Best way to conduct a successful RECALL of board member?

This is all in your documents on how to conduct a recall. It may or may not require a special meeting. It will also spell out what is considered the majority vote. Some HOA's it's 51% to 100% of the vote. So that is another thing need to confirm that is required.

Your MC is a PAID contractor to the HOA. They are NOT the HOA. You can't just simply drop them if there is a contract in place. Will need to know the terms of that contract and how much notice is required to cancel it. Also it's a LARGE MC you said. It may be the "crooked" person is no longer there or is handling your account. There should be multiple people working there that handle different accounts.

Have you ever asked to view the records? Why is the MC counting the votes? It should be done unless contractually agreed upon by the HOA board in front of everyone. Then they should be certified properly. Whatever that process is by putting them in the meeting notes or having them recorded by other methods.

Please stop calling the board member "Crooked" as it's not really proven. Kickbacks have to be better defined. Plus they would have to come directly from the HOA budget. That would have an issue with. However, there are some kick backs that are not that bad. If a contractor says will give a discount because of the exposure to that large of a group of members. Like if you allow them to put a sign up while they do the work, then others who hire them will get 10 - 25% off their work. That's just the way some contractors work. I'd have to see an actual check or money being given to a member directly for using a recommended contractor before hollering "Kick back".

If you were in California, it would be difficult, but it could be done. But you're not, and you have a rather large, 592 homes, HOA.

Based on experience, I wouldn't even attempt a recall. Based on what you have said, it WILL fail. The powers to be have too much to lose and they could push back or not even allow a recall.

First thing, get an attorney to cover your backside. If they are as "crooked" as you say, then you might be able to reimburse for the attorney.

You need to bring together a strong slate of candidates, not majority control of the board, but unanimous control. You need a group of 30 strong supporters willing to go door-to-door gather proxies. Because of the size of the HOA, run this like a political campaign. Make sure you have a message, make sure you have a mission. If you have issues needing to be address, have an agenda and a timetable.

What you describe as far as MC contract could have an "Evergreen" clause to it, meaning it has to be renewed 60 prior to the renewal. A day late and it automatically renews for a year. Very difficult to challenge in court. A couple of large MC's in California have been using that clause for years.

What you describe is a kickback, which if not illegal is HIGHLY unethically! How a contributor from Alabama can stay that not all kickbacks are bad is beyond me. A contractor may mark up a product they purchase on your behalf and that is a common business practice. If they do it and you are not comfortable with that, hire someone else. On the other-hand, if the contractor charges the HOA $11,000 for a job with the intention of giving the MC $5000 for their SERVICES in obtaining bid, that is a problem.

While you have a tall mountain to climb, others have been successful in the past.

Does not matter that MC contract requires 60 day notice if they are acting inappropriately and can be proven. I would bet the contract most likely states can be FIREAD for certain circumstances. That issue potentially is the least of your worries.

Hi Melissa,

We know how to conduct the recall (as it's in our documents). The majority vote is exactly that - 297 of 592 homes.

We are aware that our MC is a paid contractor and employee of our HOA, BUT those who are getting kickbacks and side with the MC have voted to give all financial control over to the MC. The "crooked people" are still there. I agree that there should be multiple people handing the accounts, but there is only one -- the MC.

The former president (who was removed from her office as pres by the other 3 on the board) has asked repeatedly for records. The MC gives a sheet that shows NOTHING. On our "financial report" the accountant states at the bottom that the document is only as good as the numbers given to him and that this report does not follow proper "accounting principles generally accepted by the United States of America." In other words, junk in = junk out.

I will call those board members crooked, specifically the one who admitted to taking "finders fees" (same as kickbacks)-- we have the email stating this. These "finder's fees" they're getting are not in the form of anything but cash using homeowners money, DIRECTLY FROM THE HOA BUDGET. I totally agree that some finder's fee are acceptable, especially those you've mentioned above... but this isn't what's happening. The homeowners are paying obscene prices for services that cost much, much less.

Just in December we paid $11K to replace ALL 91 sprinkler heads on our irrigation when we just had brand new ones installed less than 2 years ago! Although heads can sometimes be faulty or break, they are supposed to last 8-10+ years with no problems. It would be highly unlikely for ALL 91 heads to be faulty or go out. My husband has a landscape company (as do 3 of our neighbors). Each say "there is no possible way all heads were broken." My husband spent a lot of time pricing out the same service with his company, as well as 2 of the landscape neighbors AND 3 of the most expensive companies in our area. Bids ranged from $4200-5900 -- less than HALF what we paid.

We have LOTS of money missing from our reserves. We have caught the MC lying in our reports about how much is left over each year (this is per our accountant before he was fired). The HOA majority votes to roll almost every penny into our main budget each year so that it can be spent and pad the pockets of those taking kickbacks.

Upon reviewing our financial documents with those given by the MC, the FBI's accountant agreed that there is, at the very least, gross mismanagement, and he felt that fraud is more likely. They said we need to do a forensic audit. These can be expensive, but he thought that they could find more than enough info from the year 2014 alone -- we have $148K missing from that year.

So...

My question weren't necessarily "how" to conduct a recall, but to see if anyone has any tips/pointers to conducting a SUCCESSFUL audit. Our subdivision is pretty large at 592 homes, and to get 297 votes is a daunting task.

Hi Richard,

Thanks for all your advice. I agree that it's a longshot, at best. Can you tell me how the other board members could "not allow" a recall? I ask this because our documents say the only way to removed a board member is for a majority of the homeowners to vote them out.

It would be extremely difficult to get 20, much less 30 people to go out with us.

Yes, our MC has the "Evergreen" clause. We have until 10/1/17 to inform them that we will not be renewing their contract. The bad part about our MC is that HIS attorney wrote it so that his contract is 3 years. An attorney friend read it and said that it was a horrendous contract and that NO ONE should have agree to such a long term. However, if we still have the same MC, the corrupt board members and/will continue line their pockets with homeowner's money.

What you describe is exactly what is and has been going on for years. Huge bids accepted from "friends" of MC or board member and homeowners money going back to the MC and board.

We certainly do have a tall mountain in front of us...

Janet, they should absolutely be fired. The problem is that three board members are getting paid handsomely for keeping this MC and would NEVER agree to getting rid of them.

We had hoped to get our candidate elected, take away all of our MC's financial control, and wait out until their contract was up -- and not renew it. That didn't happen because the MC COLLECTED AND COUNTED THE VOTES.

Why would be allow such a conflict of interest, you ask? Because the three board members voted to allow it to happen. Pretty convenient, huh?

Finders Fees - Specifically what are the board members getting, and how do you know they are being paid some form of compensation.

Board members are getting money - one board member admitted it in an email, as he thinks nothing is wrong with it, stating, "...finder's fees are just a part of business"

Money Missing from reserves - How much is missing, doesn't the management company provide a monthly accounting that would track income and outgoing from any accounts the HOA maintains.

We do get a quarterly report, but it only shows expenses and account balance. There are math errors on it a lot of the time. They just dismiss the errors as non-issues, and the three board members support that. There is no doubt that our checks are made out in the exact amount of what the contractors are charging. I don't feel like anyone is taking money directly from our HOA account. The theft is in kickbacks.

The Accountant - who is the accountant? If the accountant hired by the board? Who fired the accountant?

We had another accountant prior to the unethical board members had the majority. Once they got the majority, they fired our accountant because he point blank told our MC that there was $148K missing from our records. He was fired on the spot, and a new account was chosen by the MC. The other 2 board members aren't allowed to view any of our books. They receive the same report that the homeowners do.

The FBI - Why was the FBI involved and more specifically who did the FBI tell that there was gross mismanagement? I spent 31 years in federal law enforcement as a criminal investigator and I've never heard of a federal agency reporting the results of an investigation to a complainant. What jurisdiction did the FBI feel it had?

The FBI was involved because the MC changed several of our accounts to a companies in other states. Since the money crossed state lines, it was automatically a federal matter. They told the former president (who was removed as pres, but still a board member). She is the one who has all the older financial documents, as well as those from our former accountant. There was no investigation and no formal complaint. When the former pres contacted the DA, he suggested calling the FBI, given that money has crossed state lines. He gave her the nama and number of an agent. The agent brought an FBI accountant with him to view our documents to see if we even had a case. Based on the former accountant's recordes for 2014, the FBI's accountant agreed that there was gross mismanagement and bookkeeping, at the very least, and said that they couldn't go further without a forensic audit. After we got one, they would take over from there. Of course, the election was fixed and we won't be able to get a forensic audit now.

Generally, HOA's have a records policy that dictates what a member must do in order to see the financial records - you should be entitled to all bills, banks statements, contracts, etc.
You as a member probably have no right to conduct an audit of the books of the organization, that is something that only the board can do. You should be able request and receive all records for the year you are concerned about and see if they support the financial statements. You can also file a complaint with local law enforcement if there is evidence of wrongdoing and then the State can step in.

I'm aware of all of this, but the MC's books won't show it... which is why we tried to get a forensic audit. A regular audit will not suffice. We did speak with local LE -- and they told us this was a federal matter for reasons stated above.

Lacking all of that - you can also try to mobilize the membership to replace the board in accordance with the governing documents of your association. After that the new board can fire the management company, and hire an accountant to conduct an audit of the books.

That is what we are trying to do with a recall. Our documents say that a board member can be removed and replaced ONLY by a majority of homeowner votes to do so. Should we be successful in the recall, our plan is to take away all financial matters from our MC, wait out the rest of their contract (which expires at the end of 2017), and not renew their contract. We will also be having a forensic audit, as well as hire a new accountant.