurer hired herself to do those duties. So she's now getting $15/hr to do things listed in the bylaws as required. And again the board should have voted on that. So we do not have a board and I cannot get the president to hold an election for one. We have several neighbors who complain but when I told them the news was interested in our story and we had an attorney they backed out. They're afraid of this guy because he's vandalized some peoples' homes in the past. Can't be proven but he was the only neighbor people had words with before it happened. The police even thought it was a neighbor. And then those who aren't afraid and complain don't want to get involved in a lawsuit. There's a handful of us but they can't pay the attorney. So we might pay to have him write the demand letter but if that doesn't work then I don't think we could afford to go to court. We could ask the judge to have the guy pay the attorneys fees but who pays the attorney up front? We do. And people aren't willing to shell out that kind of money. Most people just do what they want and don't pay their dues or don't follow the restrictions. And because the HOA has never enforced anything then people feel thats good enough. But they're threatening to start enforcing but when I asked when that starts I couldn't get an answer. So we have an attorney and people who want things to change but no one willing to put their money where their mouth is.

PitA
Posts: 1,416

Posted:

I hired a layer today.

Case summarily dismissed w/o prejudice.

JenniferP8 (Missouri)
Posts: 15

Posted:

I'm sorry, I don't understand why you posted your comment or what you're intending to convey.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By JenniferP8 on 04/19/2016 9:43 AM
I'm sorry, I don't understand why you posted your comment or what you're intending to convey.

Jennifer

The guy from South Carolina routinely shoots off when he is off is medications.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By JenniferP8 on 04/15/2016 10:26 AM
According to the attorney him and the treasurer are not the board. I read the bylaws with a fine toothed comb, that's why I posted on here. We were to be given a written ballot to elect a board when it was turned over and we never got that. Therefore per the bylaws we never elected a board. And then the board is to appoint officers. They cannot simply appoint themselves. They're also supposed to be producing monthly bank statements and invoices, etc to full fill their fiduciary duty. They're not. We are supposed to have annual member meeting every November where we elect/reelect board members. That canceled the HOA meeting last November. As far as I know our HOA doesn't have an attorney. Nor do they carry liability insurance as the bylaws state they should. Not sure they're filing annual reports either as is required for a corporation. They're also compensating themselves which per the bylaws they cannot do. And the decisions the president is making himself were supposed to be voted on by a board. He also cannot change the bylaws or any restrictions which he's doing without 67% vote from the members. We are not required to hire a management company, the treasurer hired herself to do those duties. So she's now getting $15/hr to do things listed in the bylaws as required. And again the board should have voted on that. So we do not have a board and I cannot get the president to hold an election for one. We have several neighbors who complain but when I told them the news was interested in our story and we had an attorney they backed out. They're afraid of this guy because he's vandalized some peoples' homes in the past. Can't be proven but he was the only neighbor people had words with before it happened. The police even thought it was a neighbor. And then those who aren't afraid and complain don't want to get involved in a lawsuit. There's a handful of us but they can't pay the attorney. So we might pay to have him write the demand letter but if that doesn't work then I don't think we could afford to go to court. We could ask the judge to have the guy pay the attorneys fees but who pays the attorney up front? We do. And people aren't willing to shell out that kind of money. Most people just do what they want and don't pay their dues or don't follow the restrictions. And because the HOA has never enforced anything then people feel thats good enough. But they're threatening to start enforcing but when I asked when that starts I couldn't get an answer. So we have an attorney and people who want things to change but no one willing to put their money where their mouth is.

No written ballot ...
No elected board ...
Improper officer appointments ...
No bank statements and invoices ...
No election because annual meeting cancelled ...
No liability insurance ...
No corporate reporting ...
Improper self compensation ...
Improper decisions by Prez ...
Improper changes to bylaws ...
Improper self hiring ...
No board votes ...
Homeowners do what they want ...
Homeowners don't pay dues ...
Homeowners don't follow restrictions ...
Prez & Co threatening enforcement without giving a start date ...

But

Homeowners not interested in news publicity ...
Homeowners not interested in a lawsuit ...
Homeowners not willing to shell out money for an attorney ...
Can maybe afford a demand letter, but that's about it ...
No one willing to put their money where their mouth is.

Hmmmm ... This is a tough one. But maybe, just maybe, there's another answer.

I've heard from many lawyers what a good case I had, and it seems like your lawyer thinks that you have a great case too.

Why not ask your lawyer: "Since I've got such a great case, why won't you take it on contingency?"

I've asked that question to lawyers who encouraged me to pursue my "excellent" claims on several occasions. Their responses to my question were enlightening.

Sikubali jukumu. Read all posts at your own risk.

JenniferP8 (Missouri)
Posts: 15

Posted:

Oh ok lol. Thanks for letting me know.

JenniferP8 (Missouri)
Posts: 15

Posted:

I did and he said that's not how it works. We'd have to pay up front (not sure if that's all of it or the retainer) and then go after these people to pay us back. He wasn't going to work for free and then go after these people himself to make sure they paid. They could refuse to pay the judgement and then you'd have to take it to court to get their wages garnished or whatever. It would be a pain so I can see where he's coming from.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By JenniferP8 on 04/19/2016 10:31 AM
I did and he said that's not how it works.

So even though he thinks you have a great case, he's not willing to take the financial risk.
And neither is anyone else.
As you said, no one is willing to put their money where their mouth is.

It's going to cost money that you don't have. What are your options?

Sikubali jukumu. Read all posts at your own risk.

JenniferP8 (Missouri)
Posts: 15

Posted:

Well if he will accept a retainer we have several neighbors where a few of us are willing to pay. One neighbor has the money to pay for it but it's their basement finishing fund and even they're hesitant to use it. But when we elect a board we can ask them to approve reimbursement since likely most of us will be on that board. And then when we get these two to pay we can reimburse the HOA funds. Since we're doing this on behalf of the corporation then we should be able to use the funds to litigate. I asked the attorney if we can pay with that once we win and he said no because we don't have access to the account now. But I don't know of any attorney who would be ok with waiting to get paid on a what if. But we're hoping it doesn't come to a lawsuit. That a demand letter will work. I wrote it for the attorney so he shouldn't charge us a whole lot for that. Or if it does come to a lawsuit that we can harbor more support and the more of us there are the less it will cost each of us.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

This is a situation where INTERNAL solution is possible than EXTERNAL. If you have the numbers, then take it to the man I say. Time to put on the bootstraps and get yourself a majority vote to make some changes. Guess what that costs? Not a dang thing except for making things change. Go figure...

Former HOA President

JenniferP8 (Missouri)
Posts: 15

Posted:

It doesn't matter. The current president won't hold an election so we can get a board even if we get support. That's why we had to go to a lawyer.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Well seems someone isn't reading their documents clearly... Who says you can't recall the president or current board?

Your talking to people here who have gone through the trenches in their HOA to make changes. My HOA President was a horn dog con man who ripped off the HOA... Nothing is impossible... Just have to work hard at it and get the numbers...

Former HOA President

JeffT2 (Iowa)
Posts: 880

Posted:

I agree with Melissa. You don't need the president to call the election. Check your original documents for how to call an election, and do it yourself.

KerryL1 (California)
Posts: 14,550

Posted:

I think that Melissa & Jeff are right. Just follow your documents and state laws and hold an election sticking to the legal procedures. Lots cheaper than an attorney? You'll need to prepare ballots, etc.

But....have you not found your CC&Rs that are required to be recorded, i.e., in your county recorders office? ?? Didn't your attorney say anything about them??

PitA
Posts: 1,416

Posted:

The guy from South Carolina routinely shoots off when he is off is medications.

MORE illiterate jabberwocky.

or

Are you implying an alternate interpretation?

must . . . take . . . medications

PitA
Posts: 1,416

Posted:

Quote:

Posted By JenniferP8 on 04/19/2016 9:43 AM
I'm sorry, I don't understand why you posted your comment or what you're intending to convey.

I would suggest you fire the layer and hire an actual attorney who will use English in his/her petition(s) to the court(s).

A petition containing substantial errors will be summarily dismissed without prejudice.

Without prejudice means without any actual ruling as to 'merit', permitting the matter to be resubmitted.

However, if you can not communicate clearly and precisely HERE, how will you communicate with your attorney and/or a court of law?

Remember; You pay the attorney by the 'billable hour'.

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