dishonest board

Started by SpencerW • 47 replies • 1080 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

SpencerW (Georgia)
Posts: 4

Posted:

My HOA has under $25,000/yr budget. The board is utterly dishonest: never any budget or accounting; the meeting minutes are not published, and decisions are falsified; board functions are rotated without any votes, among the same people, unannounced; on general meetings, the secretary parades as the president, and the president pretends to be the secretary. Is there anything we can do?

RaeL (Florida)
Posts: 9

Posted:

I'm dealing with the same thing, Look at the laws in your state and read your covenants, then request records. Ask for specific financials. Ask for cancelled checks paid to any individuals. I also started a neighbors page on FB. Calling them out helps. As long as it's private for neighbors only they can't stop you. Make sure you put not an official HOA page in the description. Go to every meeting. Then find honest people to run at the next election!

KerryL1 (California)
Posts: 14,550

Posted:

Welcome to the forum, Spencer. Rae offers a good start for you. Key is to get likeminded neighbors to join with you to make change. You cannot do it alone.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It could be all perception. You say no budget but then say there is a 25K budget at beginning of post. President and Secretary roles are not to switched. However, this is an ALL volunteer board. No one is a professional. So they probably rotate jobs on who is available to do them. Ever think of that?

Where and when do you want the meeting notes posted? Meeting notes are accepted till the NEXT meeting. So you can't expect to see the meetings official notes until after the next meeting. Simply ask the secretary where and when can find the notes. You may not have that information,

What are you looking for the board to actually do? Their job is to make sure the HOA's budget meets it's debts. That doesn't mean going and buying everything everyone wants. It may be your budget is so tight it just meets the bills just like it should. Otherwise, you need a special assessment or raise in dues to make more happen. A HOA is ONLY funded by it's members for it's members. The board just VOLUNTEERS to represent everyone in spending it.

Former HOA President

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Spencer,

The reason we are asking questions ... is that many post on this forum with anger and emotion. This doesn’t help us understand exactly what is occurring- and we can’t comment with certainty.

So, please take a breath and provide specific background on your circumstances.

Are you on the Board or a committee? Have you been in the past?

The type of neighborhood? How many properties? What, specifically, do your Bylaws say about Board size, and officer election within the Board?

PaulJ6
Posts: 990

Posted:

Quote:

Posted By SpencerW on 02/08/2020 7:26 AM
My HOA has under $25,000/yr budget. The board is utterly dishonest: never any budget or accounting; the meeting minutes are not published, and decisions are falsified; board functions are rotated without any votes, among the same people, unannounced; on general meetings, the secretary parades as the president, and the president pretends to be the secretary. Is there anything we can do?

If these actions violate state law or your HOA's governing documents, then you can sue to force them to follow state law and your HOA's governing documents. But that's expensive and you may not win anything other than a court ordering the board to behave. If the board's actions are economically harming you, then you could recover monetary damages. But that's tough to prove.

You could also do a "derivative suit" if the HOA is harmed but it's tough to show economic damages. You do that by sending a letter to the board, demanding that the board act to recover damages incurred by the HOA. If the board doesn't do anything, then you can sue the board members, but any economic recovery would go to the HOA's bank account, not to you.

Best bet is just to remove them from office, either by voting at an annual meeting or by calling a special meeting.

SpencerW (Georgia)
Posts: 4

Posted:

Thanks, Rael, I did it all: I have asked for last year's totals, this year's budget, meeting minutes, etc. Although the prez promises it, he never delivers. My like-minded neighbors are as much at a loss as I am. Does your response mean that no official oversight is available? I think I could sue in courts, but I was hoping that there was a body through which we could get the board to behave.

SpencerW (Georgia)
Posts: 4

Posted:

Dear MelissaP1,
1. posting the yearly budget figure is not the same as presenting an itemized account.
2. you cannot go around switching positions amongst yourselves, so that to satisfy the term limits.
3. If you are the new secretary, you cannot parade as the president.
4. Besides, positions should be changed through elections, and not through secret board meetings.

SpencerW (Georgia)
Posts: 4

Posted:

Thanks PaulJ6, for your advice

I guess the biggest hurdle is that my HOA is governed by GA common law, and not by the HOA statue. But there is a breach of fiduciary duty and strong signs of graft, that is, criminality in the board's behaviour. I was hoping that there would be a better way than the civil court, although, the amount is probably too small for the FBI to look into, maybe too small for the Chamber of Commerce and/or the Consumer Protection Agency also.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

"2. you cannot go around switching positions amongst yourselves, so that to satisfy the term limits."

Depending on your governing documents you can in fact switch positions. In our case, the president, vice president, treasurer and secretary are elected by the Board and not the community. As for term limits, we do not have different duration's based on the position. It simply says that no Board member can serve more than two three year terms. Do you know your doc's say? If not, you're speculating.

You may be operating under different guidelines but this is the very reason others have asked you for more details and a better explanation. Post the relevant sections of your governing documents and you just might get some help.

MarkW18
Posts: 1,290

Posted:

Quote:

Posted By SpencerW on 02/08/2020 8:33 AM
Dear MelissaP1,
1. posting the yearly budget figure is not the same as presenting an itemized account.
2. you cannot go around switching positions amongst yourselves, so that to satisfy the term limits.
3. If you are the new secretary, you cannot parade as the president.
4. Besides, positions should be changed through elections, and not through secret board meetings.

Spencer,

Great information. I am sure much of it is new to her.

DeidreB (Virginia)
Posts: 113

Posted:

Hi Spencer,

Your concerns and expectations are reasonable. I assume the $25,000 per year budget is your HOA total annual assessment income.

Based on that info alone, I assume that $25,000 means either you live in a smaller HOA or perhaps an HOA with limited common area responsibilities (or both). I am in Virginia so that is my frame of reference and Georgia may be very different so forgive me if I am off.

Is it possible that your HOA board consists of people who simply bought homes and are now thrust into volunteer positions they lack the time or passion for? It may not mean dishonesty, but rather busy home owners who agreed to take on the role no one else wanted and they are taking care of the major things but not all the administrative requirements.

Are your common areas being maintained? Are covenants being followed for the most part? Are there any indications of possible theft other than lack of transparency?

I am not in Georgia but provided the link below to some information resources for you.

In the meantime, I recommend you consider the possibility that things arent as bad as they look and maybe consider running for the board in the future to get a first hand look at things. And of course continue to ask your questions of the board because they are indeed reasonable to ask and may be of great help to the board by alerting them to potential mistakes on their part.

Link below:

https://www.hopb.co/georgia

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By SpencerW on 02/08/2020 9:11 AM
I guess the biggest hurdle is that my HOA is governed by GA common law, and not by the HOA statue.

-- Can you please explain why your HOA is not governed by the Georgia Property Owners' Association Act, 44-3-220?

-- Is your HOA a corporation?

-- Can you please quote exactly what your HOA's CC&Rs say about inspecting records?

-- Are annual elections being run? If so, are they being run properly?

WalterH4 (Indiana)
Posts: 145

Posted:

DeidreB's response is on mark.

In short, you are criticizing volunteers. Are you willing to volunteer to perform their duties on the board? That would be a good first step -- get on the board, which requires bringing with you sufficient voter support (via proxy should be fine).

If they resist you getting on the board, via illicit/illegal means (suppressing the election), THEN you have a definite reason to complain. But if they allow you to get on the board, then my gut says that they are probably not-bad people, and are simply doing a poor job at these volunteer positions, which is understandable for many cases. Instead of being thanked, they are criticized, often by people who wouldn't be willing to change shoes with them.

Run for the board, and demonstrate your willingness to do a better job than them, or else give them a lot of grace (they are unpaid).

The only exception here is if you have evidence that they are using their positions for self-gain, like giving contracts to friends/relatives with higher than normal profits, etc, or theft. Which I think is rare.

PaulJ6
Posts: 990

Posted:

It doesn’t matter if they are volunteers. They’re in a position of trust and power on the board and there are laws and governing documents that they must follow. If they don’t want to follow them, they should get off the board.

WalterH4 (Indiana)
Posts: 145

Posted:

Quote:

Posted By PaulJ6 on 02/08/2020 10:47 AM
It doesn’t matter if they are volunteers. They’re in a position of trust and power on the board and there are laws and governing documents that they must follow. If they don’t want to follow them, they should get off the board.

And with no one to replace them, there is no board, and nothing gets done at all. I assume that they board's actions are achieving some amount of benefit for the neighbors, and if so, let them be. Otherwise, making their lives a nightmare might just cause them to quit, and without replacement, the person complaining has just hurt the HOA, not helped it.

So unless you want to have no board at all, or unless you are willing to do their job better than they are doing it, it's probably better to give them grace, than to complain and try to force them to do things that you aren't even willing to do yourself.

Paul, you say "must follow" as though some outside entity is going to come in, uninvited, and prosecute the board or HOA for non-compliance with elections/etc. This involvement only happens if a HOA member makes an issue of it, and files a complaint. Otherwise the bulk of non-compliance for HOA affairs goes unaddressed, as it should.

If compliance is important enough to this HOA, yet no one wants to do the work, then they could hire a MC to do the work, for higher dues. That's another choice that can be made here, if the HOA thinks it's worth the money to achieve this optional compliance. I say "optional" because it's only mandatory if someone in the HOA raises a stink about it.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By WalterH4 on 02/08/2020 11:06 AM
And with no one to replace them, there is no board, and nothing gets done at all.
How do you know there is no one to replace them?

Posted By WalterH4 on 02/08/2020 11:06 AM
Otherwise the bulk of non-compliance for HOA affairs goes unaddressed, as it should.

I think your attitude is why some HOAs have had tens to hundreds of thousands of dollars embezzled from them. I believe the bulk of current and former directors here support compliance with a HOA's governing documents, state law, and federal law.

More importantly for the OP: A few Georgians have posted here recently. They asked good questions. It was quickly established that their community was not a HOA in any legal sense at all. Instead, it was a group of neighbors subject to the same covenants.

KerryL1 (California)
Posts: 14,550

Posted:

Spencer, can you answer Augustin's questions?

Also, do your bylaws say there are term limits for directors??

You're aware that generally the board elects officers, not the owners (members), right?

Usually there's no requirement for HOAs to "publish" minutes. Ours are on our website once approved a month after the meeting. If no website, you need to request minutes in writing.

How often does the Board meet? Are board meetings open to owners? Are what you call "general" meetings actually members meetings? The latter are usually held once a year for elections. Members meeting and board meetings are two different kinds of meetings.

AugustinD
Posts: 5,144

Posted:

Re-post for read-ability:

Quote:

Posted By WalterH4 on 02/08/2020 11:06 AM
And with no one to replace them, there is no board, and nothing gets done at all.

How do you know there is no one to replace them?

Quote:

Posted By WalterH4 on 02/08/2020 11:06 AM
Otherwise the bulk of non-compliance for HOA affairs goes unaddressed, as it should.

I think your attitude is why some HOAs have had tens to hundreds of thousands of dollars embezzled from them. I believe the bulk of current and former directors here support compliance with a HOA's governing documents, municipal law, state law, and federal law.

More importantly for the OP: A few Georgians have posted here recently. They asked good questions. It was quickly established that their community was not a HOA in any legal sense. Instead, it was a group of neighbors subject to the same covenants. I want to see what the OP says about his community not being subject to the Georgia HOA statute before giving any specific suggestions.

PaulJ6
Posts: 990

Posted:

Quote:

Posted By WalterH4 on 02/08/2020 11:06 AM

WalterH4: nonsense.

I’m a trustee of a nonprofit that has substantial assets. I didn’t volunteer to be on the board; the organization asked. But even as an involuntary volunteer, I take my obligations very seriously and act just as I would in my real job. So do my other board members.

In a HOA, people’s largest investments, their homes, are under governance by a HOA board. Thus there are numerous laws that govern HOAs and try to ensure that HOA board members act in owners’ best interests generally.

If HOA board members violate their obligations to owners, people like me sue the HOA board members. Or governments can step in. And rightfully so. People in a position of trust must be good stewards of that trust, paid or not. And all you need is one person to have a board so saying that nobody would serve if some incompetent or crooked volunteers do not is malarkey.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By PaulJ6 on 02/08/2020 12:00 PM
[good stuff snipped for brevity][...][S]aying that nobody would serve if some incompetent or crooked volunteers do not is malarkey.

Darn straight. A Yalie could not have said it better.

WalterH4 (Indiana)
Posts: 145

Posted:

Quote:

Posted By WalterH4 on 02/08/2020 11:06 AM

And with no one to replace them, there is no board, and nothing gets done at all.
So unless you want to have no board at all, or unless you are willing to do their job better than they are doing it, it's probably better to give them grace, than to complain and try to force them to do things that you aren't even willing to do yourself.

I stand by these statements.

Paul: I assume your non-profit considers themselves lucky to have you. Not all organizations have access to someone capable to do the job in compliance, and willing to volunteer their time for free. Kudos to you.

AugustinD: I'm not claiming that there aren't others available to do the job right, but in many cases there just isn't. Those who are criticizing the board are the most likely ones to become the next board, and so if those complaining aren't willing to do the job in compliance as they seem to want, then most of the time it's better for them to just give grace, and thank the current board members for doing the work that they are already doing.

You say my attitude is the reason for theft; sure this happens, but it's rare because there are 3 people involved, and it's much harder to run a conspiracy ring, where 2 or more are involved in a theft. Most conspiracies unravel themselves. So this fear shouldn't justify the action of HOA members who are complainers, but not willing to trade shoes with the current board.

Compliance is a good thing, if you have folks willing to do it. If not, then you have to make a choice; either tolerate some non-compliance, or raise dues and hire an MC to help out. But if you are just a complainer who is not willing to do the job yourself, then most likely your hostile complaining will lead to more harm than good.

AugustinD
Posts: 5,144

Posted:

Walter, I think everyone and their sister here, along with all HOA attorneys, agree that the best way to bring about change is to quit complaining and run for the board (preferably with a like-minded majority). From where I am sitting and with a few exceptions: Anyone with a major complaint, or ongoing lesser complaints, who has like-minded neighbors who could be a board majority, and who does not run for the board but instead just keeps complaining, is not worthy of my time or respect. I bet you and I agree the typical HOA member's views of the HOA and the board often change when the member gets on the board.

WalterH4 (Indiana)
Posts: 145

Posted:

Quote:

Posted By AugustinD on 02/08/2020 12:52 PM
Walter, I think everyone and their sister here, along with all HOA attorneys, agree that the best way to bring about change is to quit complaining and run for the board (preferably with a like-minded majority). From where I am sitting and with a few exceptions: Anyone with a major complaint, or ongoing lesser complaints, who has like-minded neighbors who could be a board majority, and who does not run for the board but instead just keeps complaining, is not worthy of my time or respect. I bet you and I agree the typical HOA member's views of the HOA and the board often change when the member gets on the board.

The reason I'm saying what I'm saying is that Spencer seems to me as the complaining type, but not willing to do the job himself.

Spencer wrote: "I was hoping that there was a body through which we could get the board to behave."

The answer to his question is quite simply "Yes Spencer, there is a body; it's the board itself, with yourself on it."

Instead Spencer is looking for legal recourse to force these volunteers into compliance, when it doesn't appear that Spencer wants to do this work himself. And if my guess is correct, then that only leaves two viable choices: (a) leave them alone, or (b) raise majority support for the notion of raising dues to hire an outside MC to help become more compliant.

Seeking legal recourse should usually only be done if the person complaining is facing a corrupt board that is suppressing the election process, to keep themselves elected. This doesn't seem to be the case for Spencer.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By WalterH4 on 02/08/2020 1:09 PM
The reason I'm saying what I'm saying is that Spencer seems to me as the complaining type, but not willing to do the job himself.

I think the above has about as much value as someone asserting that you seem like the dictator type (of HOA director), having no interest in following the governing documents and law.

WalterH4 (Indiana)
Posts: 145

Posted:

Quote:

Posted By AugustinD on 02/08/2020 1:32 PM

Posted By WalterH4 on 02/08/2020 1:09 PM
The reason I'm saying what I'm saying is that Spencer seems to me as the complaining type, but not willing to do the job himself.

I think the above has about as much value as someone asserting that you seem like the dictator type (of HOA director), having no interest in following the governing documents and law.

When Spencer is asking about legal recourse to force a board into compliance, without mentioning that he's trying to get on the board himself, isn't that clue enough that he might be headed in the wrong direction? (i.e. not trying to do this work himself, but rather just forcing others to do it)

That said, in all of my comments, I didn't outright say he wasn't interested; I left room for him to say "no, I AM really interested", in which case, this whole thread really should be focused on how he can get elected, and the question about "seeking legal recourse" becomes moot. For many, when you give them this answer, suddenly they lose interest in the discussion. It's more fun to complain and force others to do what you think should be done, than to do it yourself (for free).

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Spencer

Not to excuse your BOD but it is possible for the same people to stay on the BOD year, after year:

1. People like them and re-elect them year after year at the Annual Meeting.

2. When a Quorum cannot be established at the Annual Meeting, no business/elections can be done thus the existing BOD stays in place.

3. They control enough owner proxies to control the election and keep themselves in power.

BOD Officer Elections, among the BOD Members only, can be done at any time so yes it might be that same people rotating Officer positions.

What is the size of your association as in how many members and the dues? $25K budget could mean anything and to some just noise depending on the dues.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By WalterH4 on 02/08/2020 2:24 PM
When Spencer is asking about legal recourse to force a board into compliance, without mentioning that he's trying to get on the board himself, isn't that clue enough that he might be headed in the wrong direction? (i.e. not trying to do this work himself, but rather just forcing others to do it)

I think a fair number come here unable to get a like-minded majority to run for the board. Meanwhile the Board is as ignorant about its obligations as all get-out and doing some really terrible, unlawful things to members that go directly to quality of life. Like ignoring hard surface floors on upper level units in a condominium complex where the covenants prohibit said floors. Like letting the association's tree roots grow into several unit's sewer lines (repeatedly) and insisting the problem was not the association's to fix. You pointed out one possibility yourself: Running elections that are not reasonably fair by any standard, making it impossible to get onto a board.

Quote:

Posted By WalterH4 on 02/08/2020 2:24 PM
That said, in all of my comments, I didn't outright say he wasn't interested; I left room for him to say "no, I AM really interested", [snipped for brevity]

Yes, I noticed you were more constructive (IMO) in style in some your earlier posts. Believe me, I lose patience here in the internet sandbox some times and can get as snarky as anyone. (Though sandbox that it is often, I think the forum also does provide some good education now and then along with a place to let a person vent about a truly intractable, revolting and un-change-able situation.)

KerryL1 (California)
Posts: 14,550

Posted:

I've noticed over the years that some new posters really are just learning about HOAs and their own HOA. Often, they believe that there's a state office or officer of some kind that will help them deal with what they think is a dishonest or abusive board.

But most states don't have such an office. Walter's not quite right either. It's not "the board" that can fix a secretive, abusive or dishonest board. It's owners themselves--the voters-- who can throw out board members via annual election or recall. Legal action is a last resort, which Paul had to use. Apparently, he was unable to get enough Owner support to build a better board.

I don't think we should criticize new posters who're trying to learn about HOAs. I don't think we should try to bully them into seeking a board position. We know that one "reformer" on a board of five will get nowhere. There has to be a coalition of voters and volunteers and it takes a LOT of work. It took our HOA over a year's election cycle many years to rebuild an honest board out of the ashes of an arrogant ignorant one.

PaulJ6
Posts: 990

Posted:

Yes, in my case my issue was a breach of contract situation. I wasn't looking to throw out the board in my lawsuit. But neighbors found out about my lawsuit and removed the board president and a few others, and a new board took over.

I learned this week that some states have very strict statutes of limitations on legal actions to replace a board. For example, in NY if you want to overturn a board election, any lawsuit needs to be filed within 4 months after the election.

RonS15 (California)
Posts: 107

Posted:

lol why u slamming this guy is....

GeorgeS21 (Florida)
Posts: 3,808

Posted:

ha .., ma,,, tado do no ya ru sa?

KerryL1 (California)
Posts: 14,550

Posted:

Sorry--part of my reply was incomprehensible too. I should have written, "It took our HOA over a year's election cycle to rebuild an honest board..."

As ol' PiTA used to quote, "'T'was brillig and the slithy toves...."

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I find people want to found fault with their HOA without actually participating in it. They don't know what a board does or it's responsibilities. They are a GROUP of VOLUNTEERS that are making the decisions mostly due no one caring. Once 1 person cares or takes interest it's all "They are crooked".

I don't jump to the conclusion or start "witch hunting" my HOA. Instead try to find out what need to do to make things better or get an understanding. Just don't like when people jump in going "I am dealing with a dishonest board" and haven't any proof. Just their opinion.

Former HOA President

WalterH4 (Indiana)
Posts: 145

Posted:

Quote:

Posted By MelissaP1 on 02/08/2020 8:00 PM
I find people want to found fault with their HOA without actually participating in it. They don't know what a board does or it's responsibilities. They are a GROUP of VOLUNTEERS that are making the decisions mostly due no one caring. Once 1 person cares or takes interest it's all "They are crooked".

I don't jump to the conclusion or start "witch hunting" my HOA. Instead try to find out what need to do to make things better or get an understanding. Just don't like when people jump in going "I am dealing with a dishonest board" and haven't any proof. Just their opinion.

Agreed. More often than not, people just like to complain but not really help. SpencerW didn't mention once trying to get on the board, but rather was looking for legal recourse. This is a big bright red flag which indicates that he's headed in the wrong direction from the get-go. And if he doesn't really want to do the job himself, or find another volunteer who will do the job as he sees fit, then the net impact of his actions will most likely just be damaging.

We out-elected the previous board who had run wild on enforcement and had angered the majority. However despite having a majority of folks not in agreement with the board, they weren't willing to run with us to displace them. It was like pulling teeth to find two more board members out of dozens of angered neighbors. In summary, we found dozens of folks who would like to complain but not help. Just as with SpencerW (with few exceptions), I would strongly advise against their mission of seeking legal recourse.

In Spencer's case, his complaint isn't about material damage, but only the process (lack of published minutes/records, and looseness of offices/roles). And he's looking for legal recourse. I see red flags.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

And, much, or little, of what Spencer said, might be false, mistaken, or an emotionally supported pseudo-fact.

WalterH4 (Indiana)
Posts: 145

Posted:

OK, so I am going to give a shot at showing SpencerW more grace, and giving advice aside from saying "get elected to the board".

Spencer, if your primary concern here is that the board is misappropriating funds (including theft?), and they are failing to provide banking/accounting records, then I would suggest the following approach.

Give the board a choice:
1. Give the board a timeline/ultimatum, to provide accounting records (at least whatever they have) by a certain date, OR
2. Let one board member step down so that you can take their place, for purposes of achieving the compliance that you seem to desire.

If you aren't willing to do #2, then I hope you will stop bothering them. If you raise a stink without being willing to be on the board, likely it'll make you out to be the "bad guy" in this story, unless it turns out that the board is guilty of blatant theft.

If they won't do either, next recourse, IMO, should be:

1. Document your ultimatum for others to see, and the board's refusal to comply.

2. Show this document to the board. Give them until a certain date to comply, or you will go public and/or take other actions.

3. If they still won't comply, then go public, and let the neighbors see it. Make sure your document is factual, and can't be proven to be defamation.

4. If they still won't comply, consider involving the attorney general or a lawsuit. Before doing this, make sure that your neighbors in general agree with this; because in effect you may be filing a lawsuit against the entire HOA, as in most cases the board members are indemnified and are defended by HOA funded attorneys.

5. If they still won't comply, then elect a new board. Surely after exposing them, you can out elect them, and achieve that compliance yourself.

Personally, I'd skip #4 and just go on to #5. Now that neighbors are aware, you should be able to get elected and fix the issues. If you file that lawsuit, it could become a horror story, where you may become the primary object of blame.

I'd be surprised if someone on that board doesn't just step aside, or all 3 maybe, leaving you to run the entire board yourself. It depends upon how much the board hates you; which they might.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By WalterH4 on 02/09/2020 9:01 AM
Give the board a choice:
1. Give the board a timeline/ultimatum, to provide accounting records (at least whatever they have) by a certain date, OR
2. Let one board member step down so that you can take their place, for purposes of achieving the compliance that you seem to desire.

An ultimatum if of the form, "Do ____ or I am going to do xyz." WalterH4, what is the xyz you are proposing? Also what are you hoping the "compliance" is? Spencer has already said that his community is not covered by the Georgia HOA statute. I suspect his community is also not a corporation, so the Georgia nonprofit corporation statute will also not apply.

PaulJ6
Posts: 990

Posted:

Dishonest board members don’t want to step down and don’t care about ultimatums. Bad boards think that they can decree anything and do anything and get away with it, given how rare a lawsuit against a HOA is.

WalterH4 (Indiana)
Posts: 145

Posted:

Quote:

Posted By AugustinD on 02/09/2020 9:38 AM

The 1st consequence is going public with it to other neighbors. Expose them for non-compliance (which isn't too bad), and also for them not being willing to allow SpencerW to do the work for them (this part is what makes it BAD). This will make the board appear corrupt and harm their reputations. Most likely they won't want this document to be shared with neighbors.

Most of these boards operate illicitly because it mostly goes unnoticed. But if you threaten to shine a light on it, their party often ends. In most cases, it's not actually a "party", it's just volunteers doing the minimum amount of work they can get away with, which is a reasonable stance, given that there is no one else who is willing to do more work.

So his action will expose some truth, and indicate what type of board he's dealing with. Are they:
(a) just being lazy (which is reasonable), or
(b) being self-serving, and misappropriating funds, and don't want to be found out.

If they don't comply with either request, it makes them look corrupt, and justifies taking things a notch higher. Corruption gets media attention. But my gut tells me that it's most likely not corruption, because we have 3 sets of eyes on the finances, and criminal conspiracy is rare/difficult. Someone usually unravels. So I doubt the accusation of criminal behavior here.

But I'll reiterate, if Spencer isn't willing to do the work, he'll be at high risk of being labeled as the problem. If he's trying to force others to do work that he's not willing to do, it just won't look good for him, and weakens his case if trying to get other bodies to support him (e.g. even the media).

WalterH4 (Indiana)
Posts: 145

Posted:

Quote:

Posted By PaulJ6 on 02/09/2020 9:45 AM
Dishonest board members don’t want to step down and don’t care about ultimatums. Bad boards think that they can decree anything and do anything and get away with it, given how rare a lawsuit against a HOA is.

I have encountered such a HOA board. It's the one we replaced. After trying to negotiate with them to be more reasonable, and realizing that it was hopeless, I decided the right way to fix this was to displace them, which we did. In truth, they were good people, but were not like-minded with the majority of the neighborhood. They were over zealous on covenant enforcement, and the HOA didn't want this.

They were also guilty of non-transparency, which is against HOA laws here. I could have raised a stink about these laws broken, but the better solution was just to replace them with new board members.

So the only case where I would have felt justified in getting an outside agency involved would be in the case where the board obstructed the election to remain on the board, despite the majority wanting them replaced.

Taking action with the AG or via lawsuit, would have become the equivalent of me suing all of my neighbors, due to the indemnity clauses (unless we could also prove deliberate gross wrong doing - which usually only qualifies if you can prove the board member was acting for self-gain/self-enrichment, or misappropriation to bestow windfall profits onto a relative's business).

In our state, the AG rightfully only sues for theft, or if the board obstructs the election process. This seems appropriate to me, because it allows a new board to fix the issue, and if such a new board doesn't exist (or the HOA doesn't really want them), then the AG doesn't care either, nor do the courts, in general. The recourse they are all pushing on us is to "take control yourself and fix it" if you want it fixed and can't convince the existing board to fix it.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By WalterH4 on 02/09/2020 10:13 AM
The 1st consequence is going public with it to other neighbors. Expose them for non-compliance (which isn't too bad), and also for them not being willing to allow SpencerW to do the work for them (this part is what makes it BAD). This will make the board appear corrupt and harm their reputations. Most likely they won't want this document to be shared with neighbors.

I am not seeing the viability of such a "plan."

Quote:

Posted By WalterH4 on 02/09/2020 10:13 AM
Most of these boards operate illicitly because it mostly goes unnoticed. But if you threaten to shine a light on it, their party often ends.

In nearly all cases, I believe disinterest/apathy is the source of the problem in the first place. If people were not interested before, I doubt publicizing xyz is going to rile them up subsequently.

Whatever.

WalterH4 (Indiana)
Posts: 145

Posted:

Quote:

Posted By AugustinD on 02/09/2020 1:16 PM
]In nearly all cases, I believe disinterest/apathy is the source of the problem in the first place. If people were not interested before, I doubt publicizing xyz is going to rile them up subsequently. Whatever.

Corruption riles people up. It did for our HOA, which was completely apathetic. At the annual meeting, when the board openly rejected our proxies in order to keep control of the board, I created a detailed factual IDR, and once they read it, they handed over the board seats to us the very next day; when they saw the facts written down on paper, they realized how ugly this looked. Publicity helps alot, especially if you've got a case that can also be taken to the courts or other authorities. People are inspired to action when it comes to corruption.

But if you go this route, better make sure you are clean and really the "good guy" (i.e. standing up for the opinion/interests of the majority), otherwise the majority may just view YOU as the problem. In our case, it was a no-brainer, and the threat of publicity worked like a charm. In the end, hardly anyone had to find out the "dirt" on what happened. The previous board members are still our neighbors, and we wanted to help ensure that all past grief was forgotten and wounds healed as quickly as possible. They aren't bad people, but they just weren't aligned with the neighborhood, and it was time for them to let go.

Another route you can go, Spencer, is to create a petition, asking if folks think the board should "comply, or allow Spencer to be on the board", and get signatures. This also can compel the board. But before you petition, simply tell the board, ultimatum style, either comply before I conduct this petition, or I'll conduct the petition; I'm starting it in 2 weeks. Boards do respond to the threat of publicity, and majority demand.

WalterH4 (Indiana)
Posts: 145

Posted:

Our governing docs actually allow the removal of board members with 51% vote of all lot owners. You could have a petition for this as well. These forms of recourse, are effective, and don't incur legal costs for the HOA, and establish whether or not you are representing a majority interest or not.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By WalterH4 on 02/09/2020 2:15 PM
Boards do respond to the threat of publicity, and majority demand.

I think this is highly variable and depends on each situation's particulars. As a blanket conclusion, I could not disagree more. Many boards just won't care.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

I think we try and work by the rules and regulations, CCRs, Bylaws, etc.

We also allow almost unlimited discussion by a member at Board meetings.

We would certainly support a special meeting request if it met the requirements of our Bylaws and state statute.

We try and enforce all restrictions fairly and equally.

Given our good intents, if someone came to us with an ultimatum, we would, in all likelihood, simply ignore them. Now, this doesn’t mean we would win whatever the conflict is, or that we could outvote whatever group there is in obvious opposition. But, we would tell the ultimatum waver to continue down whatever oath they think is appropriate. I would personally recommend they follow the Bylaws for a special meeting on whatever their gripe concerns.

SheliaH (Indiana)
Posts: 6,964

Posted:

Odd that Spencer hasn't yet returned to comment or say what else he's tried - hopefully there will be an update

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

WalterH4 (Indiana)
Posts: 145

Posted:

Quote:

Posted By GenoS on 02/09/2020 2:21 PM

Posted By WalterH4 on 02/09/2020 2:15 PM
Boards do respond to the threat of publicity, and majority demand.

I think this is highly variable and depends on each situation's particulars. As a blanket conclusion, I could not disagree more. Many boards just won't care.

I agree. It also depends upon if the board is guilty of any foul play (theft or inappropriate use of funds, or election obstruction). If they are guilty, they are more likely to be compelled by the threat of publicity. I didn't mean to indicate that this approach is appropriate for all situations; but one where the board is hiding the accounting info, refuses to show it, and refuses to let anyone else come aboard to fix this issue, then it might warrant the threat of publicity, because that story doesn't reflect well on the board members, and they should know it.

For the threat of publicity to work, and be appropriate, the board must be blatantly guilty of something that most would find offensive. Non-compliance is not such an offense. But not showing the HOA their accounting records may qualify as shady-enough to rile people up if they were made aware, because it means to each person notified, "you also are not permitted to see how our money is being spent". This riles them up, and is something that would likely compel the board to take action.

In George's case, he's right, the guy delivering the ultimatum would be viewed as the nuisance. Why? Because you are running things compliantly and probably enjoy popular support as well.

I noted this in my comments that Spencer had better be sure that the vast majority would side with him, so that he's not just some complainer who's not representing the majority interest. I was just trying to offer an alternate viable solution than "waiting for the next election, and getting elected". You don't actually have to wait for the election, to apply some pressure, if it's warranted.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here