Withholding Information From HOA Members

I would seek a second opinion first.

The attorney was clear that the governing documents did not include all lots in the HOA and that the documents "do not mandate mandatory membership in the HOA and do not authorize the association to impose liens for unpaid assessments". The BOD made it clear that they have no intention of relaying this information to the membership because they are afraid of the fall out and that the members could have/should have hired their own attorneys to find this information. We have an annual meeting coming up in a few days and I think the membership is entitled to this information.

I would be curious on what common area, amenities and services the Association provides.

Often, if there is very few it may be voluntary.

Again, I would seek a second opinion before the annual meeting.

If the second opinion concurs with the first, then I would inform the membership of the Boards findings. The Board might be afraid of the fallout but hiding it may have other legal consequences (perpetrating a fraud perhaps).

Per USlegal Fraud:

Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Fraud may also be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.

At the very least, the Board should ask the attorney if they need to disclose this info and the consequences if they do not.

Not only YES, but hell YES!

The officers of the association have a primary duty to the homeowners, not the so called "HOA".

I am in the same position with my association. The other officers wanted to change the covenants to include conditions that would be applicable to only a mandatory HOA. I questioned that, and eventually an attorney determined that we are not mandatory, that is we are not a HOA. "Assessments" are actually contributions. We announced this to the neighborhood, and have a scheduled a meeting to discuss this.

However, make no mistake about this; Abiding by the covenants is mandatory!

I have become so involved that I have registered a domain and created a web site to be sure that the neighborhood has all of the information it needs. The other officers want me to resign from the board. In the interest of not violating any forum rules, I’m not naming the web site. However it has a lot of information that you may find valuable. Can we communicate privately?

Here is a link to my original thread on that topic.

http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/232576/view/topic/Default.aspx

We are also going to discuss if we want to become mandatory.
Here is a thread on that topic.

http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/236984/view/topic/Default.aspx

And some articles of interest.

Homeowners' Associations - Voluntary or Mandatory?
http://www.ccfj.net/HOAvolunt.htm

Homeowners' Associations - Voluntary or Mandatory or NOT AT ALL?
http://www.ccfj.net/HOAFLmand.html

Mandatory versus Voluntary – Are You Ruled by a HOA?
http://condohoalaw.blogspot.com/2013/12/mandatory-versus-voluntary-are-you.html

Be prepared for some conflict management issues.

Gary

We have 2 small common areas (grass with trees/shrubbery) totaling about 1/2 acre that the HOA maintains.

We also have 2 private roads that the HOA has been maintaining however the attorney also determined that the roads are not HOA property. They are owned by a 3rd party (prior HOA property owner) who granted an easement for use to the homeowners with the stipulation that the 3rd party is not responsible for maintenance /upkeep. The attorney noted that per Florida case law, maintenance of an easement falls to the owners of the easement, not the underlying property owner. Therefore, the homeowners, not the HOA nor the 3rd party are responsible. This is another bone of contention between myself and the rest of the BOD who don't want to reveal this fact either. One road was properly engineered, graded and paved, with underground utilities, and paid for by the property owners on that road. The other road, a narrow one lane road that the rest of the BOD lives on, just had tar laid down on top of the existing dirt road and is atrocious. To me, it seems they are scheming to use HOA money to bring their road up to standards.

DouglasM6, you seem to be of the mind that the end justifies the means. I disagree strongly but them I'm also the type who will tell the waitress they forgot to put the dessert on my check. And as TimB4 notes, omission is fraud.

I agree that a second opinion would be useful although the attorney used is more than qualified in HOA law, the BOD will never approve going to a second attorney, and I am not willing to pay out of my pocket to double check as I am OK with the findings and I understand the basis for them.

GaryM15, I appreciate your point of view and will read the links you sent and figure out how to get in contact with you.

My hope is that this being a small, high-rent neighborhood, all property owners have a vested interested in keeping it looking decent or property values will suffer. Just because an HOA is voluntary, does not mean everyone is going to cheap out. And quite frankly, if 1 or 2 out of the 14 do, the remainder can easily absorb the added cost.

What type of attorney did they use to get such an opinion? Not all lawyers are created equal or know what they are doing when it comes to HOA's. You do NOT hire a "Real Estate" attorney for a HOA. This is CONTRACTUAL or Corporate law. If it's affordable then may find a lawyer whose specialty is HOA's. Otherwise it's better to find a lawyer that may be a "general" or business in nature.

I've dealt with various attorney's and found that Real Estate Attorneys are not the type to hire for HOA's. A HOA is NOT real estate. It's a corporation.

Honestly, If you don't want to get a second opinion, I also wouldn't disclose until you have a plan in place to address the issue and fully explain everything to the membership.

The Association can still administrate the road maintenance but will have to determine the amounts to place into reserves based on those who share the road and, I expect, have a private road maintenance agreement attached to their deed (typically the CC&Rs).

The Association needs to determine if the "common area" they are maintaining is really common area or simply easements. To my understanding, those who have an easement are not required to maintain.

Tony

Part of what people are saying is mandatory or not, some costs of any association membership are mandatory such as road maintenance, retention pond maintenance, street lighting, property/liability insurance, etc.

Being voluntary does not relive one of all association financial obligations.

Yes, I've read all the governing documents and in fact I created a set of by-laws for the association since they had been running for 20 years without any. Being new to HOAs, I was not aware of what needed to be in the documents referenced by the deed for it to be a mandatory HOA. I was told it was mandatory when I bought and I unfortunately assumed I was being told correctly.

The attorney has drafted new CCRs and by-laws for submission to the homeowners for their approval. However, the homeowners are not being told why this is necessary beyond "bringing them up to date". Actually the documents are being updated because they contain verbiage pertinent to a mandatory HOA (such as placing a lien against a property) when they can not because it is, in reality, a voluntary HOA. Unlike a home purchase where folks generally hire a lawyer to review the contract(s), it is unlikely that any homeowner will hire a lawyer to review the HOA documentation. While it may (or may not) be legal to not divulge the information, it is sleazy at best. No better than slipping someone a contract and saying "sign here" without letting them reading it as it will not be obvious to anyone that the changes are to make the HOA in compliance statutory-wise with a voluntary HOA.

I disagree that any homeowner is obligated for any costs in a voluntary HOA. And in fact, a voluntary HOA has no authority to fine or lien someone for non-payment of association dues and can only sue in court for non-compliance with the CCRs. However, one would expect that a homeowner who voluntarily participates in a voluntary HOA would also voluntarily pay one's fair share for the upkeep of the common areas.

The word 'fraud' comes to mind. Once the board finds something out, then hiding it from people who have a right to know about it (not to mention prospective buyers in the future) becomes illegal, not merely unethical.

If you tell me I have to pay you every month or else a lien will be placed on my home, and I find out there is no actual legal obligation to pay, and you knew that but were lying to me about it.... you would end up paying more than I would.

I would certainly talk to an attorney and possibly more than one. And also possibly a real estate attorney instead of an HOA specialist. I'd also think about contacting my title insurance company to see what they think.

I agree. He wants to self destruct his association.

MEMBERSHIP may, or may not, be voluntary.

Assessments to pay for a NECESSARY and USED element such as the roads are MANDATORY.

Tim has it right.

First, a voluntary HOA, while they can assess dues against the voluntary members, it can not enforce payment of them nor lien your property. To me, that says they are not mandatory. Second, an HOA (voluntary or mandatory) has no right to assess a property owner who is not a member of the HOA.

Also, per the document granting easement of use for the roads to the homeowners, it is indeed the homeowners who are responsible for maintaining the roads, independent of whether or not there is an HOA. The homeowners could ask the HOA to facilitate the repair, i.e. collect the cost and hire the contractor, but the HOA has no authority to do so on its own.

Tony,

I think everyone is in agreement that the membership should be informed of this information, especially prior to the 1st of the year (when I expect the next assessment request goes out).

I think everyone is in agreement that failure to inform while demanding assessment payments places the Board and the Association is a very bad situation. Worst case, fraud charges might be brought. Next worst case, the D&O insurance wouldn't cover the Directors because they would have knowingly done this (vs. an honest mistake - which is what has been happening).

I think everyone is in agreement that you should not just tell your neighbors but you should encourage the Board to do this as a group.

In my opinion, if the Board chooses to ignore our encouragement, you should seek legal advice for you personally to see what your options are.

One option I can think of would be to refuse to pay next years assessment and withdraw from the Association. This may force the Boards hand to let the members know as some may ask why the Board isn't going after (what would appear as) delinquent accounts.

Lets face it, the word will get out.
It's best to be the one presenting it vs. the one defending why the information wasn't provided.

At the very least, get your concerns into the minutes and force a vote on the issue.
This may protect you in the future.

Found this website describing situation: http://realestatemiamiattorney.com/2826/voluntary-hoas-follow-floridas-new-hoa-regulations-2/ There is also an attorney name and number in the document to contact for a no charge, no obligation consultation if you happen to live in that area of FL. I agree with Tim that you should potentially seek another opinion and to see what potential liabilities you could have as a BOD member withholding pertinent information which affects the HOA from other owners. If dues are solicited and done in a manner whereby individuals feel like they have been forced to pay ... then later they find out otherwise ... I would not want ot be in your BOD's shoes when crap hits the fan and potential lawsuits.