What to do with illegal Board?

Started by BettyV2 • 7 replies • 738 views

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BettyV2 (Texas)
Posts: 1

Posted:

The Board is not legal and took out a $400000 loan, without doing a reserve study first.

The Board of 2017 resigned and a new group of owners decided to self manage. A controversial meeting was quickly called to vote for a new 2018 Board. I started requesting monthly Meeting and Financials, but the Board refused to provide anything. An Attorney was hired and took over six weeks to get a mess of documents.

I found out the Board did not have a required quorum # and no proxies or ballots were sent, the new President wrote an email to one owner admitting this the following week saying they would correct it soon, they discussed it and changed the number of owners from 26 to 25, making 13 instead of 14 the number for a quorum. I was told publically that I was wrong and did not know what I was talking about when I protested. They published these numbers in the Minutes! The owners in their apathy refused to challenge this, not wanting to get involved. They held another vote for owner approval of the loan but a Director signed a proxy vote for an owner who said they knew nothing about it. They also only had one meeting to discuss and an immediately vote on a 15 year loan, gave no exact details, with vague proxy allowing only the Board to vote as a proxy and not owner reps or the owners quorum considered. False Minutes were used to prove authority to get the loan. Totally inappropriate.
No Reserve Study done and only one bid for the project, no audit of accounts, and the common grounds were destroyed during building remodel with no future plans for correcting.

The Board just sent me an email saying that while I was President (9 months in 2017, and only resigned due to major surgery). The community was always self managed. I hired a professional management company and recouped $32,000 in a fraud settlement, went from 60% late to 20%. After I left, the others decided to save money by firing the manager. Now the Board is saying "you let this property go to hell" and telling owners this too.

Suggestions? Help? Thoughts?

Texas/ TCA

RoyalP
Posts: 1,104

Posted:

move and/or give all this info to the 'bank' issuing the loan

let 'them' pursue the issue(s)

or

if you are even 5% correct, spend the rest of your life fighting

or

'fuh-ged-bout-it' and simply live your life

GenoS (Florida)
Posts: 4,276

Posted:

I feel for you, Betty, but

"The owners in their apathy refused to challenge this, not wanting to get involved."

That, sadly, is the root cause of your problems. That's the root cause of 90% of all HOA problems everywhere.

If the board is telling the other owners that you are the reason that the community has gone to hell, so what? They're apathetic to begin with and probably don't care.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Your problem is apathy and having a small group ready to take control. Step back and breathe. You may not be seeing the Forrest for the trees. You been entrenched and things are different on top...

People will start paying attention when their dues payments go up to support the loan. Of which don't think you need a reserve study to get one. Not a bad idea to get your ducks in a row before diving into the loan road. However, if your HOA can't raise funds for it's expenses, then a loan may be the option they are going with.

If you want to do something, gather like minded people to join your fight. Run for the board again. Get elected with the others willing to step up. Otherwise, live with the apathetic.

Former HOA President

JaredC (Texas)
Posts: 264

Posted:

Right now our board has only 2 of the 3 required members. One is decent and the other is a power hungry egomaniac hell bent on creating chaos while blaming others for her actions. Our board not legally able to function and the sadistic [expletive] who has never met a lie she wouldn't tell has guaranteed that NOTHING gets done. I won't go into a ton of detail here but I want to let you know I understand.

There is a bright side however (maybe). Our community has 24 units and we are in Texas. We can call Special Members Meetings with only 25% of homeowners signing a request with an agenda. During that meeting we get to vote on whatever is in the agenda... and we have some pretty MAJOR issues to deal with. Basically the members call a meeting and majority votes win on whatever issues are brought up in the agenda. The board is taken out of the equation. So why did I say (maybe). Because this is the first time this is being done in my community. The bad guys will follow this same procedure to do bad things. I see it coming a mile away but at least it is a ray of hope and maybe you can apply this to your situation and your community.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Jared

With 2 on a BOD of 3, that makes for a Quorum so the BOD can operate.

In the case of a Special Meeting the Agenda must be clearly defined and followed. Example: Replace BOD Member John Jones with Mary Smith.

Not sure how your docs read but in a Special Meeting the % of owners needed to change Covenants, Bylaws, etc. remain the same. If it takes 75% of ALL MEMBERS to approve say a Covenant change, it will still take 75% of all members to make a Covenant change. Many are confused thinking it just takes 75% of members present at the Special Meeting versus 75% of all owners. Rarely do Special Meetings ever work out as those calling for it believe. Special Meetings usually end up as complaining session. Usually the best way to bring about change is to elect like thinkers to the BOD.

JaredC (Texas)
Posts: 264

Posted:

John, I've been working with both our property management company and HOA attorney regarding our special meeting. In fact the attorney wrote the meeting notice and proxy. He will also be attending. We will be voting on the agenda items that were part of the request to have the meeting. I got this. It won't be a complaining session it will be an action meeting.

Furthermore I have an ongoing lawsuit against our HOA and the attorney realizes the HOA doesn't have a chance in hell of winning. Part of this meeting is to force a resolution of the problem and he will be helping us do it since he is advocating for the HOA. From my perspective it's weird being both a plantiff and a defendant in the same lawsuit. Both he and I understand the gravity of the problem and the resolution dramatically benefits every single homeowner.

BonnieG1 (Nebraska)
Posts: 1,186

Posted:

Quote:

Posted By BettyV2 on 05/22/2019 9:57 AM
The Board is not legal and took out a $400000 loan, without doing a reserve study first.

The Board of 2017 resigned and a new group of owners decided to self manage. A controversial meeting was quickly called to vote for a new 2018 Board. I started requesting monthly Meeting and Financials, but the Board refused to provide anything. An Attorney was hired and took over six weeks to get a mess of documents.

I found out the Board did not have a required quorum # and no proxies or ballots were sent, the new President wrote an email to one owner admitting this the following week saying they would correct it soon, they discussed it and changed the number of owners from 26 to 25, making 13 instead of 14 the number for a quorum. I was told publically that I was wrong and did not know what I was talking about when I protested. They published these numbers in the Minutes! The owners in their apathy refused to challenge this, not wanting to get involved. They held another vote for owner approval of the loan but a Director signed a proxy vote for an owner who said they knew nothing about it. They also only had one meeting to discuss and an immediately vote on a 15 year loan, gave no exact details, with vague proxy allowing only the Board to vote as a proxy and not owner reps or the owners quorum considered. False Minutes were used to prove authority to get the loan. Totally inappropriate.
No Reserve Study done and only one bid for the project, no audit of accounts, and the common grounds were destroyed during building remodel with no future plans for correcting.

The Board just sent me an email saying that while I was President (9 months in 2017, and only resigned due to major surgery). The community was always self managed. I hired a professional management company and recouped $32,000 in a fraud settlement, went from 60% late to 20%. After I left, the others decided to save money by firing the manager. Now the Board is saying "you let this property go to hell" and telling owners this too.

Suggestions? Help? Thoughts?

It is a sad fact that no matter how wrong one may be there is always people they can get on his or her side. There may be members that understand what the current Board is doing is bad for the Association.

Texas/ TCA

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