Board attempting to take away my Proportionate Voting Rights

Started by RickC8 • 28 replies • 846 views

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RickC8 (Louisiana)
Posts: 11

Posted:

Board members are attempting to change my Voting rights proportionate as related to interest of the undivided ownership of the Common Elements. This is a four unit complex and smallest owner is hell bent on making everything 25% when I have 32% and can have majority with only one other member but they need three. The board hired a lawyer to go after debt before a lien was in place without Board consent or approval to seek legal advice. In doing so also spend almost 90 of operating budget while there is an assessment freeze.

First, contact I ever had from lawyer he had a plan in place that because of inconsistences between the Articles of Incorporation and Declaration. Using wrong interpretation of Articles to Corp to change Declaration and in doing so will take away my proportionate voting rights in order to make the complex 25% and changing "major decisions" needing 75%. This is setting the board up for disaster.

State law Condo Act states: §1122.108. Allocation of common element interest, votes, and common expense liabilities

A. The declaration may provide that different allocations of votes shall be made to the units on particular matters specified in the declaration.
B. Except as provided in Section 1121.107, Section 1122.112, Section 1122.114, or Section 1122.115 or in the event a portion of the condominium property is removed from the provisions of this Part following a casualty loss or expropriation, the percentage of undivided interest of such unit owner in the common elements of the condominium as expressed in the condominium declaration shall be an inseparable component of the ownership of the unit and shall not be altered without the consent of all the unit owners expressed in an amended condominium declaration duly filed for registry.

I take this to mean proportional voting share is allowed. And when your ownership is based on the undivided interest in the common elements and only you can consent to have it taken away.

I think the board needs my written consent to take away my vote and enrich themselves with it, correct? Also, if I own shares in a corporation and bought them how can they be taken away just by a vote? Condo complexes can operate or shouldn't operate like that can they?

AugustinD
Posts: 5,144

Posted:

Look in your condo's declaration for the requirements for amending it. Report back.

RickC8 (Louisiana)
Posts: 11

Posted:

Condo docs in the declaration state, in Section on Ownership of CElements

Each Unit Owner is entitled to the % of ownership in the CElements allocated to respect to the Unit owned by the Unit Owner which is set forth in a specific page called "Declaration of the Condo complex" then a table listing all four condo1)Unit Numbers 2)Sqft and 3) my % of the ownership in Common Surplus, Common Elements, % of Obligations for Common Expense & assessments along with "Proportionate Voting Rights". Then goes onto to say, the aforesaid % of ownership interest has been determine to be in accordance with LA Condo Act, and shall remained constant unless consent in writing by ALL Unit Owners.

General Amendments require 2/3rds votes

RickC8 (Louisiana)
Posts: 11

Posted:

General Amendments are a majority of the Unit Owners. So thats just 50% of the unit owners. It hard for me to believe that I could have taken voting rights with one other member if that doesn't imply 100% consent that runs with All those elements in relation to % of ownership in the Common Surplus

MelissaP1 (Alabama)
Posts: 13,836

Posted:

My question? How did this person have access to the HOA funds to have used it for lawyer expenses WITHOUT board signature? How is your accounts set up? Doesn't sound like you have a checks and balances system in place. We have to have 2 signatures on every check. Those signatures are designated Officers with signature authority on the account. So how does one spend your HOA money without approvals?

Sounds like your HOA is set up to be not 1 vote per unit but based on size? Most HOA's are set up to be 1 vote per unit. However, there are those few it is based on size of unit. Which I don't have experience with but aware there are such cases. This sounds like maybe the other member thinks 1 vote per unit is how this HOA is to work as well. That decision if want to do it that way will have to be changed with a majority vote and put into your documents.

If this was a lien, then the legal expenses would be part of the lien to pay back. So by not placing a lien but having a letter sent out really kind of stuck EVERYONE with the bill. My concern is the person who is quick to lawyer up doesn't have a lick of knowledge of how to hire/consult legal advice. It's not that easy and can get you in lots of debt if you don't know what your dealing with when it comes to lawyers... That is another post to cover lawyers...

Former HOA President

RoyalP
Posts: 1,104

Posted:

..... Then goes onto to say, the aforesaid % of ownership interest has been determine to be in accordance with LA Condo Act, and shall remained constant unless consent in writing by ALL Unit Owners. .....

Since YOU are one of the unit owners and you will NOT consent the (proposed) change is 'dead in the water'.

AugustinD
Posts: 5,144

Posted:

-- Do either your Articles of Incorporation or your Declaration say anything about conflicts between the two?

-- The general hierarchy of governing documents puts the Declaration above the Articles of Incorporation. If there is no explicit wording about conflicts, then generally one may expect that what the Declaration says will trump what the Articles of Incorporation say.

-- I agree it appears that your 32% voting interest cannot be lawfully changed unless all four owners agree it should be changed. Percentage ownership based on, say, amount of square footage is pretty common and passes the common sense test, afaic. It is the same idea as a corporate shareholder who owns more shares than others. The value of the shares at any moment is more than the value others own. The shareholder should have a greater say.

-- What do the Articles of Incorporation say on this?

-- What is the argument the board's (condo's) attorney is making about the Articles of Incorporation compared to what the Declaration states?

-- By any chance are you in arrears on your assessment, and so the Declaration or Bylaws allowed suspension of your voting rights?

-- I checked the Louisiana Condominium Act and see nothing that contradicts what I wrote above.

-- Who owes money to the condominium?

-- Melissa's questions tend to be mine.

-- The Louisiana Condominium Act at Section 1124.115 permits an owner to seek court remedies in the form of injunctive relief, damages, and more. Unfortunately the cost of hiring an attorney might exceed the value of the remedy. Consider pro se.

-- I know I need the above questions answered before I feel 100% sure about making suggestions here. Others may feel the same.

RickC8 (Louisiana)
Posts: 11

Posted:

Quote:

Posted By MelissaP1 on 02/23/2019 5:44 AM
My question? How did this person have access to the HOA funds to have used it for lawyer expenses WITHOUT board signature? How is your accounts set up? Doesn't sound like you have a checks and balances system in place. We have to have 2 signatures on every check. Those signatures are designated Officers with signature authority on the account. So how does one spend your HOA money without approvals?

Sounds like your HOA is set up to be not 1 vote per unit but based on size? Most HOA's are set up to be 1 vote per unit. However, there are those few it is based on size of unit. Which I don't have experience with but aware there are such cases. This sounds like maybe the other member thinks 1 vote per unit is how this HOA is to work as well. That decision if want to do it that way will have to be changed with a majority vote and put into your documents.

If this was a lien, then the legal expenses would be part of the lien to pay back. So by not placing a lien but having a letter sent out really kind of stuck EVERYONE with the bill. My concern is the person who is quick to lawyer up doesn't have a lick of knowledge of how to hire/consult legal advice. It's not that easy and can get you in lots of debt if you don't know what your dealing with when it comes to lawyers... That is another post to cover lawyers...

Melissa,

Thank you for taking the time to respond and offer insight. The person who is leading this charge because of a personal vendetta is the Treasurer and was pressing to get a lawyer to lien MY property for "debt" even though the debt was caused by another Unit Owner not paying for a special assessment, which is the cause of the outstanding bill to the contractor on finished. And the bill is only 8k which I believe is another wrinkle of cost benefit.

So the Treasurer happily let the VP access the funds and pay the lawyer. The lawyer is also claiming she was allowed to do as it was an ordinary business decision. But when I was President and brought up getting a lawyer, for some suspect book keeping and outgoing Treasurer doing odd things according to bank records, at that time these two said the issue needed to be voted. Of note also,the attorney "she" hired is a personal friend of the treasurer so he was soliciting advice for him before and had told us about what he had said from time to time.

Everything in the Declaration is set up with the intention of voting be proportionate be based on the owners % in the undivided interest of the common elements.

There was no lien against the association at that time just the possibly of an impending mechanic lien. In fact, the association, had filed (which we had to vote) and place a lien on this property that they were trying to collected on the debt from another person so there questionable reasons why a lawyer was even needed when you fact in costs and the fact the default 4th Unit owner had his house on the market and proceed would be paid upon the sale of the Unit. Furthermore, there are rules in the Declaration that state Unit Owners could have passed this lien on to the default owner based on what it was for.

Hopefully, that won't happen as I made the lawyer aware of how much was left in the operating budget. And whats been happening there can't be much left.

RickC8 (Louisiana)
Posts: 11

Posted:

Quote:

Posted By RoyalP on 02/23/2019 6:24 AM

Since YOU are one of the unit owners and you will NOT consent the (proposed) change is 'dead in the water'.

Thank you Royal

RickC8 (Louisiana)
Posts: 11

Posted:

Quote:

Posted By AugustinD on 02/23/2019 7:41 AM
-- Do either your Articles of Incorporation or your Declaration say anything about conflicts between the two?

-- The general hierarchy of governing documents puts the Declaration above the Articles of Incorporation. If there is no explicit wording about conflicts, then generally one may expect that what the Declaration says will trump what the Articles of Incorporation say.

-- I agree it appears that your 32% voting interest cannot be lawfully changed unless all four owners agree it should be changed. Percentage ownership based on, say, amount of square footage is pretty common and passes the common sense test, afaic. It is the same idea as a corporate shareholder who owns more shares than others. The value of the shares at any moment is more than the value others own. The shareholder should have a greater say.

-- What do the Articles of Incorporation say on this?

-- What is the argument the board's (condo's) attorney is making about the Articles of Incorporation compared to what the Declaration states?

-- By any chance are you in arrears on your assessment, and so the Declaration or Bylaws allowed suspension of your voting rights?

-- I checked the Louisiana Condominium Act and see nothing that contradicts what I wrote above.

-- Who owes money to the condominium?

-- Melissa's questions tend to be mine.

-- The Louisiana Condominium Act at Section 1124.115 permits an owner to seek court remedies in the form of injunctive relief, damages, and more. Unfortunately the cost of hiring an attorney might exceed the value of the remedy. Consider pro se.

-- I know I need the above questions answered before I feel 100% sure about making suggestions here. Others may feel the same.

1) No. The AOC states that words in it are defined in the declaration and I see no language in the AOC that would make you think its a governing document. Nor does the declaration reference the AOC for any of its powers. And the clause that the lawyer is referring to justify this whole charade is under a section called "Members" and then goes on to talk about Class A and Class B votes with B being the developer.

2) It is intuitive to me also. But this is what the lawyer stated in his first email on the matter: "The square footage of each unit has a rational relationship to expenses and assessments but a less rational relationship to voting rights among units of near equal units." My unit is 24% to 30% larger then ever other unit. How is that near equal?

3)After more research, I'm under the impression Articles in Louisiana and in the structure of these basically don't matter when it comes to condo operations and buyers or owners shouldn't even look at them as they were for the developer just to file with the state i.e. see above with the Class A and B voting structure. And the Louisiana Condominium Act states that the Declaration and the bylaws are what regulate the condo operations and just says AOC must be filed.

4) There isn't any language to prevent him from voting. Theres this 4th unit owner who is in default and the reason for the potential liability stems from a special assessment that he has never paid when the work is done. The default unit owner has an accepted contract from that non member the first week in February. This is when all hell broke lose, so to speak. Because the Treasurer started firing off email to the board CC'ing the lawyer using clauses in the AOC to block the sale, which again makes me think that AOC is only for development purposes. Which is when they lawyer step in and started making these suggestions so it also changed his scope, which he wasn't hired for and I wasn't made aware of he was doing on our behalf

5) I have been trying to keep this piety because my main concern was voting rights (stopping this meeting). With maybe a demand letter and some logically reason myself.

But essentially what happened here is that the Unit Owner was in default, a 50k assessment had been raised to fix foundation issue. My condo was so bad a pan and knife slide off and killed my dog. They were bulking at the work starting without having the full assessment even though the money had been hand over in good faith for two months and probably still wouldn't have been started as he hasn't paid. I reached out to a family friend and they offered to pay the balance when work was completed, verbally, never signed a contract with the board. As work progress the Treasurer made it know the contract could be alter to complete different work in the special assessment contract we all signed and handed over money in good faith. At this point that non member said she was no longer comfortable paying and had lost faith in them to follow the contract. She also told the contractor the Assn didn't have money. At this point the contractor had completed phase one and was paid in full based on how much the three other members had paid. The treasurer, who is also the "project manager" told the contractor to still continue with the work. I hope this gives you a batter understanding of the source of the debt and why they started to go after me then proceeded to hire the attorney to go after the non member.

This seems to be a hostile take over that they want to hamper my perceived power that I will have with the new owner. Which isn't what we want or whatever do because its not in the best interest of the board and is just wrong to treat someone in that manner. The new owner is buying in to protect my interest and flip that other Unit so we can both get out, make a little money and get away from these irrational and unreasonable people. If I'm left alone with 25% I'm afraid ill have to give my condo away in order to get someone willing to live in this thiefdom or they will decide when and who I can sell it to. So this is while I understand this could be costly it worth it to protect my investment along with they have no money and are all bark and no bite. They just got lucky in this case cause they controlled a bit of money and found a personal friend, acting as a board lawyer, to take their side and give them bad advice.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By RickC8 on 02/22/2019 7:38 PM
Board members are attempting to change my Voting rights proportionate as related to interest of the undivided ownership of the Common Elements. This is a four unit complex and smallest owner is hell bent on making everything 25% when I have 32% and can have majority with only one other member but they need three. The board hired a lawyer to go after debt before a lien was in place without Board consent or approval to seek legal advice. In doing so also spend almost 90 of operating budget while there is an assessment freeze.

First, contact I ever had from lawyer he had a plan in place that because of inconsistences between the Articles of Incorporation and Declaration. Using wrong interpretation of Articles to Corp to change Declaration and in doing so will take away my proportionate voting rights in order to make the complex 25% and changing "major decisions" needing 75%. This is setting the board up for disaster.

State law Condo Act states: §1122.108. Allocation of common element interest, votes, and common expense liabilities

A. The declaration may provide that different allocations of votes shall be made to the units on particular matters specified in the declaration.
B. Except as provided in Section 1121.107, Section 1122.112, Section 1122.114, or Section 1122.115 or in the event a portion of the condominium property is removed from the provisions of this Part following a casualty loss or expropriation, the percentage of undivided interest of such unit owner in the common elements of the condominium as expressed in the condominium declaration shall be an inseparable component of the ownership of the unit and shall not be altered without the consent of all the unit owners expressed in an amended condominium declaration duly filed for registry.

I take this to mean proportional voting share is allowed. And when your ownership is based on the undivided interest in the common elements and only you can consent to have it taken away.

I think the board needs my written consent to take away my vote and enrich themselves with it, correct? Also, if I own shares in a corporation and bought them how can they be taken away just by a vote? Condo complexes can operate or shouldn't operate like that can they?

Is the above bold not the answer? It says all must agree.

RoyalP
Posts: 1,104

Posted:

Quote:

Posted By JohnC46 on 02/23/2019 10:47 AM

Is the above bold not the answer? It says all must agree.

Correct, the above bold is in fact NOT not the answer, but IS in fact the answer.

(not + not = is)

CathyA3 (Ohio)
Posts: 6,299

Posted:

I'm confused. We're talking about amending the proportional share of the common elements, but hereabouts they don't necessarily coincide with voting rights. That is, it's one vote per unit but the percentage of ownership varies by square footage among other things.

If the OP addressed this, I missed it.

RoyalP
Posts: 1,104

Posted:

In a condo one's vote may be proportionate to one's ownership interest.

RoyalP
Posts: 1,104

Posted:

eg. unit 1 is 30% of the total square footage therefor unit 1 gets 30% of the 'votage'

unit 2 is 25%

unit 3 is 25%

unit 4 is 20%

total votage is 100%

simple

CathyA3 (Ohio)
Posts: 6,299

Posted:

I understand how it works, I just find it strange. Makes perfect sense to determine the amount of the assessments based on percentage; you own more, you pay more. But in the communities I'm familiar with, the guiding principle is that all owners have the same rights and responsibilities. Proportional voting would shoot that right down. I'd expect courts to give that a bunch of side eye.

Oh well, I'm not in Kansas anymore.

RickC8 (Louisiana)
Posts: 11

Posted:

Quote:

Posted By CathyA3 on 02/23/2019 2:58 PM
I understand how it works, I just find it strange. Makes perfect sense to determine the amount of the assessments based on percentage; you own more, you pay more. But in the communities I'm familiar with, the guiding principle is that all owners have the same rights and responsibilities. Proportional voting would shoot that right down. I'd expect courts to give that a bunch of side eye.

Oh well, I'm not in Kansas anymore.

I appreciate all the responses everyone!

I understand what you are saying. And even thinking this all over as people respond and I go back to the condo docs Ive made some mistakes and whats what.

Let me correct a few things

In La and according the the hierarchy that governs condo's :
1) State Law & the La Condo Act
2) Declaration (legal document establishing the ownership and rules of a property)
3) Bylaws (powers of the powered given by unit owner)
4) AOC (which is terms used in it are defined by the Declaration). Furthermore I've seen things that say Unit owners and buyers shouldn't even concern themselves with it.

So knowing that:
1) The lawyer was hired by the President, for the Association, which according to the Declaration, is the Unit owners.
2) Her any power as President is in relation to the Board not to deciding on matters for the Unit Owners.
3) The Boards duties are defined in the bylaws. No where does it say she can hired a lawyer but it also doesn't.
3a)Under BOD duties it states the board must comply with majority of unit owners.
3b) either way no unit owner meeting or board meet was called to discuss. And as I stated before it left no money in the operating budget and there is an assessment freeze.
4) So the majority and all the rules in the declaration relate to majority of owners.

S0 that might work for a 5-8 person complex but not 4 when they want to move majority would mean 75 needed to pass anything. That makes no logical sense and will just result in gridlock esp with such contention.

This infers why the condo assn. was set up in this matter. And if it does make sense to be even you certainly can't take it away. On the flipped Its hard for me to believe me and another owner could with a 50% threshold increase are voting share or give ourselves % voting share if it was the other way around.

I hope this helps everyone better understand whats going.

Once again. Thanks so much and keep it going

RoyalP
Posts: 1,104

Posted:

..... A. The declaration may provide that different allocations of votes shall be made to the units on particular matters specified in the declaration. .....

You need to read the actual declaration to determine 'votage'.

AugustinD
Posts: 5,144

Posted:

Rick, according to the Bylaws, how many people are supposed to serve on the board? Chances are high that the hiring of contractors (including attorneys) is supposed to be a board decision. This means the President is not supposed to be making decisions all by herself.

When is the next election for board members? Or how does one get to be on the board at your four-member condo? The latter is probably your least expensive option and the option to bring you to a solution the quickest.

The articles of incorporation are still relevant. For one thing, they help ensure that your condo is subject to certain corporate statutes and case law.

I could be wrong, but my sense is that whoever is trying to drive you out is betting you are not willing to spend much, if any, money on an attorney. It's one of those frequent scenarios where it is not about justice but instead it is about which side has the most money. Worse, what this President is spending on the condominium attorney is divided among only four members. So if you hire an attorney, then depending on state law, you may get to pay for your attorney and around 32% of whatever the condo attorney's fees are.

It might be worth an hour's consultation with a real estate-hoa attorney.

RickC8 (Louisiana)
Posts: 11

Posted:

"Votage" is only found in Declaration is that 1 once special item that is the tabled mention before showing the "% Voting Rights" of each unit along with those others things like common interest, assessment amount, etc. Then everything when talking about hoe something is vote on states: must me majority of unit owners as defined by the common interest. Where Unit owner is defined has share of the common interest. Working this backwards just seems like bad legal advice of a lawyer telling helping there friend get what they want and not going through the nuances

RoyalP
Posts: 1,104

Posted:

this issue is becoming VERY complex:

..... I take this to mean proportional voting share is allowed. And when your ownership is based on the undivided interest in the common elements and only you can consent to have *it* taken away. .....

*it* may very well refer to your undivided interest and NOT to your votage %.

Voting may, or may NOT, be proportionate to 'ownership %'.

ALL the answers 'should' be in the actual Covenants and Restrictions a/k/a Declaration.

It seems easy to mix up ownership/assessment % with/and votage %.

best of luck

RickC8 (Louisiana)
Posts: 11

Posted:

Quote:

Posted By AugustinD on 02/23/2019 4:14 PM
Rick, according to the Bylaws, how many people are supposed to serve on the board? Chances are high that the hiring of contractors (including attorneys) is supposed to be a board decision. This means the President is not supposed to be making decisions all by herself.

When is the next election for board members? Or how does one get to be on the board at your four-member condo? The latter is probably your least expensive option and the option to bring you to a solution the quickest.

The articles of incorporation are still relevant. For one thing, they help ensure that your condo is subject to certain corporate statutes and case law.

I could be wrong, but my sense is that whoever is trying to drive you out is betting you are not willing to spend much, if any, money on an attorney. It's one of those frequent scenarios where it is not about justice but instead it is about which side has the most money. Worse, what this President is spending on the condominium attorney is divided among only four members. So if you hire an attorney, then depending on state law, you may get to pay for your attorney and around 32% of whatever the condo attorney's fees are.

It might be worth an hour's consultation with a real estate-hoa attorney.

It states 3-5 and there are currently four. But the board is compelled to do what majority of Unit owners say.

I didn't mean to dismiss them totally just think it is in this case. The section they are using to justify this has A & B shares with being the developer so these our obviously for just the committing of the INC. And the clause says Unit owner, as defined in the Declaration, is their % of the common elements.

RoyalP
Posts: 1,104

Posted:

Rick,

copy and paste your actual declaration or provide a link if online

or

email it to me @ john9441@gmail(dot)com

RickC8 (Louisiana)
Posts: 11

Posted:

Quote:

Posted By RoyalP on 02/23/2019 4:42 PM
Rick,

copy and paste your actual declaration or provide a link if online

or

email it to me @ john9441@gmail(dot)com

You have mail!

RoyalP
Posts: 1,104

Posted:

Quote:

Posted By RickC8 on 02/23/2019 4:52 PM

Posted By RoyalP on 02/23/2019 4:42 PM
Rick,

copy and paste your actual declaration or provide a link if online

or

email it to me @ john9441@gmail(dot)com

You have mail!

Emil,

While I personally agree with your interpretation of the Declaration re: voting %, I believe y’all will need arbitration as per Bylaws, Article VI, 6.02

Your ‘docs’ are poorly worded and subject to interpretation

It may become a matter of ‘equity’

While different units have different ‘footage’ each unit has the same interest (except for ‘wall spaces’) in the amenities

The exhibit (B), however, is compelling for % votage

Best of luck,

John Bernabeu

RoyalP
Posts: 1,104

Posted:

+ Bylaws 2.01 states: membership interest is proportional to .........

CathyA3 (Ohio)
Posts: 6,299

Posted:

It sure looks like voting is proportionate. I wonder if there is any other language in the declaration that modifies this - ie., describes the situations in which proportionate voting occurs.

I think you can make a good case that it makes sense when voting on financial matters, where persons with a higher percentage of ownership would have to pay more. On t'other hand, a lot of the nitpicky CC&R stuff deals with what I call "quality of life" issues, such as pets, trash pickup, acceptable uses of the common areas, etc. For these things, I don't see how you justify proportionate voting - it means some owners are more equal than others. It surprises me that there wouldn't be any legal challenges to this. (Perhaps one is coming...?)

RoyalP
Posts: 1,104

Posted:

Cathy,

'his' bylaws require arbitration as per LA statute

in arbitration the principle of 'equity' over-rides the principle of 'contract' because the contract itself is in dispute

(common law requires a contract to be 'plain and understandable')

however

the declaration OVER-RIDES the bylaws

ergo: neither side will be happy with the outcome

HOAs are like vacuum cleaners - they both suck

RickC8 (Louisiana)
Posts: 11

Posted:

Quote:

Posted By CathyA3 on 02/24/2019 7:30 AM
It sure looks like voting is proportionate. I wonder if there is any other language in the declaration that modifies this - ie., describes the situations in which proportionate voting occurs.

I think you can make a good case that it makes sense when voting on financial matters, where persons with a higher percentage of ownership would have to pay more. On t'other hand, a lot of the nitpicky CC&R stuff deals with what I call "quality of life" issues, such as pets, trash pickup, acceptable uses of the common areas, etc. For these things, I don't see how you justify proportionate voting - it means some owners are more equal than others. It surprises me that there wouldn't be any legal challenges to this. (Perhaps one is coming...?)

I agree. While there is no clarification the intend of the document to me seems to be % voting rights along with the bylaws as it says the board is compelled to do what a owners want according to their percent in the undivided interest.

They are using the AOC as justification to change the clarification saying if it isn't the same we are somehow open to liability.

I still go back to the statue in the La Condo Act. I believe my % is tied to common elements based on the intent of the declaration and all the reasons you stated. And according to the law and the declaration those can't be separated without my consent.

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