Board's Obligation

Started by BrandyJ2 • 39 replies • 1201 views

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BrandyJ2 (Florida)
Posts: 16

Posted:

One of the unit owners in our Condo informed the board via letter that the board president has done some things unilaterally that *could* be considered illegal (one is using the condo attorney to send a letter for a personal matter). What is the Board's obligation in such a matter? Are we obligate to do *something*? We're concerned that his actions could come back on us if we don't address the owner's concerns, but it's not clear what we should do. The President and the attorney are both very slimy characters so it's not clear we can trust the association attorney.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Question? How was the attorney paid to send this letter? Was HOA money spent or was it the President's personal money? Just because they are the same lawyer doesn't mean there is something going on "illegal". I would be more concern how the lawyer was paid than what they were used for.

Plus it seems the personal issue involves the person who wrote the letter... Which means they are trying to drag the HOA into a PERSONAL matter. It's time to stop the HOA from going down that slipper slope. Nip it in the bud. Make sure it's understood there is a difference between personal and professional. The HOA board should vote the President out if they are clearly crossing that line.

Former HOA President

KerryL1 (California)
Posts: 14,550

Posted:

Are you ion the board, Brandy? Who told you the president had the HOA attorney do him/her a favor? How do you know it's the truth?

Whether the president paid the attorney or not, imo, the attorney should do NO business with individual Owners whether president or not. It may not be illegal, but any behavior that could cause your HOA to be liable should be of great concern to members and directors.

If you're on he board, you & other directors need to ask the prez at an executive session why s/her used the HOA's attorney? If that attorney must be present in an ex. sees., which might be a law in FL, then maybe have less then a quorum of the board meet with the prez to find our the reasons for him/her isntruting the attorney to send a letter.

Once your board has all of the facts, they my, indeed, want to remove the person from the office of president. N need for an attorney to do that.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

When an owner sends a letter to the BOD, the BOD should discuss the letter so I suggest you do so. Be neutral, not accusatory. Let the chips fall where they will. The BOD is not under any obligation to respond to the letter.

While I see nothing wrong with a BOD Member using the HOA lawyer for non-HOA business, it is best not to as proven by the letter writer making such an accusation.

TimB4 (Tennessee)
Posts: 21,059

Posted:

As others have pointed out, the question to ask the President is:

Did you use the Association attorney to send a letter on your behalf and, if so, who paid for it?

If the answer is: Yes I used the attorney and I paid for it - the issue is closed.
If the answer is: No I did not use the attorney - the issue is closed
If the answer is: Yes I used the attorney and I haven't been billed - someone needs to talk to the attorney
If the answer is: Yes, I used the attorney and the Association was billed - there is an issue
If the answer is: Yes, I used the attorney and the Association was incorrectly billed, which I am correcting - the issue is closed.

KerryL1 (California)
Posts: 14,550

Posted:

I disagree with Tims #1. The reason is that the HOA attorney is hired by a vote of the entire board to serve the Association. To do work for any individual, imo, opens the door to accusations of self dealing by the president. In other words, Owners and the board might ask: why does the prez get services from the HOA attorney that aren't available to anyone else?

Now if the board with its vote instructed the president to ask to ask the attorney to mail something, that's one thing. For the prez to ask for a personal favor is improper conduct. I also believe the HA attorney should not have compiled.

Look, there's a signed contract between the Association, as voted on by the Board, and this attorney & his/her firm. What does it say about WHO is the client??

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By KerryL1 on 03/10/2018 12:54 PM
I disagree with Tims #1. The reason is that the HOA attorney is hired by a vote of the entire board to serve the Association. To do work for any individual, imo, opens the door to accusations of self dealing by the president. In other words, Owners and the board might ask: why does the prez get services from the HOA attorney that aren't available to anyone else?

Attorney's have many clients.

Individuals are free to use any attorney they desire.

Why can't an individual use an attorney they may have gotten to know through the Association for personal business paid for by the individual?

I happen to know an attorney I met through church. That attorney happens to do work for the church. Per Kerry's posting, it appears that I shouldn't hire him to do my will or set up a trust or help me settle an estate, etc. etc.

Kerry, I think you are reading more into the OP's posting then is actually there.

KerryL1 (California)
Posts: 14,550

Posted:

We directors are expected to engage in a higher stander of behavior thank other Ownrs since we're fiduciaries. We shouldn't engage in conduct that looks shady or appears to be self serving. By giving the HOA attorney "extra" business, the president might expect the attorney to side with the prez in HOA matters where opinions differ among directors.

A congregant doesn't hire the church's general counsel, some sort of governing body does. Imo, and it's only mine, it's best if whoever hired the attorney to serve the entire congregation, find their own lawyer for their personal matters.

Actually, I'm reading less into the OP's question vs."more." I'm not sure, for instance, how Brandy is using the word "unilaterally." She makes it sound as if the prez is making decisions that should be made by the entire board. But....I just don't know.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Why would it be a higher standard to not hire a lawyer you know? Seriously, are you all that paranoid that one can't hire a lawyer or use the same company the HOA uses? It's a free enterprise. As long as I don't see a bill from a board members using those services without approval, then what does it matter?

It's like not hiring the only barber in town because your the mayor of that town and they may have voted for you. That mindset to me is so petty and immature to say the least. If it's my money and they offer something I want/need, going to hire them.

BTW: We allowed any of our contractors to do private work for any member. What better way to know your going to get good work if you see if first hand?

Former HOA President

BrandyJ2 (Florida)
Posts: 16

Posted:

It was paid for with Association funds on behalf of the Association.

BrandyJ2 (Florida)
Posts: 16

Posted:

wow. I guess I didnt make this clear.

An owner accused the president of a shady RE deal within the building, which has nothing to do with his duties as Board Director. The President sent a letter on behalf of the association demanding that the owner cease snd desist.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It is sounding like a personal matter between the member and the President. It is something worth inquiring about at the next meeting what justified the bill on the HOA's behalf? There could still be a connection without knowing all the details. Wonder if there is some other details missing in their interactions we don't know about? Like if they are threatening to sue the HOA? If so, then that may be one of the reasons the letter was written and paid for by the HOA.

My feeling is still that the member is trying to bring the HOA into this "Pee" fight. Especially if they wrote that letter to the board. Seems to me that there may have been some personal/business lines crossed here. Time to sort it out and keep the HOA out of it.

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By BrandyJ2 on 03/10/2018 4:38 PM

The President sent a letter on behalf of the association demanding that the owner cease snd desist.

Was this letter done with or without board approval?

BrandyJ2 (Florida)
Posts: 16

Posted:

"unilaterally" implies it was done without board approval.

The owner isn't suing the Association. He wants the board to police the president; perhaps to vote him out of his post. It is the board's responsibility to police the other board members, no?

BrandyJ2 (Florida)
Posts: 16

Posted:

Also note that we don't have a meeting for another few months, so that's another issue.

KerryL1 (California)
Posts: 14,550

Posted:

Thanks for clarifying your use of "unilateral," Brandy. You are on the Board right? And it sounds like maybe you're a condo building? Now, though, I'm trying to understand this quote of yours: "The President sent a letter on behalf of the association demanding that the owner cease and desist." Have yu actually seen this letter???

That the owner cease & desist what? Maybe if you'd give the players fake names I could follow better (sorry.)

Did the owner, let's call him Joe, send his letter to each director, via a property manager, or what?

The prez directed the HOA attorney send a letter to Joe without board approval, correct? Does your HOA's contract with the attorney give the prez such authority?? Many give the president the authority to contact the HOA attorney with questions, but, imo, it'd be a bad mistake to let the president give instructions or directions to the attorney without Board approval.

The president is implying that the board approved his cease & desist letter, so, yes directors could get in trouble if they silently ignore the president's misconduct.

Is the reason your board won't meet for a few months that you're a smaller HOA? What size? To protect your own, the rest of the Board and your HOA, you must meet about this topic as soon as you can. How many directors are there? Your bylaws most likely say who can call a meeting. Often it's the president OR any two directors. If your bylaws are silent, see FL corporations code.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By BrandyJ2 on 03/10/2018 5:45 PM
"unilaterally" implies it was done without board approval.

The owner isn't suing the Association. He wants the board to police the president; perhaps to vote him out of his post. It is the board's responsibility to police the other board members, no?

Any individual’s personal business actions are not the responsibility of the HOA for any of its members ... you are not the police. The HOA is only responsible for HOA business as noted in your CCR’s or your State Laws. My response to the individual would be to please provide the Article and Section of the CCR’s which have been violated and the responsibility of the HOA ... and that usually stops garbage when they cannot provide where the CCR’s have been violated. The only thing the complaint should do is give a heads up to watch for future potential HOA issues just in case ... however, many times it is just one individual not liking another individual for some reason or another.

KerryL1 (California)
Posts: 14,550

Posted:

Unless the Board has given the president the power to unilaterally order the HOA attorney to act, the president may not give the attorney orders that aren't board approved and pretend that they ARE. If the Board passively stands by and ignores the president's misconduct--especially acting in its name--they can be held liable for turning a blind eye to such misbehavior.

But....I did ask Brandy some further questions and she hasn't answered. This makes me wonder if the letter supposedly written by the HOA attorney as directed by the prez even exists.

Boards, not presidents, govern HOAs.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I kind of think the situation involves a personal matter between the President and whomever wrote the letter. They are trying to discredit or bring the HOA into their personal fight. Which makes sense here by them drafting a letter bringing the situation to the boards attention.

It sounds like the President may be a Realtor or somehow involved in Real Estate transactions. Which some people read that if your an officer of an HOA or Board member, being a Realtor is a conflict of interest situation. So they will say the HOA is involved.

My bet is that is the view of the letter writer and thus wants to bring the HOA into it. Still the President should NOT have used the HOA's funds to pay for the lawyer unless it is a situation which a lawsuit may have been threatened against the HOA. Which the President may have contact the HOA attorney to draft a letter. Once the HOA was brought into the situation then it needed to be separated with any interactions the letter writer and president may have.

Former HOA President

JanetB2 (Colorado)
Posts: 4,219

Posted:

I’m thinking along the same lines as you Melissa. That is why I stated the HOA is not the police and should not police ANY members.

BrandyJ2 (Florida)
Posts: 16

Posted:

@kerry your questions muddied the issue, which was "Is the rest of the board responsible for dealing with the bad conduct of the board president"; I'm a new member on a 7 person board and the others have been on the board for years so I don't know what arrangements are in place. Most of the board has been appointed over time by the president, so there appear to be unstated loyalties. The board is basically a sham. The board appears to ignore everything and the president just does whatever he wants without scrutiny. The condo attorneys are sue first, mediate never bullies, so I don't expect to get any good advice from them. Other new board members usually resign or do not seek a 2nd term. I'm just concerned about my personal liability if this place blows up while I'm on the board.

We have no committees and 2 1 hour board meetings a year to run a 200 unit luxury condo with a 3.5M budget.

BrandyJ2 (Florida)
Posts: 16

Posted:

Melissa doesn't seem to think that the board president using association funds to threaten to sue unit members is something the rest of the board should be concerned with, which is why I've pretty much ignored her posts.

KerryL1 (California)
Posts: 14,550

Posted:

Whew, Brandy, you're in a difficult situation it seems. I'm very sorry I muddied the waters. I'm trying to understand your situation better and also to learn if you actually have seen the letter that the prez had the attorney write?

Our condo HOA sounds exactly like yours--I assume you also have elevators, roof top cooling towers, etc.? So, not only are you big, maybe complex too? I assume you have a full-time property mgr. on the premises who maybe has an assistant?

Our bylaws say we must have 4 board meetings a year, but there's always too much to do so we have 11 and they last closer to two hours each. I can't imagine having only 2 one-hour board meetings a year. (but in CA, we must make board decisions at meetings not online, etc.)

I still believe that you need to be on record in the minutes stating your disapproval of the president's behavior if you're certain he did what you think he did. You probably will have to put it on an agenda and probably in executive session. Your Bylaws or FL Corp. Code or Condo codes will say how to call a special meetings or executive session. It may be that two directors or some other combo must call it.

Even if you can get another director to call a meeting with you, achieving quorum might be difficult if all directors think the prez is just fine.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Brandy that is NOT even close to what I have stated. Not in the ballpark... What I have said REPEATEDLY is that it sounds like the Letter writer (LW) threatened to maybe sue the HOA due to PERSONAL issues with the President. The President in order to "Protect" the members of the HOA contacted the HOA lawyer to send a letter to the LW to back off the HOA.

I NEVER EVER said or indicated that the letter the President had the HOA draft was in any kind of form of lawsuit against the LW on the HOA's behalf. Where you got that from is a mystery. It is quite the opposite. The letter the HOA President should have the HOA draft to the LW was that they are barking up the wrong tree with the HOA.

That is the ONLY situation I can see why the President would have contacted the lawyer CORRECTLY. Otherwise, I would be highly suspect about the charges and use of the HOA lawyer.

BTW: We do NOT even know what the letter the President had the lawyer write to the LW. I am just using the ONE example/situation of which I can see the President properly taking legal action in this PERSONAL issue. If this is the case, then the President is doing the RIGHT THING by protecting the HOA from frivolous lawsuits against the entire membership. A duty the President should be doing in most people's minds.

Former HOA President

KerryL1 (California)
Posts: 14,550

Posted:

Melissa wrote: "...it sounds like the Letter writer (LW) threatened to maybe sue the HOA due to PERSONAL issues with the President. The President in order to "Protect" the members of the HOA contacted the HOA lawyer to send a letter to the LW to back off the HOA."

But the owner/LW, according to Brandy, wants the board to take some kind of action against the president to reign him in. The LW did not threaten to sue the HOA.

Melissa also speculated that "...the President is doing the RIGHT THING by protecting the HOA from frivolous lawsuits against the entire membership."
But the president does NOT determine if there are threats; the board does.

The point remains that the prez instructed the HOA attorney to write a letter to this owner withOUT consulting with the board. But the prez said it was on behalf of the board, which is completely dishonest. The HOA also is being billed by the attorney for this "service." HOA boards should never let presidents make these kinds of decisions. As non-profits, at least in my state, boards govern and are the "deciders," Not the president.

It is possible that Brandy's board has given the president certain powers. If so, that will be in some minutes or a book of resolutions. If the prez ha the power to director the attorney without the Board's con set, that should be in the contract between the HOA & attorney.

Perhaps things are different in AL, Melissa's state

JohnC46 (South Carolina)
Posts: 14,265

Posted:

As we have not seen the letter how can we advise?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

My darling Kerry... I am using this as an EXAMPLE. We do NOT know what happened between the LW and the President. Nor do we know what was in that letter. All we know is that the LW wrote the board to "inform" them of the activities of the President they had observed. The OP seems to indicate that means they should remove the President.

My GUESS is that the LW did not agree with the President conducting/involved in a Real Estate deal. They may have contacted the President with their grievance. Which NOT knowing the conversation they may have had, IF that LW had told the President "I will sue the HOA" the President may have contacted the lawyer. In my opinion, contacting the lawyer may have been "proper" IF this indeed was the interaction that occurred.

However, if this was NOT the interaction that took place, then the President most likely was out of line. Especially if they contacted the lawyer to threaten legal actions against the LW.

I am NOT saying the President was correct in their actions. I am just giving an EXAMPLE of what scenario that contacting the lawyer was part of HOA business.

How hard is this to understand???

Former HOA President

KerryL1 (California)
Posts: 14,550

Posted:

Melissa wrote: "IF that LW had told the President "I will sue the HOA" the President may have contacted the lawyer. In my opinion, contacting the lawyer may have been "proper" IF this indeed was the interaction that occurred."

The prez contacting the lawyer and directing him to write a letter to an owner is never "proper" unless the board has given such powers to the president, which they never should do except perhaps for one-offs. Even then, the board must be consulted. In CA this can only occur at a meeting of the Board.

I don't think the content of the attorney's letter matters. What matters is the president unilaterally ordered the attorney to write it to the owner "on behalf of the board," yet the board was NOT consulted. How can that be ethical or in the best interests of the HOA? How can the prize spend the HOA's funds on this unproved expense (UNLESS the board has given him this power)?

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By JohnC46 on 03/14/2018 4:57 PM
As we have not seen the letter how can we advise?

YEP

KerryL1 (California)
Posts: 14,550

Posted:

Say, Janet & John: according to the OP, the president ordered the attorney to send the letter "on the board's behalf" withOUT consent from the Board. So, why does the content of the letter matter sat all?

KerryL1 (California)
Posts: 14,550

Posted:

Say, Janet & John: according to the OP, the president ordered the attorney-preumably at HOA expense-- to send the letter "on the board's behalf" withOUT consent from the Board. So, why does the content of the letter matter at all? Do HOA presidents get do whatever they please?

Our bylaws state that the president does this or that "subject to the board's approval," or some such.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Kerry

All I have seen are suppositions and accusations from one unhappy person. I need more information about the specific incident. Should any Officer have the BOD Attorney sending letters out without BOD approval? No. Did this really happen? I do not know.

KerryL1 (California)
Posts: 14,550

Posted:

Oh, I get it now, John. So you think the OP is fabricating that the letter by the attorney was sent without board approval? At the HOA's expense? Fair enough, I guess. But, why would Brandy go to the trouble of making this up?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By KerryL1 on 03/15/2018 3:40 PM
Oh, I get it now, John. So you think the OP is fabricating that the letter by the attorney was sent without board approval? At the HOA's expense? Fair enough, I guess. But, why would Brandy go to the trouble of making this up?

We have many posters come out here shopping for answers they want, seeking absolution, hurling accusations, etc. I have learned that I want/need more information.

BrandyJ2 (Florida)
Posts: 16

Posted:

@johnC46 Try thinking in the abstract instead of pretending that anyone cares about your opinion on this specific case.

1) Board President uses Association Attorneys inappropriately to threaten member on behalf of association for a personal matter outside the scope of his duties as director
2) member informs rest of board about the incident

The simple question is, if the board does nothing, can they be considered complacent and just as guilty of the act.

The end game is if the member decides to sue, would the rest of the board be in breach of their duty because they didn't do anything. It's very simple.

Nobody is asking you if the member has a case or if the act was actually inappropriate. ASSume its the case. That's what I'm asking.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Brandy,

In reality, and as already stated, without knowing the contents of the letter or the issue involved nobody can really say.

I'm not asking you to disclose that information. In fact, I don't think you should.
I would encourage you to consult an attorney who would have access to that information and can then provided an informed opinion.

Let me try to summarize:

1) The President did something that a member thought was shady (supposingly a private deal vs. an Association issue)
2) The member chose to inform all who would listen about this "shady" activity
3) The President, [likely] feeling they were defamed brought the issue to the Board
4) The Board approved the President to contact the attorney and have a cease and desist letter sent
5) The member received the letter and complained to the Board that this was improper use of Association funds
6) The OP is unsure how to proceed concerned that this can cause issues if not addressed.

Again, not knowing everything and basing my summary partially on the fact that the OP said the Association paid for the letter and the action was approved by the Board, It's a 50/50 thing in my mind.

If someone claimed I was doing something shady, drawing my trustworthiness into question, As treasurer I would approach the Board for a cease and desist order approval as I would argue this has a direct impact on my ability of treasurer to be trusted with access to Association funds.

Therefore, I go back to the advice given earlier in this post. Seek a legal opinion where all the information associated with the action (including minutes from Board meetings) are available so an informed opinion can be provided.

KerryL1 (California)
Posts: 14,550

Posted:

Time wrote: "3) The President, [likely] feeling they were defamed brought the issue to the Board
4) The Board approved the President to contact the attorney and have a cease and desist letter sent"

But Brandy wrote that the prez acted unilaterally, i.e., she added, "'unilaterally' implies it was done without board approval."

She IS saying the president made it seem like the Board had approved the letter to the Owner. OR, I"m completely missing her point.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Yes, but she also said it was paid for by the Association.
Hence, the Board must have approved it (unless the President and Treasurer are held by the same person)

JanetB2 (Colorado)
Posts: 4,219

Posted:

You are stirring the pot Kerry without full information and potentially adding what you believe you heard. The OP stated:

“An owner accused the president of a shady RE deal within the building, which has nothing to do with his duties as Board Director. The President sent a letter on behalf of the association demanding that the owner cease snd desist.”

It appears the OP also may not have all the facts. I agree with TIm ... most likely the BOD knew about the letter being sent and authorized the payment. Also, most likely the HOA Attorney would have known whether or not his actions to send the letter had been properly authorized.

KerryL1 (California)
Posts: 14,550

Posted:

Only Brandy can clear this up. My reading of what she wrote is that:

1. The president ordered the HOA attorney to perform services withOUT board approval.

2. The board was billed for these services without its approval.

Please clarify, Brandy

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