UNAUTHORIZED CONTRACT

Started by LaskaS • 32 replies • 797 views

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LaskaS (Texas)
Posts: 1,025

Posted:

Hello,
The president of the condominium association entered a signed a16,000 contract before the board reviewed it. The board was very clear, we would allow the president to whittle down the 3 bids and select one. The board stated, in the minutes, we give Mr. x authority to pick the vendor. provided that the board reviews and approves any contract before signing. The president entered into the contract . Once it was discovered, he backtracked and canceled the contract. This was several months ago. Lo and behold. I was helping the treasurer track down some unknown payments. We found out the president put a 2000 deposit down with the contractor!. and never told the board, and never got it back. His response when confronted was, " do you think you can sign an contract and not put a down payment down?"
This was a total deflection. He wasn't supposed to sign the contract in the first place. He acted outside of his legal authority. When he realized the board agreed with me. He canceled the contract. But never told us he gave the guy a 2000 deposit.

The contractor of course stopped answering phone calls. The president insists we can get the contractor to do 2000 worth of other work..Um this is besides the point.. the 2000 should have never been paid. it was never authorized.

What is the proper way to get this information recorded in the minutes of a meeting.?

I know the board won't remove him from president. Even though this is the 2nd serious issue regarding money.

I would like to make sure that a the information is documented somewhere in the official records. Does anyone know what arguement I can make to have it added to the hoa records...

What I really think is the right thing to do is have the MC charge his account for the 2000 he put down as a deposit on a contract that was not approved by the board. Does anyone have any suggestions ? Certainly there must be some repercussion for this? Outside of owners calling a special meeting. . I guess i'm asking , how to I present this issue to the board. Everyone knows what happened.. He didn't personally gain from this. However, he did use hoa funds without authorization.

PaulJ6
Posts: 990

Posted:

Bring up the topic at a meeting and insist on a discussion. If the topic doesn’t appear in the minutes, vote against approving the minutes and ensure that your vote is in the minutes of the meeting where the minutes were voted on. If that doesn’t work then you have a third-rate board and then I would let all owners know.

You can do a “derivative suit” in small claims court: you sue the president on behalf of the HOA and the court could make him pay $2,000 to the HOA.

SheliaH (Indiana)
Posts: 6,964

Posted:

You present this to the board by relating exactly what you told us here, but add the date of the board meeting when the original decision was made. Make the president explain this and if he can't or refuses to, someone should make a motion to remove him from the position - and delay the $2k. If he refuses to pay, turn this over to the association attorney. You might also urge the board to call a special homeowners meeting to discuss this and call for a vote to recall him.

You probably know what I'm about to say next, but just in case - who the hell thought THIS was a good idea to begin with??? ALL OF YOU are responsible for this mess. Apparently no one else wanted to do what board members are supposed to do - review all the bids and discuss the pros and cons of each and THEN vote for the one you think is best. So stop being oh so dismayed over what the president did.

If the rest of the board doesn't want to do the work required of them, they need to rethink why they took the position. Maybe the president isn't the only one who should be censured.

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

MarkW18
Posts: 1,290

Posted:

Laska

How large is your condo complex?

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By LaskaS on 04/18/2020 1:35 AM
The board was very clear, we would allow the president to whittle down the 3 bids and select one. The board stated, in the minutes, we give Mr. x authority to pick the vendor.

Your HOA board authorized the HOA president to obtain three bids and pick one. I see. LaskaS, I realize the HOA board compartment of your life is pretty much some kind of nightmare. But if the board explicitly chooses not to review bids made on a project, I am not sure I see the point of having multiple bids. In other words, I think the board made a bad decision here. Worse, I am not sure a board can lawfully designate a single individual to act for it in a matter like this and then claim it had no responsibility for any mistakes made. It seems close to a breach of the board's fiduciary duty.

Quote:

Posted By LaskaS on 04/18/2020 1:35 AM
[HOA President, without board authorization and in cahoots with the manager paid a $2000 down payment to a contractor. Then the President cancelled the contract. The contractor is not responding to communications.]

What is the proper way to get this information recorded in the minutes of a meeting?

I know the board won't remove him from president. Even though this is the 2nd serious issue regarding money.

I would like to make sure that a the information is documented somewhere in the official records. Does anyone know what arguement I can make to have it added to the hoa records

First, this information is in the financial records. It should be properly notated, in accounting jargon, for the mess-up it so far appears to be.

Second, if you can get this in the minutes, include a comment about how (1) the board authorized the president to obtain the bids and pick one; and (2) the board explicitly said it would not review the bids (period).

Does whoever writes the agenda for board meetings except requests for agenda items? If so, ask that discussion of what happened in the bidding for xyz project and prepare a motion to alter the authorization your board has given the president.

But if the board is not going to remove the president, then I think the better path to pursue is a demand letter to get the contractor to complete the $2000 of work.

LaskaS (Texas)
Posts: 1,025

Posted:

Sheila,

It is like pulling teeth to get anything done. Finally we had several bids. That were within our range, The board chose 3 of those and then agreed to let the president follow up and make sure they were all working off the same scope of work when they bid.. based on that and his opinion after talked to all three ,we deferred to his discretion to choose one and bring the contract back to us to review.

It is not my fault at all. I'm the one who found out "accidentally" that he had signed the contract!.

Immediately I emailed the board and copied the previous minutes that had said, he could choose the vendor(out of the final 3) contingent upon the board reviewing the contract first.

The president first tried to deflect and accuse me of always having to interfere. Always having to be involved in everything. But several board members also agreed that no contract is valid if it wasn't approved by the board. So by the next meeting. I brought it up again. His response was the contract was canceled and then stated "i'm out, i'm not going to be involved with the door painting contract"

But, he never told us there was a deposit that he paid.!

when we found this out, I brought it up. (this was over zoom though,,the first covid meeting) his response was to inform the board that he had asked for the deposit back but that the contractor is not wealthy, and has lost a lot of work, so the president wanted to work something out. When i protested, and stated that the contract was never approved by the board, and sure and hell no deposit. He tried to deflect again on me .

Here's the reality. For whatever reason. Noone is going to remove the president. He always has an excuse, and a semi plausible explanation. However, any critical thinker could easily see that he was not addressing the issue. I guess I don't have many other critical thinkers on the board.

When the president said he was trying to work something out and maybe get some other work done worth 2000 by this contractor. The board thought that was a good idea. That deflected the real issue..the president acted outside of his authority by signing the contract and paying the down payment in the first place!..

I want to present that the president should pay back the hoa. If the president wants to get some work done on his personal home or whatever, that's fine. If the board wants to hire the contractor to perform 2000 worth of work so that we are made whole. it may or may not be fine..

LaskaS (Texas)
Posts: 1,025

Posted:

Mark our complex is 252 units.

in texas.

MarkW18
Posts: 1,290

Posted:

Quote:

Posted By LaskaS on 04/18/2020 11:52 AM
Mark our complex is 252 units.

in texas.

Based on the community's website, it states the president is on top of things in every aspect related to our community. He frequently walks the property, keeps an eye on the Office Manager, meets with contractors, reviews and verifies contractors, instructs the Office Manager on how to check the contractors work performance. He is going above and beyond his job requirements.

It appears, based on the statement above, that things are different than what you stated. But, until you have majority control of the Board, you won't ever effect change in your wrong, if, in fact it is being run they way you describe.

IMO, your management company needs to step into the 21st century.

LaskaS (Texas)
Posts: 1,025

Posted:

Paul. thanks for that info. that's a viable solution.. However. that puts teh burden on me.. I already spend too much time and energy trying to get some kind of internal controls in place for the hoa operations.

I absolutely could win the derivative suit. However.. it's not the money so much,, as He needs to be removed from the presidents position.

Initially the president said he had tried to get the money back, He also indicated the current property manager was going to get a payment soon. as an alternative the president suggested.that it would be hard to get the money back..so we should trade for 2000 worth of work.

After the meeting.., the property manager has repeatedly tried to get in touch with the contractor . he didn't come and make a partial re payment to the hoa ,as the president said he would. I asked the property manager this week. and she said she had finally gotten in touch with him and he and his wife were going to come up and meet with her tomorrow.

I rolled my eyes and said, Elizabeth, come on, he's not going to show up. Elizabeth was so sure he would show up. two days go by. I ask what the status was. She told me he didn't show up and then She got mad and told me I'm micromanaging.

Every time I ask follow up on things that are supposed to have already taken place. It turns out ,, the thing hasn't been done yet. The ball has been dropped. It drives me crazy. I do get mad. Then the person shuts down and gets defensive and lo and behold. I'm blamed for asking too many questions..

The point is, I did tell the property manager what to do. the board gave instructions. I simple followed up after the time period in which it was supposed to happen. Then i get in trouble.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By PaulJ6 on 04/18/2020 3:33 AM
You can do a “derivative suit” in small claims court: you sue the president on behalf of the HOA and the court could make him pay $2,000 to the HOA.

-- The Texas Business Code prohibits shareholders of nonprofit corporations from bringing derivative suits. See Chapters 21 and 22 of the Texas Business Code and https://cases.justia.com/texas/first-court-of-appeals/2015-01-14-00973-cv.pdf?ts=1447150836 and .

-- Shareholders of a for-profit corporation may file a derivative claim only in Texas district court (not small claims court).

-- Texas Business Code section 22.512 speaks of how a member may file a claim in Texas district court to remedy a "defective corporate act." See https://codes.findlaw.com/tx/business-organizations-code/bus-org-sect-22-512.html

LaskaS (Texas)
Posts: 1,025

Posted:

mark, our website doesn't say anything like that, I think you are on the wrong website.

LaskaS (Texas)
Posts: 1,025

Posted:

I know we can't give identifying specifics.. like a name of a property,, but what is the first letter of the name of the property web site you are looking at.??

LaskaS (Texas)
Posts: 1,025

Posted:

wait,, I just found what youare talking about,,that is the presidents writing back in march 2019. . that was soon after we took over from the seriously corrupt board that almost bankrupted us..

the point

MarkW18
Posts: 1,290

Posted:

That is what the homeowners see.

LaskaS (Texas)
Posts: 1,025

Posted:

did you notice that the supposedly the paint contract was in progress ,,back in march 2019.. IT STILL HASN"T BEEN DONE. the president hemmed and hawed about color choice. then didn't like the color choice the majority of the board chose. So, he basically didn't follow through with it. I continued to bring up the issue,, and finally in october of 2019.. the board , in an effort to get the work done. approved the president could choose from the three vendors that we had whittled the choices down to. But,, the president was required to present the contract to the board for review before it was entered.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

So, most voted to allow the Board prez to choose?

This still seems confused ...

LaskaS (Texas)
Posts: 1,025

Posted:

yes,,, by the way,, that is the website that one of our board members created on his own. He claimed he was doing it as a donation. When the first year anniversary came up,, he now wanted money. I protested.. the board member shut down the web site. and told us to go screw ourselves.. I was not going to be held hostage so

I then spent 6 days designing a website and hiring (with my own dime) a programmer online..

here's the website I created..

pinescondominiums.org

when mr. C found out i created a functional website. he was livid, like rumplestiltskin. He then re enabled his site.. it's just childish sh++

LaskaS (Texas)
Posts: 1,025

Posted:

george,, yes, we voted to let the president choose, because otherwise it would never get done.. However, we did review several bids and whittled the list down and the president was to choose amongst those and then confirm the scope of work was the same as what we needed. (don't get me started.. the former manager, didn't even write up a scope of work)

then, once the president confirmed that,, he was supposed to come back and present the scope and contract with his chosen contractor(from the 3) .. We knew that we needed to review the contract before it was signed...

However the president signed it on his own, and paid a down payment.. all unbeknownst to us.

MarkW18
Posts: 1,290

Posted:

Yes, I noticed the list of item donme and work in progress. Having a website means nothing if it ain't update. Under the blog, you show you have a HOA election update with a list of candidates but no results. On the calendar page, you supposedly had an election for three (7) seat open. The calendar shows January 19th, for the event on February 19th.

There is a proper process to approving contracts, which your community didn't follow. If you said the board had to review the contract, that should have been put into the minutes.

MarkW18
Posts: 1,290

Posted:

Quote:

Posted By LaskaS on 04/18/2020 12:32 PM
yes,,, by the way,, that is the website that one of our board members created on his own. He claimed he was doing it as a donation. When the first year anniversary came up,, he now wanted money. I protested.. the board member shut down the web site. and told us to go screw ourselves.. I was not going to be held hostage so

I then spent 6 days designing a website and hiring (with my own dime) a programmer online..

here's the website I created..

pinescondominiums.org

when mr. C found out i created a functional website. he was livid, like rumplestiltskin. He then re enabled his site.. it's just childish sh++

When going to that site, this appears, Your connection is not private

NOT GOOD

MarkW18
Posts: 1,290

Posted:

Quote:

My suggestion, get a REAL HOA site and have the onsite manager maintain it. Takes 30 minutes a month to maintain.

LaskaS (Texas)
Posts: 1,025

Posted:

yes,, well,, again,.

I only created it because i was not going to allow the previous board member to hold the hoa hostage.

The board had a right to decide whether to pay him or not. I protested, saying it was bait and switch, he clearly ,repeatedly stated he created the website as his contribution to the community.

he was fine managing the static website as long as he was on the board. When he got made and quit 8 months after the website was created. he then asked for money.. I called bs.

check now.. i think i corrected the ssl certificate.

I am not a web designer at all..

I actually hired a coder from freelancer to create the website from the pages I created.

LaskaS (Texas)
Posts: 1,025

Posted:

mark..

The proper process was in the minutes.!

Even though it was in the minutes, the president decided he would sign the contract and show us after the fact.

I found out about him signing the contract, and called a meeting... at the meeting,, he basically told us, he canceled the contract and he was now out of anything to do with it.. Putting us back at step 1.

only last month did i find out about the deposit he had put down. He never got it back.

and now he is putting the onus on the new property manager to try and contact the contractor. who has not returned calls and most likely is long gone.

I think the presidents should be charged 2000 back to he HOA.. he can figure out how to try and get the money he paid out as deposit, without authorization.

Can I insist on this be put in the minutes?

MarkW18
Posts: 1,290

Posted:

You can insist on having it put into the minutes, but that is a Board decision. If you don't have majority control of the Board, you're spinning your wheels.

I ran through some of your documents. You are missing exhibits from the Bylaws. You have seven board members and the Bylaws state 9. You're supposed to have an asst secretary, you don't. You're supposed to have a Vice President, you don't. Your governing docs are outdated and need to be revised. I believe you assessments are wrong.

But I am sure your management company told you that.

LaskaS (Texas)
Posts: 1,025

Posted:

we have a full time property manager,

the only thing we use a managing company for is accounting.

many of the points you viewed from online documents are outdated. noone has been properly updating the website...

thank you for the info. i didn't know the board had to vote to include something in the minutes. I'm a board member. ..

if a majority of the board has to approve dissent to be included in the minutes.. then no opinions of the members that do not agree with majority would ever be recorded..

That's why I believed there must be some statute or something that allows dissent to be recorded in the minutes.

thanks for all the info though..

we do have a vice president and assistant secretary.. it just wasn't updated to the website..
thanks for the heads up regarding the missing elements on the website.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Laska

Minutes are not your soapbox saying such as this is why I voted the way I did. One can ask for how each member voted (name only) to be put in the minutes when and if a vote is taken.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Laska,

It is good you are learning - now may be the time for you to slowly learn to work both personally, and politically, with your Board and community.

My sense is you may be pushing so hard, and so aggressively, you are creating antibodies - unnecessary antibodies - the ones that might agree with you, but can't abide the constant drama.

Regroup, figure out what worked and what didn't, build your coalition of those who agree on a path - note, I did not say "your" path ... pick a good spot to be in about three years and work as a collective group to get there.

KerryL1 (California)
Posts: 14,550

Posted:

Laska wrote: "we have a full time property manager,"

"the only thing we use a managing company for is accounting."

Are these two different people?

LaskaS (Texas)
Posts: 1,025

Posted:

kerry,

Yes, that is correct,

We have a management company that we use for just the accounting . They manage probably a hundred other properties.

we have a full time onsite property manager that is an employee of the Hoa. The board hires this person.

KerryL1 (California)
Posts: 14,550

Posted:

Is your HOA a certified property manager ( I always forget the Initials)?

KerryL1 (California)
Posts: 14,550

Posted:

Is your HOA a certified property manager ( I always forget the Initials)?

LaskaS (Texas)
Posts: 1,025

Posted:

Quote:

Posted By GeorgeS21 on 04/19/2020 10:57 AM
Laska,

It is good you are learning - now may be the time for you to slowly learn to work both personally, and politically, with your Board and community.

My sense is you may be pushing so hard, and so aggressively, you are creating antibodies - unnecessary antibodies - the ones that might agree with you, but can't abide the constant drama.

Regroup, figure out what worked and what didn't, build your coalition of those who agree on a path - note, I did not say "your" path ... pick a good spot to be in about three years and work as a collective group to get there.

george , Bingo on the pushing so hard and so agressively. ...

I think i understand the analogy, but i'm trying to find the which antibody connotation you are using.. ..

there is a lot of drama. mostly caused by me. But. let me also say, 95% of the things I bring up, ultimately end up being correct.
Another board member said it best. "she's right 95% of the time, but the drama and fighting that we go through to come to the same conclusion is not worth it."
Basically, there is very little dissention. the board would rather yes ,yes, yes everything... I don't want to say yes unless I know what i'm voting on.

LaskaS (Texas)
Posts: 1,025

Posted:

kerry,

actually, there's an entire thread on this.. our last property manager claimed he was certified with two of the certifications. I discovered he actually falsified his credentials.

I only finally resorted to verifying the credentials after a year of not having anything done properly and with procedures .

once i started verifying the credentials,, i realized, many of the certifications are glorified online courses.. which anyone can take.. so I'm not sure that having the credentials in and of itself will guarantee a competent manager.

Then new property manager is not certified. but she is smart and knows a lot about operations and maintenance. However, I am realizing, she isn't good at being organized.

She has been here 6 weeks. A lot has gotten done . However, there is no work order system. which is a huge problem. The hoa accounting records are fine. the hoa maintenance records as well as the backup documentation is not. There was not a system in place. And she assured us she would create one. She hasn't.

I even spent the last week investigation software solutions. I found several, tested several. chose the easiest to use with the functions we needed and then set up a zoom meeting with the app account rep. and the property manager. She basically was pissed she had to sit through it. Although by the end, she did say, wow, this could be very helpful.

Guess what. 4 days go by, she hasn't set aside any time to have the 3 employees download the app to their phone..

a beautiful system without implementation is not a sysmtem,

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