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Examples of owners throwing out board decisions because meeting procedures weren't followed

Started by ChrisE815 replies • 509 views

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ChrisE8
Posts: 454
Posted:
Plenty of legal commentators say that if a decision was made at a board or owners' meeting, but the terms of the HOA's bylaws or other governing documents weren't followed, an owner can potentially have a judge throw out the decision, making the HOA have to start over and get the decision re-approved, or suffer other damages.

Has anyone ever seen that happen in practice?

For example, let's say that a board meeting at which a major decision was made wasn't held in accordance with the state's open-meeting law, or perhaps even not all directors got notice of the meeting in strict compliance with the bylaws. Perhaps directors got notice by email, while the bylaws required notice by US mail, and one director didn't get notice at all. Let's then say that an owner files a lawsuit against the HOA, claiming that the decision was invalid because the meeting wasn't valid because notice wasn't validly given and open-meeting rules weren't followed.

Has anyone ever seen a judge overturn a HOA decision in such a situation? I know it can happen, but has it happened in your HOA?

Thanks.
JohnC77 (California)
Posts: 562
Posted:
If this is New York, my understanding is there are no Open Meeting laws.
AugustinD
Posts: 5,144
Posted:
Quote:
Posted By ChrisE8 on 12/19/2020 10:46 AM
Plenty of legal commentators say that if a decision was made at a board or owners' meeting, but the terms of the HOA's bylaws or other governing documents weren't followed, an owner can potentially have a judge throw out the decision, making the HOA have to start over and get the decision re-approved, or suffer other damages.
I think every appeals court decision involving a HOA/condo and a HOA/condo owner is in this category.

-- Fences. Decision made in contradiction to the governing docs. Or decision made on the basis of vague and ambiguous wording in the covenants, meaning as a matter of law, the covenant is interpreted against the author (the HOA) and in favor of free enjoyment.

-- Mobile homes. Same.

-- Chickens. Same.

-- Board specifying requirements for proxies not in the Bylaws. Not allowed, say the courts.

-- I don't wanna pay my regular assessment, 'cause I am not getting what the Declaration says the Board is supposed to provide me. The courts' response: Wrong.

-- I want a flag that says, "BLM" (and this is not on Bureau of Land Management property). Board says nope, we can prohibit all flags. Courts say, yep, political flags in your state are allowed.

-- Short Term Rentals. Same.

-- And so on.
ChrisE8
Posts: 454
Posted:
Thanks. Correct, there are no open meeting laws for HOAs in NY (as open meeting laws would go against the grain of everything in NY real estate being a scam).

My question is perhaps more precise: if a HOA board or owner meeting isn't done in accordance with the HOA's governing documents or state law, then have you seen actions approved at the meeting thrown out?
JamesJ16
Posts: 40
Posted:
ChrisE8,

Do you have a specific scenario? As of course the answer to your very broad question will be yes, as a Judge can do anything. One HOA Attorney told me that you can request meetings decisions "be set aside" and proceed with your suit as if the meeting did not happen, or the specific decision.

But, you could go to court have the action thrown out, and before your case is over, the board will probably just find another way to get what they want going around whatever is in their way. Unless you are talking about clear black and white violations of a law, CCR. By-laws may be, procedure violations probably not in my opinion.
TimB4 (Tennessee)
Posts: 21,059
Posted:
It's typically easier, less expensive and quicker to gather support and recall or simply not re-elect the individuals to the board at the next annual meeting.

Taking the issue to court can take years.
ChrisE8
Posts: 454
Posted:
Thanks. In this case, I want to avoid having board decisions thrown out.

The bylaws are standard (for the time when they are written): board meetings are called via US mail (or telex or telegram), and board decisions are made by vote at a meeting or by written consent.

However, the board in this HOA has met for years without keeping board minutes and without signing any written consents and by calling board meetings by texting some but not all directors. Even if the board changes and starts keeping minutes, calling meetings by US mail or by telex or telegram certainly just isn't going to happen.

I know that if the board doesn't meet at a meeting called in accordance with the bylaws, if an owner files a lawsuit to overturn a board decision, a judge could overturn it on the basis that the meeting wasn't validly held. But have you seen that happen in your HOA? That seems like a draconian outcome.

AugustinD
Posts: 5,144
Posted:
Quote:
Posted By ChrisE8 on 12/20/2020 9:13 AM
the board in this HOA has met for years without keeping board minutes and without signing any written consents and by calling board meetings by texting some but not all directors.
For the archives: I think the biggest problem is that there has been a 'course of conduct' by the Board for years and no Owner/member/shareholder/director complained. As you may be aware, such circumstances can and have led courts to rule that the course of conduct is lawful (at least for the many past years where the course of conduct was observed), and that the Bylaws saying the opposite of what the course of conduct has been are null and void, at least to the extent that someone files suit complaining about past practices.
ChrisE8
Posts: 454
Posted:
Very helpful- thanks! People are certainly griping now, so going forward this might be an issue.

I appreciate the feedback.
JamesJ16
Posts: 40
Posted:
Minutes need to be kept, regardless of bad past practices, I would imagine in New York there are laws that would apply to Non-profit corporations keeping minutes and the access to such minutes by the members. I would check on that. Then on the Articles of incorporation with the state as to the BOD's responsibilities, etc.

If the State law indicates members or shareholders have a right to the minutes of the corporation, then a reasonable person would expect that the BOD/secretary keep such minutes.

Also, I believe the board is to make "reasonable" decisions in the interest of the Corporation, minutes are in the interest of the Corporation. If you are not keeping minutes as they are lazy or it is just too much work, then whoever has this theory or opinion needs to go. Minutes protect the corporation and its members.

That seems like a draconian outcome?

Draco (/ˈdreɪkoʊ/; Greek: Δράκων, Drakōn; fl. c. 7th century BC), also called Drako or Drakon, was the first recorded legislator of Athens in Ancient Greece. He replaced the prevailing system of oral law and blood feud by a written code to be enforced only by a court of law.

I disagree that overturning the boards' decision would be draconian, by the definition above, your BOD, seems to be conducting itself orally and not documenting anything, It appears Draco did not like a system such as your BOD's past practices and made a written code to be enforced by law.

To overturn anything your board has done, I think would be easy for any attorney as it sounds as if there are no records. The Plaintiff would have the burden of proof initially, which this burden would easily be shifted to the defendant (BOD), once the burden of proof is shifted to the Board, what proof do they have with no minutes? And not following the by-laws. Ruling in favor of the plaintiff, on a summary judgment, as the defendant neglected to keep standard and proper documentation, which would have served as evidence in this case for both parties.
GenoS (Florida)
Posts: 4,276
Posted:
We'll be encountering such a problem next month. It's relatively minor and no one will be spending money on attorneys, so it will just be allowed to happen. The Annual Meeting is scheduled in the first half of January. The board distributed an Annual Meeting Packet to the homeowners. There's nothing on the Agenda except for the approval of the January 2020 minutes and the election of directors. They did not send out the actual minutes of the last Annual Meeting for review, as has happened for the last umpteen years. Not that there's anything of any real consequence in them.

There will be nothing on the agenda in January requiring a homeowner vote (we don't even need an election with 4 vacant board seats and only 4 candidates) so the proxies will be used only to establish a quorum.

The problem is the blank proxy form they distributed in the packet is not valid according to Florida law. To be valid, according to FS 720.306(8)(a), a proxy must:

be dated
state the date, time, and place of the meeting
be signed by the person giving the proxy

The blank proxy form sent out (created by a retired legal secretary) does not state the place of the meeting.

Several current board members have been made aware of this problem and they are determined not to fix it since it would cost almost $50 to mail out new proxies (the horror!) So last year's Annual Meeting minutes will be "approved" by a non-existant quorum and the minutes from this year's meeting will reflect that there was a quorum.

None of this is earth-shattering. The troubling question, though, is this: If they're so clueless that they can't even get the little things right, why should they be trusted to do anything more complicated? I guess we have to take solace that 4/5 of the current board won't be around next year.
ChrisE8
Posts: 454
Posted:
Thanks. One HOA where I owned a property had a similar glitch in its meeting notice- I believe the wrong year was listed. The HOA lawyer said that a court wouldn't care (that was always his excuse whenever anyone pointed out mistakes in his work) and the board didn't do anything about it. I think that having the HOA get the owners who attend the meeting affirmatively waive notice of the meeting would help "fix" the defective notice, but that doesn't totally fix the situation.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Chris

Based on your posts about procedures not being followed, I would need to see/prove:

1. How notice of a BOD Meeting is given to the BOD Members? You claim US Mail must be used. I would need to see that.

2. You claim one BOD Member did not receive notice. I would need proof of that.

3. Above #2 aside, if the BOD achieved Quorum then they can conduct business.

ChrisE8
Posts: 454
Posted:
Thanks JohnC46!
TimB4 (Tennessee)
Posts: 21,059
Posted:
I've never heard of a board being tossed out (recalled or not reelected) for failure to follow procedure.

I've heard of them being tossed out for:

cutting down trees
Not having the roads plowed
adopting a special assessment
increasing assessments
being over zealous in enforcement.

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