Action in Lieu of Meeting, legal ?

Started by CliftonR • 31 replies • 1167 views

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CliftonR (Arizona)
Posts: 15

Posted:

This is in Arizona. The HOA past a new landscape policy requiring specific quantities or trees and shrub. The majority of homes are just gravel. Additions must be submitted on a form and reviewed by the Board of Directors.

This was past in an Action in Lieu of Meeting. The only member involved in this meeting, I'll call them CC also doubles as our Director and Treasurer. It was accepted, approved and signed on behalf of the Board of Directors by the HOA Property Manager. There is not a date on the document. I am new to HOA's but I feel that this one is being run as a dictatorship. They only have one meeting a year and it hasn't been scheduled yet. I feel as though our entire HOA is being run by CC. If what they are doing is not legal can someone provide some insight.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Standard questions - Do you understand all your docs? What do they say about this situation?

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By GeorgeS21 on 07/17/2018 7:33 PM
Standard questions - Do you understand all your docs? What do they say about this situation?

Do you understand what Action in Lieu (WITHOUT) a Meeting is?

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Ja ...I thought so ...don’t many HOAs have AinL language?

RichardP13 (California)
Posts: 3,868

Posted:

Exactly almost all have it, as it is part of Corporation Law. California bans them unless it can be proved to be an emergency.

What it say though is that ALL Board must be notified and the vote HAS to be unanimous, meaning that if you have three Board members ALL have to be in agreement to the phone or email exchange and ALL must vote in the affirmative in order for it to be approved.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By CliftonR on 07/17/2018 6:31 PM
This is in Arizona. The HOA past a new landscape policy requiring specific quantities or trees and shrub. The majority of homes are just gravel. Additions must be submitted on a form and reviewed by the Board of Directors.

This was past in an Action in Lieu of Meeting. The only member involved in this meeting, I'll call them CC also doubles as our Director and Treasurer. It was accepted, approved and signed on behalf of the Board of Directors by the HOA Property Manager. There is not a date on the document. I am new to HOA's but I feel that this one is being run as a dictatorship. They only have one meeting a year and it hasn't been scheduled yet. I feel as though our entire HOA is being run by CC. If what they are doing is not legal can someone provide some insight.

What do your CCR’s note for landscaping? Sorry no BOD passed policy can violate your CCR’s if such items are noted in the CCR’s. That would take Amending your CCR’s and would require proper votes from the membership.

CliftonR (Arizona)
Posts: 15

Posted:

I don't know what docs are. I have the cc&r's. The Landscape section is easily understood I a had approval when I did my yard 3 years ago but this changed with the last in Lieu of meeting. My concern is, the way CC is running this, they can suddenly require everyone to say paint their house white or whatever they want. If what they are doing is legal I am stuck but if it is not legal then I have options.

This is from the CC&R's

Section 3.8 - Informal Action. Any action required
to be taken at a meeting of the Members, or any other action
which may be taken at such meeting, may be taken without a
meeting if a consent in writing, setting forth:the so
taken, shall be signed by all of the Voting Members entitled
to vote with respect to the subject matter thereof

VI. Landscaping
A. Each owner shall ensure that all shrubs, trees, grass, plants, rock and decorative
landscaping located on his/her Lot are properly maintained, cultivated, watered
and weeded in keeping with the Association's standards.
B. Specific specifications for desert landscaping will be furnished upon request.

This is the state statute. I don't know if this applies.

38-431.05. Meeting held in violation of article; business transacted null and void; ratification

A. All legal action transacted by any public body during a meeting held in violation of any provision of this article is null and void except as provided in subsection B.

B. A public body may ratify legal action taken in violation of this article in accordance with the following requirements:

1. Ratification shall take place at a public meeting within thirty days after discovery of the violation or after such discovery should have been made by the exercise of reasonable diligence.

2. The notice for the meeting shall include a description of the action to be ratified, a clear statement that the public body proposes to ratify a prior action and information on how the public may obtain a detailed written description of the action to be ratified.

3. The public body shall make available to the public a detailed written description of the action to be ratified and all deliberations, consultations and decisions by members of the public body that preceded and related to such action. The written description shall also be included as part of the minutes of the meeting at which ratification is taken.

4. The public body shall make available to the public the notice and detailed written description required by this section at least seventy-two hours in advance of the public meeting at which the ratification is taken.

KerryL1 (California)
Posts: 14,550

Posted:

Clifton cited: Section 3.8 - "Informal Action. Any action required to be taken at a meeting of the Members, or any other action which may be taken at such meeting, may be taken without a
meeting if a consent in writing, setting forth: the so [Action?] taken, shall be signed by all of the Voting Members entitled to vote with respect to the subject matter thereof."

Please note, Clifton, this regards meeting of the Members (homeowners), not meetings of the board. Your documents, maybe your bylaws will have the requirements for action without a meeting (AWaM) for boards of directors. They may be like ours in CA as cited by Richard.

There are some wise AZ posters here, who'll be able to help better than I. So far as I recall, AZ is an "open meeting" state that discourages AWAM.

RichardP13 (California)
Posts: 3,868

Posted:

What the OP describes is a AWM of a Board meeting, not a Member meeting. The OP should be looking in their Bylaws for guidance. As HOA's are corporations, the rules fall under Corporation Law, as it does in other states. There is a rules when doing those types of meetings. Notice to Board members must be given to all, all must consent, the vote MUST be unanimous, and the action MUST be put into the minutes of the minutes immediately following. This is where the problems arise. In reviewing AZ rules, there is nothing to suggest that AWM's are not allowed.

With the exception of emergencies, AWM have been banned. Why? Because did not following the rule that the action and vote taken was not put into the minutes of the next open session meeting, or any meeting. So it became a "secret meeting. In 2013, I had a phone conversion with the legislator who helped write the new Open Meeting Act of 2012 for clarification of why AWM were taken out. It was because of the perceived secret meetings and no records of the actions taken by AWM.

I don't have an issue with them as long as the rules are properly adhered too. A lot of boards I worked with only met on a quarterly basis and things do come in between. It bis how you communicate to those affected that determine if is being done properly.

KerryL1 (California)
Posts: 14,550

Posted:

I can see the OP's description, Richard, BUT he cited meetings of Members not Board meetings. As you know it's very common for folks to get the two different kinds of meetings mix zed up. That's why I advised him to look further.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By CliftonR on 07/18/2018 5:02 AM

This is from the CC&R's

Section 3.8 - Informal Action. Any action required
to be taken at a meeting of the Members, or any other action
which may be taken at such meeting, may be taken without a
meeting if a consent in writing, setting forth:the so
taken, shall be signed by all of the Voting Members entitled
to vote with respect to the subject matter thereof

VI. Landscaping
A. Each owner shall ensure that all shrubs, trees, grass, plants, rock and decorative
landscaping located on his/her Lot are properly maintained, cultivated, watered
and weeded in keeping with the Association's standards.
B. Specific specifications for desert landscaping will be furnished upon request.

If the above as you noted is from your CCR’s then your CCR’s do not note certain number of plants. In which case to change that would require Amending your CCR’s. For example my last HOA required two trees and 10 bushes in the front yard as noted in the CCR’s. Now the ACC or BOD could determine of any trees were nuisance trees, but could not increase the number above stated in the Declaration. Your BOD cannot on their own have higher standards than what is noted in your CCR’s. Your CCR’s from above statement do not note any trees or shrubs so an owner can just put in a rock garden with no greenery if desired.

RichardP13 (California)
Posts: 3,868

Posted:

What the hell does it matter about landscaping. The meeting was in violation of the AWM, thus the decision or vote goes down the toilet.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By RichardP13 on 07/18/2018 9:03 PM
What the hell does it matter about landscaping. The meeting was in violation of the AWM, thus the decision or vote goes down the toilet.

Hmm ... maybe because I was discussing with the OP his prior response to me. BTW ... who died and made you the website police on this open forum???

RichardP13 (California)
Posts: 3,868

Posted:

And I was thinking the very same thing about you.

CliftonR (Arizona)
Posts: 15

Posted:

I appreciate everyone's comments.

I tried to upload a copy of the in lieu of meeting notice. It didn't go through. Probably good as I see names cannot be mentioned.

I don't know if either section below covers what was done. There is a a state statute that covers open meetings. Link below. I don't don't if they violated it but I filed a complaint with the State Attorney General. If they did they should take care of it. If not then voting someone out is the next option.
http://www.azoca.gov/wp-content/uploads/Open-Meeting-Law-101.pdf

Section 3.4 - Special Meetings
Special meetings of the Members, for any purpose or purposes1 may be called by
the President or by the Vice President whenever deemed expedient
or necessary. The President or Vice president shall
call a special meeting of the Members when so requested by
the Members who are entitled to vote one-fourth (1/4) of all
cf the votes of the Class A Members, or when so instructed by
majority of the Board of Directors.

Section 3.5 -Quorum. At a meeting of the Members,
a majority of Members entitled to vote at the meeting,
present in person or represented by proxy, shall constitute a
quorurn for the transaction of business except as otherwise
provided by statute, the Declaration, or the Articles of Incorporation.
In the absence of a quorum, a majority of the
Members present1 either in person or by proxy, may adjourn
the to a time less than five (5) nor more than
sixty (60) days from the time the original meeting was
called. At any such adjourned meeting at which a quorum
shall be present any business may be transacted which might
have been conducted at the meeting originally notified.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By CliftonR on 07/19/2018 5:00 AM
I appreciate everyone's comments.

I tried to upload a copy of the in lieu of meeting notice. It didn't go through. Probably good as I see names cannot be mentioned.

I don't know if either section below covers what was done. There is a a state statute that covers open meetings. Link below. I don't don't if they violated it but I filed a complaint with the State Attorney General. If they did they should take care of it. If not then voting someone out is the next option.
http://www.azoca.gov/wp-content/uploads/Open-Meeting-Law-101.pdf

Section 3.4 - Special Meetings
Special meetings of the Members, for any purpose or purposes1 may be called by
the President or by the Vice President whenever deemed expedient
or necessary. The President or Vice president shall
call a special meeting of the Members when so requested by
the Members who are entitled to vote one-fourth (1/4) of all
cf the votes of the Class A Members, or when so instructed by
majority of the Board of Directors.

Section 3.5 -Quorum. At a meeting of the Members,
a majority of Members entitled to vote at the meeting,
present in person or represented by proxy, shall constitute a
quorurn for the transaction of business except as otherwise
provided by statute, the Declaration, or the Articles of Incorporation.
In the absence of a quorum, a majority of the
Members present1 either in person or by proxy, may adjourn
the to a time less than five (5) nor more than
sixty (60) days from the time the original meeting was
called. At any such adjourned meeting at which a quorum
shall be present any business may be transacted which might
have been conducted at the meeting originally notified.

Your above covered Special Meetings and Members Meeting but you did not address the 3rd type meeting which is BOD Meetings. You need to do more homework.

KerryL1 (California)
Posts: 14,550

Posted:

Yes, John, I tired to explain to Clifton that he needs to look at meetings of the Board of directors (board meetings) and NOT Members meetings, but I must have done a lousy job. This infer should be in your HOA's bylaws.

CliftonR (Arizona)
Posts: 15

Posted:

Thanks John and Kerry, I did miss that. I have looked into it more and they can hold a special meetings and they have powers but I don't see anything that gives them the power they used.

Section 4.7 - Powers and Duties
A.. To make Assessments as authorized by 'the Declaration,
collect Assessments, and use and expend the Assessments
to carry out the purposes and powers of the
association;
B. To employ, dismiss and control the personnel.
necessary for the maintenance of the Common Areas arid operation
of the Association, including the right and power to
employ attorneys, accountants, contractors and other professionals
as the need arises;
C. To make and amend Rules and Regulations respecting
the ,operation and use of the Common Areas and the
use and maintenance of the Lots in the Subdivision;
ID. To contract for the management of the Association
and to designate to such manager all or a portion of the
powers and duties of the Association;
E. To engage in the management of the business
affairs of the Association; -
F. To use and disburse the proceeds of Assess-
ments in the exercise of its powers and duties;
C. The maintenance, repair, replacement and operation
of the Common Areas;
H. The reconstruction of Improvements after casualty
loss and the .further improvement of the Common Areas;
I. To enforce by legal means, if necessary, the
provisions of the Declaration, the Articles of Incorporation,
the Bylaws and Rules and Regulations of the Association, and
other documents and laws respecting the Association and the
Subdivision;
- J. To pay taxes and assessments which are liens
against any part of the Subdivision, other than individual
Dwelling Units, and to assess the same against the Lots subject
to such liens;
K. pay the cost all power, water, sewer and
other utility services rendered to the Subdivision and not
metered and billed to individual Lots; and
L. To select the officers of the Association.

Section 4.8 - Special Meetings. Special meetings
of the Board of Directors may be called by the President on
three (3) days notice to each Director, given personally or
by mail,telephone or telegraph, which notice shall state the
time, place (as here in above provided) an purpose of the
meeting, Special meetings of the Board of Directors shall be
called by the President or Secretary in like manner and on
like notice on the written request of at least two-thirds
(2/3) pf the Directors.

Section 4.9 - Waiver of Notice. Before or at any
of the Board of Directors, any Director may, in writing,
waive notice of such meeting and such waiver shall be
deemed ec-.iivalent to the giving of such notice. Attendance
by a Director at any meeting of the Board shall be a waiver
of notice by him of the time and place. thereof. If all the
Directors are present at any meeting of the Board, no notice
shall be required and any business may be transacted at such
meeting.

Section 4.10 - Board of Directors' Quorum. At all
meetings of the Board of Directors,. a majority of ..the Directors
shall constitute a quorum for the transaction of business,
and the acts.of the majority of the Directors present
at a meeting at which a a-ucrum is present shall be the acts
of the Board of Directors. If at any meeting of the Board of
Directors, there should be less than a quorum present, the
majority of those present may adjourn the meeting from time
to time. At any such adjourned meeting, any business which
might have been transacted at the meeting as originally
called may be transacted further notice.
Section 4.11 - Fidelity Bonds. The Board of Directors
shall renuire that all officers and employees of the
Association handling or responsible for Association funds,
and all other persons designated by the Declaration, shall
furnish adea-uate fidelity bonds or coverage. The premiums on
such bonds or coverage shall be paid by the Association

RichardP13 (California)
Posts: 3,868

Posted:

Clifton,

All you wrote above means absolutely nothing and has no bearing on what transpired. As you stated in your opening post, A director took it upon themselves WITHOUT a meeting to pass whatever they passed. Under Corporation Law or Code, Action Without A Meeting is allowed in pretty much allowed every HOA in America, but there are three basis rules:

1. ALL Board members must have been notified and agree to this type of meeting.
2. The vote of ALL Board membersMUST be unanimous!
3. The action that was taken, MUST be recorded in the minutes of the next meeting.

KerryL1 (California)
Posts: 14,550

Posted:

With Richard, Clifton, what you cited is very typical of CC&Rs/covenants, but it does NOT tell us HOW directors can make decisions. It does say what a quorum is. But You MUST find & read your HOA's bylaws. It will say more about the types of meeting of the board: regular, special and perhaps emergency. Your bylaws will saw how many regular board meetings your board should have each year. GENERALLY, the minimum is four and they MUST be open to homeowners, who may put their two cents in on all agenda items.

Your citation of AZ laws for public meetings doesn't help either as HOAs aren't public entities. I do think there are HOA laws in AZ, and I wish an AZ poster would help us out here.

CliftonR (Arizona)
Posts: 15

Posted:

I read through the bylaws multiple times. The last post I made was specifically for Board Members under 4.7 powers and duties. I didn't post the non specific things. We do only have one meeting a year although I can request a meeting with the Board over the violation. If this has not been recorded in the minutes of a meeting is it legally in effect? They can suspend a members voting rights for violations which is more than half of the members as of now. If the state law doesn't cover this I think my next option is mail a letter to all the house in violation and try to persuade them to request a meeting in front of the board also. I think most will just do what they are told to by this one member C**** C***** that pushed this through.

If the Property Manager is acting for all Board Members then would it be the same as all Board Members voting?

This is what the Action in Lieu of Meeting says.

1. Members Involved: C*** C*****

2. Business From The Floor: The Board of Directors for Chaparral Ranch III hereby adopt Landscape Guidelines Policy 2018.1 added to the enforcement Provisions of the Declaration of Covenants, Conditions, Restrictions and Easements for Chaparral Ranch III.

3. Action in Lieu of Meeting accepted approved by signature below

signed M*** R*****
on behalf of The Board of Directors

M*** R*****
Property Manager
Kachina Management

RichardP13 (California)
Posts: 3,868

Posted:

If I read what you wrote, one person, with the backing of the property manager, is trying to amend the CCRs by an Action Without a Meeting.

Sorry, NONE of it flies. They would have violated the provisions of the CCRs in regards to amending the CCRs. It requires approval by the owners.

KerryL1 (California)
Posts: 14,550

Posted:

Clifton, what KIND of meeting is this ONE meeting a year??? Usually it's a meeting of the members. Not a board meeting. How many times a year do your BYLAWS say the board must meet? If the Bylaws don't say anything, what does AZ corporations code say about this topic?

No, your PM may not ACT instead of the board. Only the board can. Look at your own 4.10--there must a a quorum for the board to act (vote/make a decision).

It's all BS, Clifton. I'm only guessing that no AZ posters are helping because there's so much confusion here!!

JanetB2 (Colorado)
Posts: 4,219

Posted:

Again, Clifton ... The BOD cannot supersede the Landscaping Requirements noted in your CCR’s!!! To do that would require Amending your CCR’s via appropriate votes from ALL homeowners. If your CCR’s do not have noted a certain number of plants, trees, etc. then it cannot be increased without a proper change to the governing documents.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By JanetB2 on 07/24/2018 9:59 PM
Again, Clifton ... The BOD cannot supersede the Landscaping Requirements noted in your CCR’s!!! To do that would require Amending your CCR’s via appropriate votes from ALL homeowners. If your CCR’s do not have noted a certain number of plants, trees, etc. then it cannot be increased without a proper change to the governing documents.

Janet,

You're missing the big picture here. All that was offered from the CCRs was section 3.8. There could be other sections that would allow a Board to modify or enhance Architectural Guidelines.

What you fail to see is that one ONE person took action without a meeting. Sorry, NO WHERE in the country and in an HOA can anyone do that! Three basis rules, ALL Board members have to be notified, ALL have to be in agreement, and it has to be put into the next open meeting minutes. No IF's and No BUTS.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By RichardP13 on 07/24/2018 10:14 PM

There are TWO points here:

1. The BOD cannot supersede the CCR’s with regards to landscaping. The BOD cannot supercede and can only clarify (example would be if the HOA required 2 trees the BOD could eliminate potential “nuisance” trees and make a list of those not allowed).

2. One BOD member cannot implement ANYTHING - I totally agree with you here.

I would contend we both have valid points and both are correct. Also, it potentially gives the OP two avenues to attack the issue.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By JanetB2 on 07/24/2018 11:54 PM

Posted By RichardP13 on 07/24/2018 10:14 PM

We are only given one small section of the CCRs. That is NOT enough to draw any conclusion.

CliftonR (Arizona)
Posts: 15

Posted:

I had two friends that are on a board of their HOA and they both said it doesn't look legit. One that is now on the board said get the members to petition the board. He said they will ignore it though and then sue them He sued his, eventually got reimbursed. It wasn't cheap though. I will send a letter to every member first and inform them how this policy took place let them know how our hoa is being run then I'll talk to the lawyer he used.

The only thing that comes close to covering what they did is this.

Section 3.8 - Informal Action. Any action required
to be taken at a meeting of the Members, or any other action
which may be taken at such meeting, may be taken without a
meeting if a consent in writing, setting forth:the so
taken, shall be signed by all of the Voting Members entitled
to vote with respect to the subject matter thereof.

KerryL1 (California)
Posts: 14,550

Posted:

Clifton! this quote of yours is about MEMBERS meetings and we keep telling you that you need info about BOARD of Directors meetings.

To tell the truth, I don' think you have the skill set to yet put together a petition that'll capture the Board's attention. Don't you have one or more neighbors who know more about your HOA's documents and structure??

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By KerryL1 on 07/25/2018 5:54 PM
Clifton! this quote of yours is about MEMBERS meetings and we keep telling you that you need info about BOARD of Directors meetings.

To tell the truth, I don' think you have the skill set to yet put together a petition that'll capture the Board's attention. Don't you have one or more neighbors who know more about your HOA's documents and structure??

Does not matter if the quote is about Members. As Richard noted ONE of the BOD members cannot solely pass anything and which they did!!! Also, as I have pointed out the BOD cannot supersede the CCR landscape requirements. To do that would need the Membership to amend the CCRR’s. Either way the HOA will most likely loose on this issue.

KerryL1 (California)
Posts: 14,550

Posted:

I think that Clifton is trying to learn about HOAs, Janet, and it's crucial to get the language straight.

It should be obvious that one person is NOT the board, but it's true some folks don't know that.

CliftonR (Arizona)
Posts: 15

Posted:

One last thing that I found. This is the closest thing in the Bylaws that might cover what was done.

Section 4.7 - Powers and Duties. The Board of Directors
shall have the powers and duties necessary for the
administration of the affairs of the Corporation. These powers
shall include the following:

C. To make and amend Rules and Regulations respecting
the ,operation and use of the Common Areas and the
use and maintenance of the Lots in the Subdivision;

But it also says this.

ARTICLE IX
Amendments of the Bylaws
Section 9. 1 —Amendment. These Bylaws may be altered,
amended or added to by the affirmative vote of a
majority of the Members at any duly called meeting of the
Members,provided notice of the meeting shall contain a statement
of the proposed amendment.

Fact,
The Manager did approve this on his own.
The Secretary sold her home on 5/31/18. The doc she is listed on is not dated. Her home was and still is in violation. Why be a part of a policy that you are in violation of?

104 letters going out the the members tomorrow with copies of what I have urging the 60 in violation to request a hearing. Requesting a public hearing in front of the board.

Can anyone suggest anything else I might do?

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