HOA never elected a board

A property management company has been collecting HOA fees for us and spending them on various expenses without a contract to manage the HOA. This has been going on for at least 10 years and I’ve finally had enough and am in the process of holding our first meeting to start elections of a board. Most of the property owners for the HOA are investors as we mostly rent out the properties. The property manager has refused to be be transparent about financial records and repeatedly says he doesn’t have to hold board meetings because no one is interested. He collects $1500 a year in management fees from our dues again without a contract to do so. This is about $15,000 collected over the last ten years. I have one person interested in turning things around but she is not a property owner. Her dad owns several properties and she helps him manage the LLC he owns the property under. Who can serve on a board? I am looking at discussing with a lawyer about how to proceed. How would you guys respond to this individual with the property management company?

Hi Jennifer,

Your first step should be to find the Articles of Incorporation, Bylaws and Covenants for your HOA. If the management company doesn't provide those to you, you should be able to have them pulled at your county courthouse in what ever office keeps records of deeds.

The Bylaws should outline who was on the original Board of Directors and the process for electing new Board members. It should also outline the declarant control period, which you still could possibly be under and if that's the case you can't elect a new Board until that period has passed.

I do not believe it is likely worth pursuing damages against the property management company but am hoping to remove them from the equation. I do have a copy of the covenants but have not identified the period of declarant control. I thought I had seen some where before it was 10 years which would have been up in 2015. This individual is not enforcing any regulations or restrictions or following the standards of meetings without a board. Is there something beyond declarant control that would prohibit us from electing a board? I have had 23% of the owners respond to my request for a meeting so far expressing they have been concerned as well but no one ever did anything and accepted this is it was. My concern has been this person does not seem to have any legal authority over the HOA anymore unless the state of Kansas would side with continuing under declarant control.

Right - there is much to be researched and KNOWN prior to action.

Jennifer,

Are you researching your governing docs?

The documents I have from the declaration are not very specific for relinquishing control to the owners. It states for the design committee the declarant would no longer have control after they no longer own property which had occurred. There are no additional documents filed with the county or state. I have also requested the contract from the property manager regarding their continued interest in collecting fees and they state they have no contract from the original declaration or otherwise. I am hoping an attorney can clear some of this up for our best way forward.

My husband has refused to pay him for 4 years now but I would like to see things actually run in a way that protects our investment of the property as the majority are rented out and we want the area to remain well maintained. I’ve told him to suck it up that it’s time we do something about it now that we are back in the state.

Jenn
It is not uncommon for the Declarant to be in control until the last unit is sold. There have been some cases where the Declarant kept a unit and claimed that not all units have been sold thus they stayed in control.

It is also possible the contract with the MC said automatically renewed every year unless either party cancels it and the MC has kept going as no one has cancelled it.

You say you have a lawyer looking at the issue. Keep us informed.

Jennifer

I am not familiar with the applicable codes and laws in Kansas regarding property owner associations so I cannot cite section x, y, or z and suggest you draft a letter or whatever asking for what you wish to know.

Your posts hint you are suspicious, rightfully so, as to where the money is going. You have not stated how much is at stake here. You do not seem to be the recipient of a great deal of openness and cooperation from the management company. That, to me, is suspicious in and of itself--a red flag which you should be aware of.

In many states, as an owner, you have the right to ask to review the books and records of the association. Most likely there is a process you must follow, generally it amounts to making the request in writing, perhaps providing some specificity such as listing the records you wish to review. The bank account statements and general ledger would be a good start. Be prepared to review the records on the premises of the management company or at some other mutually agreeable location. You may or may not be allowed to make, or request, copies or take pictures with your cell phone.

Look for language in the association documents which speaks to the owners right to review association records. Your state may describe the process to be followed to make the request, or perhaps there is someone in this group from Kansas who is familiar with the process. There are several in the group who have subject matter expertise in many areas, perhaps one of them will chime in.

Thanks. The HOA is collecting $20,400 annually with $14,074 known expenses that I’ve been provided contracts for that cover trash and lawn care. I have requested the accounting documentation referencing statutes. Mostly curiously how we will proceed legally to obtain control of the HOA from this individual. I took it upon myself to contact owners and schedule a meeting to discuss my concerns and have some response I’m not alone. In requesting owner information he isn’t even billing 4 of the 34 addresses and simply ask which addresses are missing when asking about it.