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Arizona HOA manager running meetings and says the board has no power

Started by JohnB82 • 15 replies • 989 views

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JohnB82 (Arizona)
Posts: 7
Posted:
Here is a link to our 501c3 CCRs. The palms manager says that the board is just for practice and has no power since 51% of lots havent been sold. I read the CCR's different because we have a board of directors comprised of 4 owners and the CCR's state they have the obligation to make sure they are carried out and the manager works for them on a 3 year contract. Can someone with a few spare minutes brief this declaration and offer some advice please.

http://yumapalmsrvresort.com/downloads/CC&Rs.pdf
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Quote:
Posted By JohnB82 on 07/28/2017 12:32 PM
Here is a link to our 501c3 CCRs. The palms manager says that the board is just for practice and has no power since 51% of lots havent been sold. I read the CCR's different because we have a board of directors comprised of 4 owners and the CCR's state they have the obligation to make sure they are carried out and the manager works for them on a 3 year contract. Can someone with a few spare minutes brief this declaration and offer some advice please.

http://yumapalmsrvresort.com/downloads/CC&Rs.pdf

John

Mt first blush read:

Read 7.5. The declarant (Class B) has 9 votes per lot he owns until the last lot is sold or until 5 years from the sale of the first lot. This keeps him in charge no matter any BOD. Very typical.

EXAMPLE:

Owners 51 votes, Declarant has 441.
Owners 70 votes, Declarant 270 votes.
Owners 89 votes, Declarant 99 votes.
Owners 90 votes, Declarant 90 votes.

In the above, they are basically under Declarant control until the 91st lot is sold and that assumes all 91 owners vote the opposite of the Declarant which will probably not happen.

Basically as I see it. you are an Advisory BOD which means one with no power. Not defending the practice but typically that is these things are done.
JohnB82 (Arizona)
Posts: 7
Posted:
We are past the 5 years but I get what you are saying. Does the 501c3 have to be run like a non profit.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Yes and no. You can't make donations to your HOA as a tax break. However, your HOA is to spend as much as it collects in on it's operational/capital expenses.

Are you still under contractor control?
Former HOA President
DouglasK1 (Florida)
Posts: 2,046
Posted:
Quote:
Posted By JohnB82 on 07/28/2017 1:16 PM
We are past the 5 years but I get what you are saying. Does the 501c3 have to be run like a non profit.

Since 7.5 says developer rights stop whenever the first of the two events happens, and you are beyond 5 years, it appears the association should be transitioned to owner control. Unfortunately, if the developer doesn't relinquish that control voluntarily, the owners will probably have to sue to force that to happen. Have you talked to an attorney yet? If not, you might want to see if a group of owners is willing to chip and and have a discussion of your options and the potential costs.

Another possibility is to see if there a state agency that exercises any authority over associations. In most states there really isn't but a few do provide that.

I'm not really sure what you are getting at regarding the 503c3 issue, are you referring to taxes or something else?
Escaped former treasurer and director of a self managed association.
JohnB82 (Arizona)
Posts: 7
Posted:
How are the meetings are ran financial accounting election of officers the manager being allowed to be a board member
JohnB82 (Arizona)
Posts: 7
Posted:
I think the association is in control s
MelissaP1 (Alabama)
Posts: 13,836
Posted:
The association is you and your neighbors if it's under owner control/ownership. Otherwise, the developer is still in control. The manager being on the board makes it seems to be still under developer control. Only owners/members that are elected should be on the board if owners are in control.
Former HOA President
JohnB82 (Arizona)
Posts: 7
Posted:
1.29. Defines the manager as a person employed by the board. Currently the manager isn't a board member he just handles most of the stuff from the manager position
MelissaP1 (Alabama)
Posts: 13,836
Posted:
That usually means that they are the Management company that is paid by the board to run things. That line can often be blurred depending how involved your board is in running their HOA. If they don't care much, then they let the MC run the show.

MC's are sub-contractor to the HOA. They are to do what the HOA want them to do per contract. A developer may use a MC to run their company. Which would put the MC in a position of more dominance over the board. That is because the board even if made up of owners, the developer still in control. So they put the MC in as their representative for them. An owner run HOA the MC would be of a more supportive role.
Former HOA President
JohnB82 (Arizona)
Posts: 7
Posted:
So the ccr's still have to be followed by all ?
MelissaP1 (Alabama)
Posts: 13,836
Posted:
CC&R's are deed restrictions. They have to be followed by every member. The MC's job is to make sure people follow those rules if that is what is contracted. The MC is NOT a member of the HOA. They don't own property/home there. So they don't have to follow the CC&R's. They are paid to enforce.

Former HOA President
CarolF (Florida)
Posts: 435
Posted:
Are you sure that you are a 501C-3? I see that you are an Arizona non-profit, but that
does not necessarily mean you are a 501C-3. That is granted by the Federal IRS, under
strict guidelines.
In Florida, our Associations (and other like corporations) are called "not for profit"
But that doesn't make us 501C-3.
Do I understand correctly that you purchase your own lots, but they are RV sites?
KerryL1 (California)
Posts: 14,550
Posted:
What is it about your CC&Rs that concerns you, JohnB? Can you just cut & paste that specify area for us?

(ps, please review the posting rules here)
JanetB2 (Colorado)
Posts: 4,219
Posted:
Quote:
Posted By JohnB82 on 07/28/2017 12:32 PM
Here is a link to our 501c3 CCRs. The palms manager says that the board is just for practice and has no power since 51% of lots havent been sold. I read the CCR's different because we have a board of directors comprised of 4 owners and the CCR's state they have the obligation to make sure they are carried out and the manager works for them on a 3 year contract. Can someone with a few spare minutes brief this declaration and offer some advice please.

http://yumapalmsrvresort.com/downloads/CC&Rs.pdf

My response to them would be to send a letter "Certified Return Receipt" with the information from your CCR's contained in 7.5 Membership Classes and Voting Rights. I would inform them that the current Boad of Directors has been duly elected by the membership and shall fulfill their duties as noted in the HOA Governing Documents and under the State Law. That the Management Company will respect the decisions of the Association and if they have a problem with fulfilling their duties as assigned by the current Boarad of Directors as the EMPLOYER of the Management Company, they can either resign from serving the HOA or be fired.

See how they like that stuffed in their pipe and smoke it ... LOL. How long ago was the 5 years up??? You might want to view your State Laws because many states allow the Board to replace past Declarant controlled contractors within a certain time frame no matter the duration of any contracts.

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