Board breaking the rules

If the Board of Directors break the HOA rules set by the State, what action can be taken against them?

You say board breaking the "rules". Do you mean "laws" that make up your documents?

Does someone know where to look for penalties against a homeonwner's association (not condo) for Florida?

Thank you,
Audrey

I really appreciate your response, Roger.

You are so right, I have looked at the statues and they are so vague. They don't tell us where exactly to find the answers. Our annual meeting is this Thursday night. I need to go to the law library at our court house to look up the answers I need. My attorney advises me that what my BOD's has done is illegal and needs $8k from me to start, and this is just to go to arbitration with me.

My BOD's feel they have found a legal loop hole to be legally compensated. I am expected to get paid as everyone else is for the first time, at our annual meeting.

A BOD's is a group of unpaid volunteers who serve the members of the Association. I don't feel $7,500 a year in gifts to the Board is serving it's members.

I've sent a certified letter w/docuentations to our Association's Attorney, requesting him to advise my Board to rescind this amendment if it is not legal, and if it is, show me where it's written so I can legally accept my money at the meeting. He advised me that he made copies of everything and sent them to my BOD's, and they have to give him permission to answer me. The Board is in the bad habit of not answering me in the past either.

So,I guess I'm stuck?

I do not believe it is a good thing to pay volunteer's. I know of no other Association in the State of Florida who legalizes yealy gifts to their BOD's from their increased yearly dues to cover their compensation besides ours. This greedy BOD's just serves themselves, by using the excuse to try to use this yearly gift program to encourage new people to volunteer for the BOD's or we will be forced to turn over the BOD's to a management company and have to immedately pay $400 a year. The President used that scare tactic last September newsletter, and agian in last month's newsletter. A BOD's works with a management company. A management company isn't hired to replace a BOD's, and the President knows that.

I have this awful pain in my gut that says, this so called amendment to compensate our BOD's is not legal because our Articles of Incorporation said no before the amendment, and still says no, and FL Statue 617.0505 say that it's prohibited. They claim they amended the word "dividend" to "gifts". No dividend. No gifts.

If I take the money now, and then later on find it was illegal to do so, I don't want to be in trouble with this group. That is why, I wanted to know what are the penalties are for breaking the rules. I believe they have broken all the rules with this amendment.

At our annual meeting, if the Board of Director's has not rescinded the amendment as I requested in my letter to their attorney, I do not intend to receive the money, and make it perfectly clear, really educate the homeowner's at to why I am not taking the money.

I feel I have done everything I can do up to this point.

So, I'm out of all legal options, and I am very open to all opinions and suggestions.

Thank you,
Audrey

Hi Lynda,

Lucky you, your State tells you--you can sue your HOA BOD's indivually when the break a State HOA law. Florida is not so lucky. We have to take them to Arbitration and then possibly take them to court afterwards.

I went to the Annual Meeting, and received my compensation for volunteering. Now I have proof. Of course when I got home, I wrote "void" in big letters on the check.

I'm writing the Association's Attorney with the copy of the check enclosed, to ask one more time to rescind this amendment, to avoid Arbitration. I believe FL law-the Statue in which says "compensation of board members is prohibited" will prevail.

Also, at my Annual Meeting, the President failed to announce that she had a tape recorder on the podium. Remember, when you have a recorder and/or video recorders at the meetings, tell everyone they are being recorded. Otherwise, it's illegal in FL and other states as well, to record without anyone's knowledge.

Take care,
Audrey

Hi Lisa,

Thank you for your response, and best wishes.

The Board calls their compensation as gifts, becuase gifts are not considered income. Therefore, they feel they have found a loop hole with in the State (FL) law.

I'm not on the Board. I'm on one of their committee's. I was told by counsel that, the attorney could answer me, w/o having to ask the Boards permission.

I believe, there are no loop holes that allows the volunteer's to be compesated. Much less call part of our income to our Association alotted as "gifts", as ludicrious.

This is what they have done, Lisa. They increased our yearly dues to cover their gifts. The big no-no of all. Then, they legalized their gifts, by filing the amendment within the local court house, which forces us to pay them, or get a lien placed on our homes if we do not pay their gifts.

Can you imagine, if a homeowner were taken to court for foreclosure by the Board, and the homeowner told the Judge, "Your Honor, I paid my yearly dues, I didn't pay their yearly gifts. The lien on my home is for not paying their yearly gifts." See, the up side of that is, the yearly gifts was made part of our yearly dues, and it shouldn't have, and maybe the out the homeowner needs to win. I'm guessing.

Also, if the Board wants an increase in their gifts, they have to come back to the homeowner's for their votes. If approved they will raise the dues again to cover. Now, here's were the real problem lies: If the homeowner's did not approve to increase their gifts, can you imagine how they would be treated by the Board and their committee members?

I just do not see any good coming from this at all.

I am on a fix income, and cannot afford legal counsel. Although, I have received free advise on this subject. Which was, what they have done is illegal, you can get answers from their attorney, and the retainer to hire, is $8k.

So, I'm letting the Association's Attorney know I'm not going away. I certainly hope he's not encouraging other HOA's to compensate their volunteer's. These guys are well known in central FL, and guiding the HOA's are their main expertise. I cannot begin to tell you how very disappointed I am with them.

Take care,
Audrey

I still don't think the IRS would see 'cash gifts' as exempt, any more than any court would. I would assume that on their tax retrun the HOA is listing this an 'employee expense' or such to account for the payments. "Gift' would not cut it. File a Freedom of Information Act request after your HOA files their taxes.

I would do a little more research with the State as to what recourse you have that does not cost $8000! I cannot believe that you had a membership that approved these 'gifts' regardless of the consequences, let alone ever approve an increase because of the threat of repurcussions. My brother lives in Massachusetts and his Board is paid $300 each per month while their association is sinking quickly. I thought that that amount was silly. No one wanted to be on their Board, this is why it was voted in by the few that attend meetings. But then you end up with the people that are only there for the money.

Our Association allows for us to be paid if it is voted on by a quorum and passed.

Best of Luck,
Lisa

Hi Lisa,

Thank you for writing again, about your concerns. It really means alot to me.

At the annual meeting, it was brought up that the Association would like to make a donation to the hurricane victims. So I aksed, if it was in our documents that we can make donations? The reply was yes. My next question, Okay, are we in the habit of filing an income tax return every year? Because, you realize that donations are tax dedcutable to the donator?" The new VP spoke up, and said, "No, we don't file income tax returns, we are not-for-profit corporation!" I did't say anything, but continued to shake my head "NO" for the President to see. I didn't argue the point, because I didn't have the proof with me. These people on this Board I cannot speak to without showing visible proof. They believe they know everything, and they are right about everything.

The President told me that, gifts are not considered income or profit to the person who receives it, and they do not have to claim it on their income taxes, and the Associaton doesn't have to claim in their income taxes either. It's a win-win situation she said.

She even wrote an open letter to the homeowner's, "We do not collect income, we collect dues. Therefore, we don't have profits." It is hoped that a President doesn't think like that, much less write it. Becuase, dues are always considered income and profit for the Associaton. This was a tactic to deliberately confuse the homeowner's.

So, to up date you, I have done some more research, and found a Statue that would allow me to have this "gift" amendment revolked, and may even get back the money everyone received at the annual meeting, in the amount of $7,500. I believe my cost is $200 filing fee. How about that???

There is another statue that does allow the Board to be compesnated. However, the Board didn't use that statue and should have. They used the word "gifts" instead of "compensaton", no where can I find that a Homeowner's Board of Director's can legalize gifts to themselves, and increase our dues to cover those gifts. I'm not too crazy about that statue either. I fails to give a cap on the dollar amount the Board may compensate themselves for. I've got to write my State Legislators, and show them this statue they left wide open for legalized extortion of the homeowner's by not putting a dollar amount to cap the Board of Director's "fix" for being compensated. I believe that's all that is necessary I would need to write them too. LOL

I hope the Department of Legal Affairs will help me resolve this mess. I'll keep you informed.

Lisa, you said, your association allows for you to be paid as long as it's voted on by quroum and passed. I hope it's at an annual or special meeting. This amendment was voted on by door-to-door votes. No where is it written this is okay. None of the homeowner's knew they had voted until weeks afterwards. They thought it was a proposed proposal for a possible change, as the President wrote in our Newsletter. Voted an, as survey, not voting. There was rushed to file it too. Sneaky, huh? Make sure this doesn't happen to your Associaton what happen to us.

So, I'll see about contacting the Department of Legal Affairs, and hope for the best.

Wish me luck.

Write me again.

Take care,
Audrey

These Board members need to be removed ASAP!! The most effective method of doing this, if the Declaration or Bylaws provide, is to organize members. Use a petition to call a special meeting of the homeowners - set forth the location, date and time of the meeting, and the specific purpose or purposes of the meeting. The purposes should include: to remove specific Board members and to vote and elect the number of new Board members to replace any that are removed. Solicite members, or their proxies, to get the votes necessary to remove these Board members and have good new Board members lined up who are willing to serve.

This can take a lot of "leg work" and very little money. Hiring an attorney and going to court would never be my choice. It would be faster to wait and replace them when their term expires by the above procedures without the petition for a special meeting.

These Board members are deplorable and unfortunately an example why HOA's in general have a bad reputation.

Good Luck,
Roger

Merry Christmas!
But watch these people Audrey. While it is illegal to pay volunteers it is acceptable for the Board to hire members of the association to do work such as accounting, landscape maintenance, etc. This is not a conflict of interest as long as they develop a RFP and get several bids. Generally Board members will resign if they want to bid to prevent an apparent conflict of interest.

Roger

Hi Roger,

Christmas came early on the Space Coast! The BOD's is finally rescinding their amendment. If my fourm is approved by HOAtalk, please look at the update on this very subject.

Have a great New Year!

Audrey

To: Joshua
From: Space Coast of Florida

Yes, there is something you can do about this.

I was a condo homeowner like you, for sixteen years, until five years ago, I sold and moved to a deed restricted HOA, with problems. WHAT WAS I THINKING???

Anyway, my unit was upstairs too. The downstairs unit directly below me belonged to a homeowner who didn't want to sell her place in case she didn't like the place she purchased to move to, she could move back into her unit. Her first tenant was our HOA. The HOA paid RENT for that unit, for the on site maintenance personnel, who lived there with his wife and daughter, RENT free, and was also given a salary to live there. What a deal! This was done in lieu of a management company. We did finally hire a management company, and our dues went up because of it.

Maybe, that is why your dues are going up, and why you feel the HOA should have enough money to pay the management company from the sale of their unit, and not look to the homeowner to increase their dues? I understand you'd think that way, because other homeowner's would think the same thing, and it's not the way the HOA does things, I'm sorry to say.

The money from the sale of the unit could be used for any emergencies, and would not be part of the yearly budget.

REF INCREASE OF DUES:
Maybe, that is why your dues are going up, and why you feel the HOA should have enough money to pay the management company from the sale of their unit, and not look to the homeowner to increase their dues? I understand you'd think that way, because other homeowner's would think the same thing, and it's not the way the HOA does things, I'm sorry to say.

The money from the sale of the unit could be used for any emergencies, or used to enhance the common elements outside your condo, or both. In some HOA's that much money is not usually part of the budget.

First of all, your BOD's should have told you at least a month in advance, by first class mail, or Newsletter, explaining the need for the increase of your dues, as well as on their posted Agenda, put somewhere everyone can see it, within 72 hours of their next Board meeting, before the Board can discuss or vote on the increase of your dues. Did that happen? What does your docs. say about the proper procedure the Board has to follow before they can increase your dues? Did that happen? In my docs., it says in short, our dues need to be "reasonably" raised. I hate that word "reasonably". Tell me, what BOD's understands the word "reasonably?"

Secondly, IF the money from the sale of the unit was at the Boards disposal to use to hire a management company, that would only prolong the inevitable. Depending on the yearly cost of the management company, the money from the sale would only last a few years, if that.

However, make sure before your HOA ever hire's a management company, they get at least have three bids, and you have the right to see those bids. Also, you can request their Board minutes, and they have from ten days of the date of your CERIFIED letter to give them to you. They can charge you to up to 50 cents per copy.

REF THE MONEY FROM THE SALE OF THE UNIT:
IF this property was just sold in 2005, to find out for sure your HOA actually owned this unit, go to your local Property Tax Collector's web site. The new homeowner's name may not be on the Property Tax Bill yet until 2006 at Property Tax time. Type in the address and unit number, or your HOA's name, on your Property Tax Collector's web site.

Or, you can go to your local Property Appraiser's office, on Tuesday, January 3rd 2006, to get this same information. Also, go to your local court house to look up the old DEED to that property. It's a matter of public record, and you can find out who actually owned that unit. I don't know if your courthouse keeps old DEED's or not. If so, get a copy of the old DEED only IF it belonged to your HOA.

If your HOA's name is not on that DEED, and a homeowner who is also a Board member sold that unit, or just a plain homeowner owned that unit, that could explain why the money was not put back into your Association's account.

If you find out the sold unit belonged to a regular homeowner, then your HOA was RENTING the unit from that HOMEONWER. Find anywhere in your "yearly statement" that shows "RENT". Did the maintenance personnel pay rent to the HOA?

In the meantime, keep in mind, if the property did belong to the HOA, and it was sold for $140,000, find out if there were one or two different real estate agents that needed to be compensated from this sale, as well as their percentage each required at the end of the sale, and other things that needed to be paid before the final total.

Let's say, there were two agents who required to be compensated @ 7% each for selling this unit @ $140k. That is a total of $19,600 that is subtracted from the $140k. See, it might have sold for $140k but the HOA would not have received that amount. The total could be actually much less than $120,400.

IF your HOA did in deed own this unit and then sold it, and your yearly statement does not show a huge amount of money around, $118k or so deposited into the HOA bank account either, then also on Tuesday, RUN do not WALK, contact a real estate attorney about this issue, and take along all of your paperwork when you bought your place, your legal condo documents, along with 2003-2005 "yearly statements." with you to your first visit.

Our legal aid here cost $25 for a half hour session. Do you have something along the same lines where you live?

Joshua, I'm sorry to say, dues always go up. I haven't heard of a HOA dues ever going down. We homeowner's would love to have that happen!

Please let us know on this forum, what happens.

I wish you luck with this matter, and a wonderful, safe, New Year!

Audrey