financial mismanagement remedies

Well if they are in good standing with the HOA they can run. Last time I checked a HOA ran by GROUP decisions. This is just one board member amongst many others who make decisions. Just don't vote for them to be Treasurer...

ok, thanks..

we do have proof,, we have the financials that show the management company cut dispersed 1500 of funds . two different payments.

at some point she resigned from the previous board. (for reasons unrelated to the petty cash)
when the new board took over, we finally were able to start reviewing the books..etc.

that's when the discrepancy was flagged.
the current board member reached out to her to ask for receipts /balance of the petty cash.

when she finally provided some receipts.. the board member noted that some seemed suspicious so he did a manual search of the items on the receipt and it turns out they were for personal items.

so he voided those receipts and thus the books still show she has 700 of money, she says she has no money left that she spent it all. but she has no receipts or evidence of what it was spent on.

-- This person, who was previously responsible for petty cash, certainly seems guilty of slovenliness when it comes to record-keeping. But what if her response to the lack of receipts is that she failed to save them? As to the personal items on the receipts she does have, one could certainly publicize this. Receipts should be a record available for inspection to members. Is there a candidates' forum or similar where someone can question this person in front of everyone?

-- If she gets no votes whatsoever, I think the Board is legally in its rights not to seat her.

-- If she does get a vote and so is seated on the board, the board could set up a recall election to try to remove her from the board.

george,, you must remember,, the reason all of this happened is because harvey destroyed all of the lower units in our property.. so literally half of our owners lost everything...

when the water receded.. a debris removal company came and grossly overbilled,, and were providing no receipts. Luckily, the owners were able to get together and file a tro to stop the payments from going out until there was some kind of confirmation of the invoices they were turning in.. at the same time, the owners recalled that board.. so a temporary board was installed.. .. and i've relayed what happened at that point..

I can assure you I am relaying everything,

It's hard enough to find qualified competent homeowners that are willing to serve during normal times..
after the flood the . other than myself, all of the other elected temporary board that was put in place after the recall were non resident owners. I soon realized they were not trying to help but were trying to figure out a way to sell the whole property.
they were grossly overestimating the costs to the hoa to rebuild the common areas.. They were hoping to scare the residents that had lost everything that it was hopeless to try and rebuild. I put a stop to that falsehood and clearly explained that what was going on... at that moment I was enemy number 1. on the board. However many owners were thankful and did support me. .. anyway,,

George,,I've actually read worse stories.. the kind of shenanigans that occur when there wasn't even a disaster is ridiculous.

however. because of the disaster,, we were dealing with a board that were not truly wanting to rebuild. (even though the majority of owners did want to rebuild). Also. we were dealing with a lawsuit from the debris removal company .(they actually thought they were going to get away with 445,000 of our money!).. the got away with 259,000,,, all without providing anuy documentation or verification...

they obviously did remove the debris.. but now after we have had time to get experts and comparisons.... the debris removal cost for our property and the number of units should have been approx 150,000-200,00.
actually, george as I write this, I guess I need to be cognizant of how the current board DID stop certain bankruptcy. .. ..

I resigned from the interim board that was elected after we recalled the board that was in place when the debris removal fiasco happened. I resigned because they clearly were not honestly representing the hoa interests as a whole, but only the absentee owners who wanted to sell.

That second board then proceeded to blow through almost 900,000.. of reserve funds.. illegally, and without authority,.. Luckily the current board which i am a part of was able to get in office and I had to find an attorney to represent the hoa in the debris removal lawsuit,, as the previous board didn't ever respond, we were 10 days away from summary judgement.!

so the new board had to take over ,, with only 160,000 in our reservers,, down from 1.2 million.. 10 days away from a summary judgement for another 300,000. plus the common areas were still not repaired.. plus.. the unnecessary foundations work that the previous corrupt board and contractors ok'd was not causing plumbing problems.

we have come a very very long way,,, like i've said before the current board isn't corrupt. The current president isnt' corrupt, he just wants to run everything and he thinks only his ideas are good ideas. My continual press back against this totalitarian attempt has caused extreme animosity among the president and myself..

The owners are all fine.,,everyone is back in their homes. the common areas are at least somewhat done.. (not complete because the president does not have the time necessary to devote to the tasks.. yet he prevents me from being involved... The other board members by and large are busy.. they do show up to meetings.. but they don't have the time or energy that is would be required to facilitate speedier progress.

the point is,, we are not doomed.. WE WERE DOOMED. thankfully the current board , myself included narrowly avoided certain bankruptcy. we are now rebuilding our reserves.. they are close to 650,000.!

I just come here to hoa talk because for all the progress we've made,, I see that having one board member control everything is not the way boards are supposed to run. that's what got us into this mess in the first place.

well harvey was the disaster,, but post disaster a single president signing contracts, without board approval. no oversight, no documentation,, it was a recipe for disaster.

Put her on a payment plan of $10 month.

Whenever she runs for office, remind people she is on a payment plan to repay the HOA for using HOA funds for personal expenses.

So fuzzy.

Did she admit to using community funds for personal gain? Has she signed anything to allow her guilt to be clear - or, are these simply accusations? Is there agreed to evidence, by the Board, of this?

As others have noted, if all you say us true, she is a criminal. If you know if this crime, but don’t report it - and other board members don’t, are you guilty of failing as a fiduciary ... leaving you personally, legally responsible?

I don’t get it, Laska.

Nope. It's for assessments that make you not in good standing. All other things are "tongue wagging".

Don't the homeowners know what happened with this board member? If so, it seems to me that would be motivation for them to participate in this election and vote to keep her off the board. Can you find someone else to run for that spot to take those votes?

You may need to take that option and perhaps there should be a meet the candidates forum where this lady can be compelled to explain herself and what she's doing to make things right. This won't be pleasant, but it may be necessary.

(Unlike the U.S. Senate, at least someone would have the guts to hold someone accountable!)

If the makes the board by default, the only thing I can suggest is to keep her away from the money. Or go back to the homeowners and push for a recall. In the meantime, you'll have to walk the neighborhood and let people know what's at stake. If they still don't respond, they will get whatever they deserve afterwards.

LaskaS, thank you for explaining the devastation Hurricane Harvey wreaked on your HOA. I can begin to imagine how much all have suffered in your HOA. To say the least, I think what you describe is a board's nightmare.

Regarding disqualifying this owner from being a candidate, I believe Texas Property Code 209.0059 is clear that the HOA cannot take away this right. From 209.0059(a):
"A provision in a dedicatory instrument that would disqualify a property owner from voting in a property owners association election of board members or on any matter concerning the rights or responsibilities of the owner is void." Running for the board is a right of an owner." See https://texas.public.law/statutes/tex._prop._code_section_209.0059

Here is a 2014 Texas Court of Appeals decision reinforcing the unlawfulness of removing HOA rights on account of being delinquent: https://cases.justia.com/texas/sixth-court-of-appeals/2014-06-13-00066-cv.pdf?ts=1407968851

I recommend the board consider what PaulJ6 suggests above. In Texas, the court that handles lawsuits for $10,000 and less is called a "Justice Court." Pursuant to Texas Government Code 27.031 (d), A corporation does not have to use an attorney to file suit in a Texas Justice Court. See https://statutes.capitol.texas.gov/Docs/GV/htm/GV.27.htm#27.031

Laska,
I can see both sides here. She is dishonest and honest at the same time. By producing some of the receipts she seemed to try to do the right thing. She could have and should have probably just told the Board they were in her car or were damaged by the Hurricane. No one would have challenged her because it probably happened to thousands of people down South.

As others have mentioned I doubt you will want to go through all the hassle of chasing the $700.00 legally. The Police have lots of worse things to worry about in the Houston area than this crime. I also doubt she will be given much Cash responsibilities with this current board. If you have 5 board members someone else should be nominated for the treasurer position and she would be a member at large. She probably will never earn your total trust again and that is OK. I have been on boards with people I really did not trust and while not great is not the end of the world.

You can't control everything and everyone. You can only control YOUR decisions. Most post on here has been about how this person or that person does this or that. Well what can be said about your actions? Would someone viewing (like we are) from the outside take your actions as "resident complainer" or "action taker"?

Well said.

George,, let me be clear. I'm not saying that Im not annoying.. I'm saying that I haven't done anything wrong. I have gone out of my way to try and make sure the board establishes an above reproach way of doing things. I complained at nauseum about the previous boards lack of transparency, complete disregard of the bylaws. complete disregard for the requirements to sign huge contracts etc.

So now.. I'm on the board, and when I see a board member start to skirt the rules or try and avoid transparency , even if it's not malicious per say. it's still setting a bad precedent. That is the gist of the issues that go on right now. The president , in an effort to prevent me in particular from contributing to the hoa projects, doesn't respond to questions from me. The real issue here , the president has basically put his reputation on the line in trying to discredit , or minimize my contribution,I believe he was honestly mislead by the property manager and continues to be mislead. but he doesn't want to accept that he was lied to and he bit , hook line and sinker. Now, the truth is coming out. finally, after months and months of me trying to get the absentee board members to listen. Finally, the lies, and lack of competence of the property manager are affecting absentee owners tenants. So now, the president is scrambling. For months he was able to minimize my complaints by basically labeling me as a complainer. Now, it turns out, I was complaining, but the issues were real and important and should not have been minimized.

anyway,, regarding the potential board member.. I like your breakdown..

I think in this case. I don't know what was done with the money. There was a lot of chaos and nothing was going on like it was supposed to. The items in question on the receipts were not line items.. they were receipts that had all items that were for the interior of her rebuild... a couple of hundred dollars. However, if i give her the benefit of the doubt. it's possible she just confused receipts. I don't believe she was just out to spend the money on herself. I think that after months of no real structure , or communication with that board. She may have just mingled the remaining funds with her own.

Obviously, we won't we giving her any oversight of funds.. and I think we need to implement a repayment schedule.

thank you all of you for your advice.

Another huge problem with the way the board operates.. despite a fiduciary duty to be objective and not bring personal feeling into decisions.. the president has repeatedly twisted the facts in an effort to create a narrative that I was the problem and not the property manager. The truth has come out. Finally. after a year of dealing with this idiot property manager.. Now we just have to find a replacement.

In Texas for small claims, a corporation is not required to use an attorney.

Good point. I didn’t know that. Thanks. Then the HOA can do it itself.

george,

the problem is,, she has put her name in the pool for the upcoming elections.. there are 5 seasts up for election and 5 people running.

based on what has happened in past elections..our bylaws state that if a quorum of owners is not met at the annual meeting.. the annual election will be ajourned until the next regularly scheduled board meeting at which time however many owners show up,. that counts as a quourum..

thus,, it seems to me she is going to be elected by acclimation.. even if The current board does bring up the issue of the missing funds. It won't change the outcome. she still gets to be on the board.

I was hoping that this missing funds and the current board definitely has proof ..we did an audit, met with her, she does not have the receipts that add up to the ammount of money she was given to use as petty cash,

If I bring it up its just going to start a hate fest.. I was looking for some legal way to prevent her from being eligible for occupying a board seat given the mishandling, lack of manangement of fuinds when she last was on the board.

From what i've gathered. there really is no way to keep her from taking one of the seats up for election .

quick follow up. the election is next week.. I anticipate we won't make quorum. does this mean that the election is put off til the following months meeting as stated in the bylaws. or does the fact that the number of people running for as seat equals the number of seats available make the adjournment unnecessary. as the same thing is going to happen the following month.. I think they may try and negate the need for the adjournment, however. I may push the issue and at least she won't be on the board for another month.
I've already inquired if we can have additional candidates submit their bio between after the annual meeting is ajourned but before the next meeting.. I was told no. Apparently our bylaws don't specify that write in or from the floor nominations are allowed. I know our bylaws don't prohibit it. But i'm not sure in texas if the corproate code allows for nominations from the floor without having submitted a bio.

Yeah - another potential confused point?

Reconvene an Annual Meeting at the next Board meeting? Huh?

and here is the exact wording regarding when a quorum of owners is not met..

4. Quorum. Except as otherwise provided in these By-Laws,
the presence in person or by proxy of fifty-one percent (51i) in :interest of the owners shall constitute ,a quorum. In the event a ::;.1c•rum is not present, then the meeting called shall be adjourned, and notice of a new meeting:-!g for the same purposes within two (2) to four (4) weeks shall 'Le sent by mail, at which meeting the number of owners represented in person or by proxy shall be sufficient to constitute a quorum. An affirmative vote of a
majority of the owners present, either in person or by proxy,
required to transact the business of the meeting.

In Texas? You can not disqualify a member, in Texas, from voting no matter how the CCRs or Bylaws read. If they are a member they can vote and be on the Board. The only thing that will disqualify a member from being on the Board in Texas is a felony conviction or crime of moral turpitude conviction in the last 20 years - and that is only if it is documented to the Board.

forgot Board part: Sec. 209.00591. BOARD MEMBERSHIP. (a) Except as provided by this section, a provision in a dedicatory instrument that restricts a property owner's right to run for a position on the board of the property owners' association is void.

oops...look like that statute doesn't actually apply to condos.
Sec. 209.003. APPLICABILITY OF CHAPTER.

(d) This chapter does not apply to a condominium as defined by Section 81.002 or 82.003.