Case study in Condo gone wrong

I am an owner in a condo in Wa state.
I have lived in the unit for 15 years

I am also a former board member from 2007-2010.

condo is from late 1970s and is aged with 40 year old siding in many places.

the board under took a SPA starting in 2007 and onward to fix roof and aged siding.
SPA has been ongoing since 2007, and there has been great progress on several buildings

I met with board pres a week and half ago to show him the condition of 25 year old parking lot.

at this time Board president told me association has 300K in delinquencies, and blamed the property management company for this.

That day was the 3rd attempt at an annual meeting, and the audience was ripe with upset home owners.

after the meeting I met with a neighbor, and he shared with me numerous concerns that had been on going for the last 18-24 months by several home owners.
he stated that home owners questions and concerns had been unanswered by property management company and board.

the property management company lost the former CEO around 2 years ago, and performance seems to decrease.
our association has had perhaps 10 Pms in the last 2 years.

property management company now has new CEO, and has fired and replaced approx 95% of staff

I shall summarize concerns here:

Issues and questions:

2013, 2014, 2015 auditor's report not provided in a timely fashion.. still not signed and finalized

status of presumed owned E-14 unit by the association

status of presumed owned H-1 unit by the association

status of insurance settlement lawsuit monies for 1.285Million,
identified in 2011 audit not 5.
board president says association only received approx. 300K

accounts that are 20K+ is arrears, that is like a decade's forth of fees.

Motion was passed in 2010 to lien after 30 days.

status of cash funds at foundation bank

status of current association account amounts?

2013 draft audit ($359,229.96) replacement fund shortfall?

approximately 300K currently in delinquencies, up from 80K in 2010

report of internal control from draft 2013 audit of capital control delinquencies

why SPA funds and Reserve funds are commingled?

Why using Reserve funds for operations?

I have tried to engage the board president, but he seems to brush off questions with BS.

I want to know how to best go about attacking these issue with the association, and the board

AND IF

as a home owner I have grounds for a lawsuit for gross negligence and incompetence?

thanks

I am very reluctantly adding my name to be a potential appointee by the board for one of the 2 open positions.

let me clarify. I feel strongly the board has failed, and I attribute the biggest share of the blame to the board president.

I don't want to sue the association, I am wanting to sue the Board president..
as this person's failures have been ongoing since the time when I was on the board.

he has been on the board for over 10 years, and this situation is a classic example of amateurs trying to lead a non profit business

Unclear to me why you would go after the prez for leading your org down a bad path, but not go after the other board members who let him do it.

Your claim IMO is against the HOA board (for letting it happen), not the prez.

If there is a personal vendetta, you-v-prez or prez-v-you, that only makes things messier.

You're going to need support from your community, and if it was that easy, you would have done something about this long ago.

As a matter of law, I do not think any of TV's claims are allegations of direct harms to him as a shareholder. Instead I think they are all allegations of harm the board did to the corporation and the corporate assets. Hence I believe all the claims are derivative in nature. Being derivative, one impression I have is that TV has to overcome the following hurdles:

https://www.courts.wa.gov/court_rules/?fa=court_rules.display&group=sup&set=CR&ruleid=supcr23.1

http://app.leg.wa.gov/rcw/default.aspx?cite=23B.07.400

These may seem trivial but they are not. TV, break down the above requirements such that your claim would qualify standing-wise as derivative. It's entirely possible that Washington law prohibits a person filing a derivative action without an attorney (so no pro se filings). I'd have to dig more to determine this. Regardless of what Washington law says, from my reading pro se folks are unlikely to win in a derivative action. Direct harms are much easier to argue.

Even though TV would be suing on behalf of the corporation, I understand he would still name the corporation as a defendant. My impression is it's fine to also name the President (and no other board member) in the claim. Particularly if you want to put pressure on the President.

Practically speaking, for now here is how I would start:

Submit a long letter of demand to the board, detailing exactly what you want the board to do and the consequences if the board does not do these things. Give the board a set time to respond, being reasonable. Ask for a signed receipt that this was received. Document every communication.

Has the HOA attorney been involved in these mis-steps, either defending them or counseling the board? If so, this might be a good thing. You might be able to avoid court.

Simultaneously, either plan on getting back on the board, or plan to move.

I am not an attorney. This is a crude rendering of my experience in these matters. TV can google on {derivative direct corporation} and get an introduction to the legalities here.

Assuming the OP's statement is correct, this would be a perfect example of a corporation in need of a receiver.

Not exactly.

The President is the designated signatory for the Association. This is typically mandated by the governing documents.

The President doesn't have veto power (unless your governing documents authorize said power).

The Board makes the decision.
The President simply signs the documents on behalf of the Board/Association.

size of complex is irrelevant

petition for what? confirmation of incompetence and stupidity

it is not a fight, it is based on data.
the prez has always down a rather poor job

I have to wonder TV as you seem to have the ability to rate the performance of others.

How would you rate your performance and that of the other property owners who have knowingly allowed this person to remain in the position of board president? How would you rate the performance of the other sitting members of your board who have sat back and allowed all of this substandard management ? Or is that also irrelevant?

Confusing what it is you are looking for here when you seem to believe you have a good grasp on the entire situation in your HOA?

everything is my fault, or the home owners fault

never the boards fault

TV,

You posted that you had previously served on the Board.

From that experience, you should be aware that decisions are made by majority rule of the Board and the Officers and MC simply implement those decisions.

From that experience, you should also be aware that responsibility rests with the Board.

You should also realize that it's the Board who must be the checks and balances on the PM/MC (trust but verify) just as its' the membership who are the checks and balances on the Board. Jon was pointing out that the membership, either through apathy or apparent misguided trust, allowed these Board members (or several sets of Board members over the past 6 years) to remain in Office even though they were not getting answers. In other words, there is enough blame to spread around and it's unlikely the sole fault of one individual (the President).

It's good that you are willing to step up and serve in the hopes to clean the mess up.
You may find, as many of us have, that you might have to continue to serve to keep the mess from recurring.

You have gotten some good advice.
Start with the contract of the MC and see what they are or are not doing.
Then move to the finances.
Rather then finding someone to blame, the mess should first be cleaned up then, if desired, attention and resources can go to assigning blame. Just remember (as Jon tried to point out) everyone appears to have some blame.

president runs board!!!

are you blind

let speaker of the house has no power???

I understand your concerns

my point is I think the President of the board has done huge hard to the board, the home owners, and the association.

we have lost revenue,

SPA and reserve funds have been co-mingled.

delinquencies are up

some accounts over 20K in delinquencies, that is like a delinquency for a decade with no remedy

they may or may not have acquired individual units (purchased) with association funds.

Board pres did not pay attention to MC performance

board pres have been on board since early 2000s, and has been president for over a dacade

etc, etc

TV

This forum is a great place to test your viewpoints and get feedback from folks who have had comparable experiences.

IMO, the questioning you get here toughens you up for what you will face when you decide to move things along in your HOA.

Don't take it personally.

No.

The President typically only presides over meetings.
Running the meeting is not the same as running the Board.

If it is within your Association, then I agree with Larry and perhaps it might be time to request a receiver be appointed by the court.


The speaker of the house only has the power and authority the governing documents of the House gives that position.

The President of an HOA/COA only has the power and authority the governing documents of the Association gives that position.
Typically, that power is to:
1) Preside over meetings of the Board
2) Preside over meetings of the membership
3) Be the signatory on contracts and other official documents of the Association (however said contracts are awarded by the Board)
4) Be cosigner of checks

That is typically the only power the President of an HOA/COA has, unless the governing documents or the Board authorizes more.

Keep in mind that the MC isn't clear of blame either.

This all apparently, at least from what I'm gathering from the posts, got worse when the MC had issues and assigned 7 different PMs to the property in 6 years. Every PM was likely playing catch up and the Board failed to properly fill the void.

I agree that TV is to be commended for being willing to step up and try to straighten this mess out.
However, TV will likely be less productive if he enters with the attitude of it's all the Presidents fault vs. taking the attitude of what must we do to address the issues.

BTW: For those who had to look it up like I did, AFAIC stands for As Far As I'm Concerned

1- With respect, are there Washington or other judgments finding an elected condo/HOA Director(s) personally liable to the condo/HOA electorate for 'gross negligence & incompetence' ?

2 - There must be no end of such judgments or adjudicative awards against professional service providers or suppliers of goods.

( Whether or not property managers come within that professional category, I am aware of at least one civil award against a property management company for overreach/sloppy performance/incompetence. It was a member in highest standing in my jurisdiction's industry association. Also awards for sloppy estoppelling certificates.)

I intended my words as encouragement to TV, not criticism.

I've had many ideas that I tested here to get reactions (both good and bad, both complementary and disapproving) to ideas that I was thinking about taking to my board and/or my community.

Whether I liked the responses I got from this forum or not, I paid close attention to what others said here. It helped me prepare for what I might hear when I take my message back home where it really counts. And after all, that's a goal of mine - To use this forum as a practice ground to help me figure out the best way to get things accomplished in my community.

I appreciate a well-thought-out challenge. The better the challenge to my ideas, the better prepared I become. And let me tell you, nothing anything has said here compares to the intensity of an angry homeowner. So I'll gladly take the hit here if that's what it takes to understand an opposing perspective.

I see a big difference between a critique and a personal criticism. But if someone sees every critique as personal criticism, then IMO that person isn't taking advantage of one of the greatest values that this forum has to offer.

So yeah, I'll test and I'll prod - But not with any menacing intent. And I hope that others will continue to test and prod me in return. That's the way I learn how to become a better board member.

I have one statement to all of you:

It is reasonable for unit owners to expect that the board members will properly discharge those duties.. and not BE IDIOTS!!!

incompetence and stupidity seem to be the SOP

I don't get it TV. The title you gave this thread is "Case Study in Condo gone wrong"

Ok, so you've identified a problem. But a Case Study involves a lot more. It involves an analysis that not only identifies a problem, but describes what efforts were taken to correct it.

Yet all you seem to be doing is pointing at the defects and calling names. That's not my idea of a Case Study.

It certainly is reasonable to expect that. However, that expectation would be unrealistic.

Since you served on the Board, you should be aware that Board members often learn how to do the job by doing it.

The Association might be lucky enough to have a landscape contractor be your Maintenance Officer, but the reality is you likely got an individual who only knows how to cut their grass.

The Association might be lucky enough to have a CPA as their Treasure. However, the reality is you may have someone who knows how to keep a family check book or worse, they have no idea how to keep a checkbook.

The Association might be lucky enough to have a retired CEO as their President. However, the reality is it was the last guy in line when the jobs were being divided up (that's actually how I became President my first year on the Board).

It's rare that you get the right credentials for any Board member on an HOA or COA Board. Because of this, anyone who gives the appearance that they know how to run things are likely seen as the expert in the field. If you have an MC or PM, they are typically seen as the expert in the field. However, even when you have an expert, they might not be able to relate to your development (case in point, I once served with a past President of CAI on my Board. We often had disagreements as he would refer to condo rules and I would refer to HOA rules).

Realistically, the Association gets a Board out of those members willing to serve. Their willingness may be due to having an agenda, wanting revenge or just wanting make things better in their vision. The only common thread being that they were willing to serve when others were not (which is what tends to keep them on the Board). TV, you have indicated with your posts that you have a good grasp of what needs to be done. You have indicated that having served in the past, you are willing to serve again. To me that gives you a lot of credibility.

Have you formulated how to address the problems you have identified when you get on the Board?

TV,

sounds like a good plan.


Having severed there, the correct acronym is GTMO it is simply pronounced GitMo.

Yep, fat finger syndrome.