When are board members personally liable?

Currently we have a total of two board members. One is decent enough while the other is a complete nightmare. I won't go into all the details but I will give just a couple of examples:

1) This board member is our "Treasurer" and complained, during an open meeting, that the annual audit had not been completed on time. I asked if she was going to sign the engagement letter to begin the audit with the CPA firm and she said "No". Weird eh? Then she again refused to sign the same engagement letter for the 2018 audit.

2) We have a SIGNIFICANT electrical meter issue in that most of our meters are not functioning properly and homeowners are therefore not being billed correctly. The Texas PUC has issued a letter saying our HOA is not in compliance yet she votes "No" to replacing the meters.

The history is actually far worse than these two examples but the question remains:

At what point does a board member exercise such willful gross negligence (actually those words aren't strong enough) that they lose the legal protections afforded to board members? Can they ever become personally liable for their actions? I would not go so far as to say that her actions are criminal but they definitely expose our HOA to unnecessary legal liability. In fact there are currently several lawsuits against the HOA solely because of her actions.

Our governing documents state that we need a minimum of three (3) directors. Our third board member moved away from our community months ago and the appointment of a replacement cannot be made due to the highly toxic nature of this person. She refuses to even engage in any such discussion.

Worse yet she plotted to have an annual meeting to replace our decent board member and tried to shut out all homeowners that did not vote for the person she wanted to be on the board. I didn't even get to vote! I shut that down quick fast and in a hurry.

Our PM and HOA attorney all realize this woman is a complete unhinged, unreasonable, irrational, belligerent, toxic individual.

Other homeowners and myself will likely be hiring an attorney to sue the HOA for other reasons next week and I suppose it would be a good opportunity to also ask about suing this woman personally.

Be very careful here.
Since you are on the Board, being part of legal action against the Association/Board may have your D&O insurance not pay (as most have a director v. director exclusion). It's likely that the membership will be paying the full legal costs of the Association through assessments.

It's likely better to gather support and wait until the general election, then vote that individual off the board and fill both seats (expecting you would be staying on the board) with those you believe will do a better job.

Simply remove her. Use your CCRs and bylaws to do it. If your not sure how talk to a lawyer, but do not sue her. Good grief.

If you sue her she will use the D&O insurance to represent herself and they will drop your HOA. Getting a new policy will be super expensive, each year.

All this money spent will come out of "your" pockets, the homeowners. Its coming out of your dues!

When things go to the courts and lawyers, the homeowner always looses. Financially. Solve it yourself. (with the help of everyone else in the community)

You need to first gather support. Let other homeowners know whats going on, stick to the facts. Also talk about expenses coming up in the future such as lawsuits, increased insurance, and how much it will cost each homeowner. Knock on doors or send a letter to each homeowner. A .55 cent stamp to each homeowner is far less than talking to a lawyer. Specify what to do next. Show up at a meeting to vote her out, etc....

Steve provided the correct answer.

More talk is just talk.

homeowners will start to listen when you tell them how much it will cost them personally. per month. per year. etc. typically no one cares until you tell them a dollar amount.

When you steal money, your personally liable.
When you suck at your job, your not.

She has done that RoyalP. Voting "No" to replace electrical meters despite letters from the PUC stating our HOA is not in compliance and a professional assessment from an electrical metering company.

Voting "No" to addressing a rodent problem in 50% of our buildings despite photographic evidence of damage caused to homeowners.

Purposefully stopping repairs on my building because she doesn't like me.

Voting "No" to collection efforts on delinquent accounts totaling more than $30,000 (to secure these homeowners votes)

This is beyond "sucking at your job". This is some pretty bad stuff.

Now don't hate me for playing "Devil's Advocate" here but how is the HOA's budget for such expenses? I've had to vote "no" for things because don't have the money quite frankly. You can't vote "Yes" and have no way to follow through. That's not being responsible.

The rodent issue, that may be considered an individual homeowner responsibility. When your asking/assuming the HOA to pay for something your NOT asking an individual to pick up the costs. Your asking FOR ALL members to pick up the cost of one individual. So if I don't have a rodent problem, then why am I going to pay extra money to cover yours or another building? Can you see that kind of blow back if Rodent control was voted "Yes"?

Meters aren't exactly cheap to replace. If your HOA doesn't have the money, will everyone be on board for a special assessment to purchase new meters? Do you know the process of having a special assessment? How many people will be on board to pay over $100 in addition to their dues to pay for the meters? That may be a vote of "no" because knowing no one wants to contribute additional funds or raise dues.

Not collecting on money owed? That takes money. Matter of fact it can be a few hundred dollars to file a lien. I think we paid $400 to file. (Which is added to amount owed). We could not afford to place liens. So we had a policy of 6 months behind we liened and 1 year considered foreclosure. It was 6 months before the break even mark for the expense of a lien. So does your HOA have the funds to pursue non-payers?

The logic of them securing votes doesn't hold much water why not collecting. Many HOA's you have to be up to date/in good standing to cast a vote. A non-paying member doesn't have a vote.

Had to play some Devil's advocate here because sometimes it's necessary to see the other side of a situation. We hear yours. We don't hear theirs. There are reasons why someone may vote "no" that seem completely insane. Well if there's no money to support the idea then "Yes" isn't an option either.

Well it doesn't happen overnight. Keep trying. You need to gather support from other homeowners. You have not solved that part of the equation yet.

The meters, sockets and current transformers cost $3000 and the labor to install $8000. We have 35-40k in the bank (I'm still waiting for the March financials to be published). Rodents are 8k to patch the holes in all buildings and put out traps in the buildings that need them. Luckily for me 3 of 4 homeowners in my building have been catching tons of rats for the past several months so our rat problem is "under control". We're doing our own extermination which is fine with me; we just need those holes patched.

I send out emails to many homeowners giving updates. I really go out of my way to communicate with people but it falls on deaf ears. People believe what they want not what is true. The bad board member blames our lack of funds on another board member "stealing money". I give people three years worth of audits and highlight the summary saying this hasn't happened but it doesn't matter because they don't want to believe it. All I'm asking them to do is read two sentences stating there is no fraud and they won't even do that. In the final analysis half our homeowners are brainwashed minions who believe what they want, 25% know the truth but don't lift a finger to even vote and 25% of us are reasonably active and trying to do the right thing.

Good advice George. We did have the HOA attorney write a letter stating that ALL board members should be replaced due to the toxic nature of things. One of the board members voted "No" to publishing that letter to the homeowners because it's all about her trying go gain control and power. The decent board member was willing to resign as an act of good faith because he too realizes what the perception is.

I guess the best course of action is to continue at least try to communicate. I've been holding off on my 2018 financial analysis (pie graphs, summary, etc) due to lack of motivation but perhaps I need to rethink that and just keep trying.