Board members biased in Special Meeting

Started by RobertM39 • 24 replies • 2165 views

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RobertM39 (North Carolina)
Posts: 9

Posted:

We have a 55 & over planned community with age restrictions as a continuing debate in our community. A Special Meeting has been declared with the sole topic to be the pro's & con's of having an age restricted community. After the special meeting, there will be a vote by all the home/lot owners about whether to remove the age restrictions, or not. In North Carolina, a 2/3rd's majority is required to pass an amendment to the DC & R's. We had this vote almost 3 years ago, & it was passed to remove the age restrictions with a 59.5% vote (at the time our DC & R's incorrectly read that only a simple majority was required). During that last meeting, the board members chose to speak on behalf of only the Pro's of maintaining the age restrictions. they declared by NC state law, that a board member could simply be sitting at a board chair, could switch hats from being a board member to being a homeowner. My personal opinion, & reading our own DC & R's, Chapter 55A for non-profit organ in NC, & Chapter 47F for planned communities in NC, are that this presents either bias, conflict of interest, unethical, or, a breach of their fiduciary duties by the board members. So the final question is, can a board member in good faith, speak only on behalf of their own personal opinion, & not on behalf of all the home/lot owners? They say yes, & I say no, based on my research!?

UNETHICAL BOARD MEMBERS:

1) Advancing self-serving interests to further their own agenda (which would be a conflict of interest).
2) Not following the Business Judgment Rule
3) Acting in a disparate or discriminatory manner towards certain homeowners.

DouglasK1 (Florida)
Posts: 2,046

Posted:

I can't speak to NC law, but in my opinion directors who are also owners should have the same rights as any other owner to have and present their opinions.

Escaped former treasurer and director of a self managed association.

MarkM31 (Washington)
Posts: 494

Posted:

Quote:

Posted By DouglasK1 on 11/22/2016 10:40 AM
I can't speak to NC law, but in my opinion directors who are also owners should have the same rights as any other owner to have and present their opinions.

Seems about right

SueW6 (Michigan)
Posts: 814

Posted:

At an ANNUAL MEETING of the MEMBERS, all board members function as Member homeowners with voting rights the same as any other homeowner.

The role of the Chair or president is to lead the meeting, but at vote time, casts his/her vote like any other member.

(I am assuming that the president IS a homeowner)

MarkM31 (Washington)
Posts: 494

Posted:

Quote:

Posted By SueW6 on 11/22/2016 12:57 PM

(I am assuming that the president IS a homeowner)

Or otherwise has full voting rights such as a Declerant would for example

KerryL1 (California)
Posts: 14,550

Posted:

Looks like you mean a social meeting of the Members (owners), right?

Whether it's that or a specula meting of the Board, I don't see how 1-3 Could be invoked:

1) "Advancing self-serving interests to further their own agenda (which would be a conflict of interest)." Since many other owners have the same interest, it's not "self" interest.

2) "Not following the Business Judgment Rule" Pretty broad statement, what part aren't they following?? The duty of loyalty part? The good faith part?

3) Acting in a disparate [sic] or discriminatory manner towards certain homeowners. Disagreeing with those who want the limitation removed is not discriminatory. Wanting to keep the existing limitation doesn't seem to be discriminatory either. l guess you're saying that all Owners who don't want the limit removed are biased against a families with kids?? I think I'd want an attorney's opinion on that one.

RobertM39 (North Carolina)
Posts: 9

Posted:

So if they are breaking the basic laws of Roberts Rules of Order, Chapter 55A, Chapter 47F, & any other general information on ethics in regards to HOA's, you feel they have a right in a meeting declared by a super majority to wear both hats from the seat? Did you get a chance to read the three general ethical codes they are breaking by doing this. The only right they have in a HOA board meeting, is to be fair & balanced to both sides. They cannot change hats, during a HOA meeting after the meeting has been declared to order. Of course, as home owners, they have the freedom to vote their conscience, but, they cannot subject their own personal opinion (particularly when they are in the super minority) to the other members when the meeting is in session. The only time they can express their point of view is when they are not in session. Every HOA board member in our country has these same rules to follow, to be equal & non biased, not to create a conflict of interest, not to be unethical, & provide their fiduciary duties. Finally, while they are wearing their board hat, they can express the Pro's & Con's on a level playing field, but, that would be the absolute extent of their authority. I do thank you, & any others that have made your comments & I apologize if have have not made myself perfectly clear as to the goal of this post.

KerryL1 (California)
Posts: 14,550

Posted:

Correction: In both cases, I meant Special meeting!!!

TimB4 (Tennessee)
Posts: 21,059

Posted:

Robert,

Rather then deal with the behavior of the Board, why not simply stick with the issue at hand -

Pros and Cons of an age restricted community.

Here are some links:

Housing for Older Persons Act (HOPA) the authority to have an age restricted community.

Senior Housing: What you should know... HUD web site

Questions and Answers Concerning the Final Rule Implementing the Housing for Older Persons Act of 1995 (HOPA) From HUD

Pros & Cons of Age-Restricted Homeowners Associations 2015 article from an HOA management blog

Downside of 55 and Older Communities from 55 Community Guide

Advantages and Disadvantages of Over 55 Retirement Communities 2013 Article

Why a Retirement Community? 2013 Article

55 & Over Housing: What is the 80/20 Rule? 2010 article from FL condo & HOA law blog.

Hope these help.

Tim

RobertM39 (North Carolina)
Posts: 9

Posted:

Tim

Thank you for spending the time & research on the real issue at hand, regarding the Pro's & Cons of age restrictions in a HOA community. You are right, not do belabor very long on the speaking rights of the board members, I was more into any fact finding & opinions at this time on that issue. I will review all of your suggestions & see if it sheds any new light in our preparation for this upcoming Special Meeting".

SueW6 (Michigan)
Posts: 814

Posted:

Robert,

You asked "So the final question is, can a board member in good faith, speak only on behalf of their own personal opinion, & not on behalf of all the home/lot owners? They say yes, & I say no, based on my research!? "

If this is a Board called Special Meeting with homeowner-members attending, then the president leads the meeting. If a motion is made, and homeowners are voting, each Board member votes as a homeowner. Other board members should feel free to express their opinion.

At the discussion time of the motion, the president should just acknowledge the speaker and let others speak their allotted time. He/She should let the debate happen and, as the monitor, let all viewpoints be expressed.

If this is a Special Meeting of the Board, (Executive Session with just the Board in attendance) then all sides should be brought to the discussion but all board members can express their views.

KerryL1 (California)
Posts: 14,550

Posted:

Sorry, Robert, wouldn't have guessed from your subject line that your real question was the pros & cons of 55-limited HOAs. I'm sure Tim's reference list will be very useful.

It's still not clear to me if the upcoming meeting is a Special Meeting of the Board. But Sue is incorrect to say that that type of meeting is held in executive session. Special meetings of the board are simply meetings held outside the schedule of regular meetings of the board. In open meeting states, Owners certainly may attend. But, Sue's Bylaws might be different than most.

I'll look at my Robert's Rules later--it's the 11th ed. Do your governing documents, probably your bylaws, state the board must adhere to Robert's Rules? Ours only requires Robert's for Members Meetings. Or does your state (like CT) require Robert's? Meantime, Robert, what do you mean here: "... in a meeting declared by a super majority..."

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Sue

A Special Meeting basically is a meeting called for that was not scheduled. Special Meetings can be called in a number of ways (by the President, the BOD, the owners, etc.) and typically they must be limited to the subject/reason the meeting was called for such as discussing such as shall we remain a 55 and over association. Called to replace Ja ne Smith on the BOD with Harry Jones, etc. They cannot be a general bytching session.

Executive Sessions are a whole different issue.

RobertM39 (North Carolina)
Posts: 9

Posted:

Kerry

The only subject for this upcoming "Special Meeting" petitioned by the homeowners to hold, is as you mentioned the Pros & Cons of age restrictions in an HOA Planned Community. Anything regarding info such as Tim has sent is potentially going to be helpful in our presentation of speakers for the possibility to remove these age restrictions. But, the initial reason I sent a post on this site, is to capture any
opinions & facts for a board member to able to declare their own personal view points during a meeting where they reside as a board member. Legally, I am not sure, but, from my logic & reasoning I would interpret their two hats presentation as a potential of the any & all of the following: Conflict of Interest; Bias; Unethical; or, finally a breach of fiduciary of duty. All 5 board members are only representing the case to maintain the age restrictions 100%. In my opinion this unjust, & not fair & balanced for both sides of the issue to only support one side. All the laws I have mentioned previously
all refer to that any board member must be non biased, & not show PARTIALITY to their view point. To take this to another level politically, again all five board members are all wanting to maintain the age restrictions, & this is the reason most likely they volunteered to be on the board. On a recent survey conducted verbally without a vote, there are 58.5% that would vote to remove the age restrictions, 27.6% to maintain, & 13.8% undecided. Of the 27.6% of the Pros to maintain, 81.3% are serving, or, have served on the board on the last 12 months. It has been well documented that board members can have an advantage in influencing the decisions of others in the association. With that said, if you study the numbers I have shared, there is an overwhelming obvious reason why certain individuals seek these positions of power, to have the advantage of influencing others. As you can see by the numbers noted above, the undecided will swing the vote one direction, or the other, with a 2/3rds majority required for passing an amendment.

SheliaH (Indiana)
Posts: 6,964

Posted:

Sorry, but people can't split in two like that. You have to be a homeowner to serve on the board and the decisions the board makes as a whole will also affect board members. Human nature is what it is - of course, people will have a bias one way or another, regardless of whether they serve on a HOA board or anything else.

And yes, some people hold more sway on an issue than others because they're in a position to get more information and sometimes because people are just lazy and would rather have someone else do the thinking for them (a major reason for apathy in HOA communities). I'm more interested as to whether the board has provided complete, accurate information on the pros and cons, given homeowners a chance to express their opinions and then ensure any votes taken on the subject are done according to the procedures in your documents. And what's wrong with doing your own research - anyone can go to the library or an internet search and find information, just as you did. If your homeowners are so addled brained that they'll just go along with whatever simply because a 3 or 5 member board said so - especially on a major decision like this - I would say you have bigger problems in that community than the board.

You say the undecided will swing the vote one way or another - well, all you can do is make sure they have access to the same information. What they do with it is their decision - just because they vote one way or another doesn't necessarily mean they did it because of what the board said.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By SheliaH on 11/24/2016 8:28 AM
Sorry, but people can't split in two like that. You have to be a homeowner to serve on the board and the decisions the board makes as a whole will also affect board members. Human nature is what it is - of course, people will have a bias one way or another, regardless of whether they serve on a HOA board or anything else.

And yes, some people hold more sway on an issue than others because they're in a position to get more information and sometimes because people are just lazy and would rather have someone else do the thinking for them (a major reason for apathy in HOA communities). I'm more interested as to whether the board has provided complete, accurate information on the pros and cons, given homeowners a chance to express their opinions and then ensure any votes taken on the subject are done according to the procedures in your documents. And what's wrong with doing your own research - anyone can go to the library or an internet search and find information, just as you did. If your homeowners are so addled brained that they'll just go along with whatever simply because a 3 or 5 member board said so - especially on a major decision like this - I would say you have bigger problems in that community than the board.

You say the undecided will swing the vote one way or another - well, all you can do is make sure they have access to the same information. What they do with it is their decision - just because they vote one way or another doesn't necessarily mean they did it because of what the board said.

Well said.

KerryL1 (California)
Posts: 14,550

Posted:

I listed some brief reasons waaaaay above, Robert why your logic & reasoning are misguided, imo.

I siad I'd look at Robert's Rules, but it's actually on t you to cite the page, etc. and even q an exact quirt to support your assertion. Similarly I'm not going to look up NC Codes that you claim support your point of view. Citation, please, to bolster your argument.

I tend to agree with Sheila. And add that on many boards there are some directors who know a lot more than others and than other Owners. They, and others too, certainly may express their opinions on topics at members meetings.

In my state, directors may NOT use HOA resources ($$) to promote their point of view, such as the HOA newsletter, HOA-paid mailers etc.

RobertM39 (North Carolina)
Posts: 9

Posted:

Hi Kerry

Here is a quote from Cagle's Parlimentary Procedures website:

In Robert's Rules of Order Newly Revised, in a BOARD, the chair does has the authority to debate, make motions, and so forth. The idea that a chair doesn't debate relates to rules for ASSEMBLIES or PLENARY bodies, not to boards or committees.

Here in lies the confusion of interpretation. EX: Our board states in a "Special Meeting", they are 100% allowed to speak only on behalf of the minority opinion, & not convey the the strengths of the opposite point of view on the issue. Well, in a closed Board meeting they can convey their opinion, BUT, they cannot share that biased point of view in an assembly, or plenary body as indicated above in Robert's Rules of Order!

Here is info from Chapter 55A North Carolina Non-profit Corporation Act:

§ 55A-8-42. Standards of conduct for officers.
(a) An officer with discretionary authority shall discharge his duties under that authority:
(1) In good faith; (not in good faith to only share one view point only on the controversial subject)
(2) With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and (not being prudent to look at both sides & be equally fair)
(3) In a manner the officer reasonably believes to be in the best interests of the corporation. (In our case, their minority point of view would not be in the best interests of the HOA)

In regards to Chapter 47F of the North Carolina Planned Community Act:

I have not found anything very specific, other than a repetition of words such as "Good Faith", "Non-Biased Opinion", "Conflict of Interest", & "Equality" to apply to the board members duty & responsibilities. If they spoke their own personal opinion, as they have in the past, they would not be following their own code of conduct noted above.

Again, I want to thank each & everyone of you that have commented on my original post, because it enhances my overall research on the subject.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By RobertM39 on 11/25/2016 8:20 AM
Here is info from Chapter 55A North Carolina Non-profit Corporation Act:

§ 55A-8-42. Standards of conduct for officers.
(a) An officer with discretionary authority shall discharge his duties under that authority:
(1) In good faith; (not in good faith to only share one view point only on the controversial subject)
(2) With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and (not being prudent to look at both sides & be equally fair)
(3) In a manner the officer reasonably believes to be in the best interests of the corporation. (In our case, their minority point of view would not be in the best interests of the HOA)

Robert,

Two things. First, the quoted passage applies to officers, who serve at the pleasure of the board. It does not apply to board members. Second, it is bad practice to insert editorial comments inside a quoted statute because it then becomes difficult to distinguish between the legislature's words and your own.

KerryL1 (California)
Posts: 14,550

Posted:

Robert wrote: "...in a BOARD, the chair does has the authority to debate, make motions, and so forth. The idea that a chair doesn't debate relates to rules for ASSEMBLIES or PLENARY bodies, not to boards or committees.."
KL: But I don't know if a Members Meeting, which is what is sounds like your special meeting it, is an "assembly" or "Plenary." And I'm not going to look for the RONR citation which says the president or presider may not participate in debate in that circumstance.

I also don't know if your HOA si required to use Robert's at its members for board meetings

(1) "in good faith" simply means trying do what's best for the HOA--in their opinion.

(2) This DOES mean the board members should examine the topic from all angles and use the advice of experts if needed. Also called "due diligence" or their "duty of care." But It doesn't mean they must present both sides of the topic (even though I think they should).

(3) "in the best interests of the corporation" means what the officer/directors (in CA) believes is in the HOA's overall best interest. Obviously the Board does NOT believe changing your CC&Rs is in your HOA's best interests. Also known as their "duty of loyalty," putting the good of the HOA ahead of their own personal interests/desires.

In CA, board meetings must be open to owners and we have 11 a year. Each of us directors certainly do give our opinions during debates of motions. If not permitted to, why would the discussion following motions be called "debate"?

Now, I do agree that the Board is not required to present only the "con" view to the proposed CC&R change.

But why not focus on the pros & cons, make a nice spreadsheet or handwritten list of two columns with the pros & cons to hand out at the meeting? Or to mail to all Owners. In other words, campaign for your point of view.

Btw, I'm very curious to know why the board wants to keep the old CC&R. Knowing their reasons should hale your formulate your own.

BobD4 (up north)
Posts: 1,002

Posted:

Posted By RobertM39 . . . We have a 55 & over planned community with age restrictions as a continuing debate in our community. A Special Meeting has been declared with the sole topic to be the pro's & con's . . . During that last meeting, the board members chose to speak on behalf of only the Pro's of maintaining the age restrictions. . . . So the final question is, can a board member in good faith, speak only on behalf of their own personal opinion, & not on behalf of all the home/lot owners? They say yes, & I say no, based on my research!?

RobertM39(N Carolina) Respectfully it is a 'tough argue' that at an Owners Meeting Directors should be 'gagged' on an issue.

1- It will be tough to persuade that expressing a preference - as opposed to actual acts of governance - is pursuit of a private divurgence from the community's lawful common interest.

As long as the widespread 2 part duty of care ( 3 Stooges good faith & some higher competence than the 3 Stooges) is observed by the Directors, gagging Board members perhaps might even be seen as crippling the decision-making of the stakeholders. One expects the owners to evaluate.

Maybe there isn't very much jurisprudence that has bothered to "pierce the corporate veil" where non-Declarant individual condo/HOA Directors were actually caught & punished for pursuing private interest at odds with that of the majority stakeholders. ie not theft nor Declarant shenanigans. If so it's disappointing. And if one is caught, does much happen ?

2 - A condo President in my jurisdiction last year was PERSONALLY hit with a mere $ 15 K civil penalty for a scorched earth policy that defied the Declaration's express prohibitions against transient dorm rentals in a highrise where single family residence is the only Declaration-compliant usage.

4 of his 5 units were illegal dorm style in flat-out defiance of the Declaration. He did a lot more than merely voicing an opinion. But other than whatever disgrace, very little seems to have impacted him.

He was held to have actively stage-managed an obstructionist Rule that purported to 'grand-father' the illegal dorms for 10 years upcoming. ie to neuter the Declaration. ( Some details & articles about it are at http://ontario.cafcor.org/index.php?option=com_fireboard&Itemid=46&func=view&id=18187&catid=9 )

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Robert's issue is he is trying to silence the BOD Members from giving their opinions and most (if not all on here) say they are entitled to give their opinions so Robert is still searching for ways to silence them.

BobD4 (up north)
Posts: 1,002

Posted:

Quote:

Posted By RobertM39 : Our board states in a "Special Meeting", they are 100% allowed to speak only on behalf of (what you describe as ) the minority opinion, & not convey the the strengths of the opposite point of view on the issue. Here is info from Chapter 55A North Carolina Non-profit Corporation Act: § 55A-8-42. Standards of conduct for officers. (a) An officer with discretionary authority shall discharge his duties under that authority :
(3) In a manner the officer reasonably believes to be in the best interests of the corporation. ( your appended analysis : " In our case, their minority point of view would not be in the best interests of the HOA ") . . .

Robert M39 N Carolina : Respectfully let me suggest a couple of things.

1 - Without a 67 % or higher present - not just 2/3rds - (proxied) owner vote/consents to rescind IF your community looks governed by § 47F – 2 - 117 ("Amendment of declaration"), the Declaration enshrines Senior Age.

To say that a FAILED prior vote/consent process is now a gag on sitting Directors at Owner Meetings & indefensible, is a huge leap.

It's not too surprising that support for such gag is not easy to find. But if the Board throttles contrary views, it's a very different matter.

2 - Directors are under a duty to lawfully serve not merely the existing provisions but the legislated right of stakeholders to consider & even lawfully change the Declaration.

Allowing a frank open discussion by all stakeholders, they probably SHOULD share their views upfront.

3 - If the concern is a fulsome sort of balanced open discussion of an issue at an Owners Meeting , why not ask that the meeting be chaired - or at least the item 's discussion - by a paid neutral professional ?

BobD4 (up north)
Posts: 1,002

Posted:

Quote:

Posted By RobertM39 . . . So the final question is, can a board member in good faith, speak only on behalf of their own personal opinion, & not on behalf of all the home/lot owners? They say yes, & I say no, based on my research !?

Robertm39 N Carolina :
1- I should respectfully clarify above that the 67 % or higher (above) within your state's Planned Community Act 47C / Article 2, seems to also contemplate an allowable 'higher still' as the amendment threshold under 2 conditions.

( It's worth checking whether either condition applies to you. Perhaps a higher Declarant 'development' threshold could have addressed reassuring about Seniors Status . . ? )

2 Whether a short vote is 59 % or 50.0000009 % is it your feeling that merely a (short-)vote to amend immediately gags the Directors from expressing their personal view at an Owners Meeting ?

Or that at every Owners Meeting they will never be able to remove the Director's hat and speak self-declared as to their own personal view ? I suspect you need to find something to get around that aspect . . .

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By KerryL1 on 11/25/2016 2:53 PM
But It doesn't mean they must present both sides of the topic (even though I think they should).

OK, then please watch the following video of a Congressman arguing that deploying more US troops on Guam could cause the island to capsize.
https://www.youtube.com/watch?v=cesSRfXqS1Q

Most of us think the guy was nuts but I look forward to your presentation in favor of his arguments.

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