Can HOA President suspend a vendor?

Assuming this was not an emergency: That the Bylaws and state statutes give the President/CEO the lawful power to make such decisions is unlikely. For example, from the Ohio Nonprofit Corporation Act:

Except where the law, the articles, or the regulations require that action be otherwise authorized or taken, all of the authority of a corporation shall be exercised by or under the direction of its directors.

If there is nothing in writing what is he actually suspending? It sounds like he told this person that no future work will be given to them until he speaks with the rest of the Board. I don't see this as a big problem since he is bringing the issue back to the full Board.

What contract? He said nothings in writing. Also how is he doing an end run when he has stated that he wants to bring the issue back to the Board to decide how to proceed?

You're right. Nothing was in writing. Some sort of agreement was in place. (Though to be a total jerk here: Contracts do not have to be written down to be enforceable.) I'd say that if the Board approved this agreement, then the President/CEO does not have the lawful right to suspend the work (assuming this was not an emergency). Just my opinion.

Perhaps the bigger question should be: Is the Board angry with the President/CEO?

Agree that the board decides especially if the board is the one who "hired" this person. The Ohio Nonprofit statute makes this very clear. CA's nonprofit code is similar.

Also agree there are some boards who don't want to act AS A BOARD, but let the prez make all or too many decisions. Very weak conduct AND the board as a whole would still be liable for mistakes the prez might make.

There also are presidents who are bullies and intimidate the rest of the Board into letting them be dictators.

Without much more information provided by Thomas some of these comments are really jumping to conclusions. People seem to be glossing over the part that says the Prez will, "....bring the situation to the Board to decide how to proceed?"
As written this does not indicate any sign that the president is trying to pull a fast one. In addition he could have had a variety of reasons to legitimately stop the owner/'vendor' temporarily until the Board could meet. For example:

1.) He found the owner/'vendor' was doing work while drinking.
2.) He found out the owner/'vendor' didn't have the required insurance coverage that vendors are required to have.
3.) He was reviewing invoices and discovered that the owner/'vendor' was silently jacking up prices despite their verbal agreement on what the price should be. (If this happened they got what they deserved.)

I could go on but I won't. If any of the scenarios above are close to what happened he did the right thing by pausing the work and scheduling a meeting with the Board, "...to decide how to proceed."

IMHO we aren't even talking about the more important problem which is using an owner as a vendor without a contract.

Thomas, if there is justification (which you will or have heard) for the temporary service halt pending full and immediate board review, then it could be wise business. As you describe, the board will get final review add the community should not experience any undue inconvenience in losing the service momentarily as a result.

The idea that the CEO of any business has the responsibility to ensure that the business' money and property is properly cared for, and that it is not subject to unauthorized modifications or expenditures, but lacks the authority to act when he discovers this going on is absurd. No CEO, at least one worth hiring, would ever remotely accept such a mismatch between responsibility and authority.

The Board is a conceptual entity, but it lacks the agency required to properly protect the Association when rogue behavior occurs.

The person in question in this particular situation gave himself the title of Property Manager back when the Association was first started and no one knew anything about how things were supposed be properly run. Although the By-Laws require a written contract between the Association and any agent the Board hires to exercise its duties, and state that the length of such a contract may not be for more than one year, no such contract exists, or has ever existed.

Part of the problem is that he used to hold the title of Board President, but never held a Board meeting, instead making all decisions himself. Last fall, after a great deal of animosity here that predates me but I've heard plenty about, a large majority of the Owners made it clear he would not be re-elected. Rather than face defeat, he withdrew his name and a new Owner was elected and given the position of President. This person was completely cut out of everything and completely ignored by the other two Board members, and the 'PM" continued to run things behind the scenes using the void created by the inaction of the Board. Upon my becoming President, I made it clear to everyone involved that I would never tolerate such a situation, upon which I was given access to the Board's online documents, and began to discover what has actually been going on here, which I had been lied to about previously by this 'PM' as to the extent of his compensation.

Moreover, the Board only had its first meeting last month; prior to this, there had occasionally (maybe two or three times each year) been meetings of all members in the Association to discuss one or two major expenditure questions that even this person wasn't so bold as to spend on his own. Everything else has been whatever this person has decided on his own, and since he hired a friend to be the Association's bookkeeper, he simply gives her the invoices, including monthly ones for himself, and has her write checks for whatever he's decided to spend.

Many of the Owners in the 20-unit building have described their experience here as tenants living his this person's building. They have no idea where their money has been going, and don't know that, for instance, last year he personally took out $6300 from the Association's monies, all on his own say-so. And that doesn't include what he spent on materials, which he has a penchant for buying expensive items, as he's a semi-retired doctor looking to fill his time by making up work around here and then charging the Association for it.

Now that we have a semi-functioning Board, he's been told repeatedly that he needs to get Board approval before doing anything other than incidental repair or emergency work, and the latter requires informing at least one Board member immediately. At the last Board meeting, a resolution explicitly stating this was passed unanimously (3 members). Since then, one Board member resigned. The other Board member is extremely passive, but is also, like the pseudo-PM in question, one of the first of a small group of people who bought into the building and lives across the hall from him. It's unclear what the exact nature of their relationship is, but it is clear this other Board member lacks any sense of what the responsibilities actually are of the Board, and he's been very reluctant to engage. It was a major accomplishment to actually have a Board meeting and conduct business.

In addition, 6 weeks ago, after an incident where the 'PM' decided he was going to have a large hanging light installed in a common area and I told him he needed to get the Board's approval first, he first threw a temper tantrum, but then sent a text the next morning assuring me no work would be done going forward without Board approval.

Since then, it's been a steady stream of ignoring this and finding out later about what he's been up to, representing himself to Association vendors as having the authority to schedule work and spend Association money. Even after I spoke with the VP of one of them to make it clear he was no longer on the Board and had no authority to schedule work, he attempted to go around my back with the President and do it anyway. Fortunately, the VP stepped in and told him no, and copied me on the email.

This person has very serious control issues, and refuses to accept that this is not his building and its not his money to spend. He also attempted to act like a member of the Board at the first Board meeting last month. The latest issue to arise is that I received an invoice from a locksmith in the Association's mail box which I discovered was the result of him, a week after our Board meeting where the resolution above was passed and where also the issue of needing to develop a policy of who should have what keys, having a new, expensive, heavy duty deadbolt lock placed on the cabinet where the spare keys are located. He, of course, has the only key. This was the result, I believe, of my getting a key to the utility closet this cabinet is in from the Developer, so he no longer was the only person with the key to that space.

He also has placed a padlock on a storage room in our basement we had been considering designating as the place to store Association items without telling anyone, and which I just discovered. I have no idea what he's put inside of it.

Doing nothing until the entity called The Board makes a decision, which may well take months, is unconscionable. The idea that the CEO is some sort of eunuch who may only act when explicitly authorized to on behalf of the Association in every case and circumstance flies in the face of all business management as well as the educational materials from the CAI.

The question here is not whether the CEO of the business may act, but to what extent. Facile arguments that attempt to select one or two sentences from the ORC, as if that's the only factor at play here, is just that, facile. Every business has a CEO because, ultimately, the buck needs to stop with someone, and the CEO who attempts to shirk his responsibility to protect the business he leads should either resign or be fired.

The issue at hand here is stopping someone who lacks any contract with the Association and who is not on the Board, but lives in the building, from continuing to spend the Association's money and making changes to the property, especially in terms of usurping control of space and keys that are properly controlled by the Board.

I expect that CAI educational materials say that the President/CEO must act with board approval with the possible exception of emergencies.If the other directors are not responding to non-emergency requests to do xyz, then this changes the premise of the original query. AFAIC under such circumstances the President/CEO is understandably in "doing the best she/he can" mode. All manner of lawbreaking, large and small, may be occurring, but unless the owners are complaining, then so what?

Let's start with the By-Laws.

"3.03 President. The President shall be the chief executive officer of the Association. He
shall preside at all meetings of the Association and of the Board of Directors. Subject to
directions of the Board of Directors, the President shall have general executive supervision over
the business and affairs of the Association. He may execute all authorized deeds, contracts and
the obligations of the Association and shall have such other authority and shall perform such
other duties as may be determined by the Board of Directors or otherwise provided for in the
Declaration or in these By-Laws."

Two sentences here speak to the question at hand. First, "The President shall be the chief executive officer of the Association." As the first sentence, and without qualification, the question then becomes, what are the responsibilities and their attendant authority that a CEO has regarding the business, in its entirety, he leads? Can you imagine a business where one of the general (not managing) partners goes around spending the business' money however he feels like it and the CEO responding by saying, "My hands are tied until I can get the Board to approve some sort of specific response."? What utter nonsense. The response of the Board would be to fire the CEO for being an idiot.

Second, "Subject to directions of the Board of Directors, the President shall have general executive supervision over
the business and affairs of the Association." The main clause grants executive supervision powers to the President, but gives the Board the ability to direct them. The President starts with the full authority to conduct executive supervision, and this authority is only limited to whatever extent the Board decides to direct. Since the Board in question has not subjected the President to any direction, the "general executive supervision" authority over the Association is as full as it possibly can be. And what could be understood by "executive supervision" if that doesn't include the power to stop an entity from the unauthorized spending of the Association's money and/or changes to its property? Essentially, the By-Laws have already granted the power to suspend a vendor behaving this way, especially in the absence of any contract, and the President doesn't need to wait for Board approval to act. He has the fiduciary responsibility to act, and can only decline to act if the Board has directed him not to.

As a purely practical matter and in order to attempt to maintain a decent working relationship with the other Board member, I think it wise to attempt to connect with him and give him the opportunity to weigh in. But, given that every day brings yet more time the 'PM' is looking to fill by making up projects to do so he can spend our money on whatever he wants and bill us for his time, and almost everyday leading up to this has resulted in the discovery of unauthorized expenses, it would be irresponsible not to act simply because the other Board member refuses to engage.

I'll mention here that I already took one action earlier this week. After discovering an invoice for pre-payment of future work that was never discussed by the Board had already been paid because it came not to the Association, but directly to the personal mailbox of this 'PM', who 'approved' it and gave it directly to the bookkeeper to pay, I sent the bookkeeper clear instructions that no invoice that had not been approved by the Board was to be paid, and that this 'PM' had no authority to authorize any invoice and that I needed to know immediately if he attempted to represent otherwise.

I'll be contacting the Association's attorney tomorrow to make sure they'll back up my perspective and to explore further options available to put a stop to this. He's been given multiple opportunities to modify his behavior and co-operate with the reality that now exists. Instead, after initially saying he would, he's now acting out like a little kid. Enough.

Thomas

It seems you might have cut him off at his knees when you told the book keeper not to pay any invoice he submitted. A good first step. Notify him of this and get the BOD behind you.

Unfortunately, it's only effective as far as his own invoices are concerned, and for any where no work has yet been done. It's one thing to be able to go thru his and say, "we're not paying for this", but quite another to have 3rd parties involved where he's represented authority to them he doesn't have, and they've done work as a result and now want paid.

There's also the issue that he's locking up things that belong the Association (like all our spare keys), so even if we choose refuse to pay for the work and sour the vendor relationship, there's this issue as well. There's also the issue that he's affecting Association property, so even if he does it for free, it's not ok.

So, now, Thomas, you're a board of two. I'm trying to think of things you might be able to do to get this man our of your HOA's affairs to which he seems to have to no legal right. I don't see why he has any legal right to be the only person to have access the common areas. He could, in fact, be trespassing. I don't know the legalities about any of this.

This are very rough ideas.

How about sending an email to the remaining director that says something like: "Unless I hear objections from you by mm/sdd/2022, xxlm, , I'm going to have a locksmith change all of the locks in the common areas. Per our Bylaws and Ohio codes [look them up, Thomas & cite them], board members are permitted access to all common areas." Then....do it. If you fear the other director, Mr. Milquetoast, would give new keys to the "PM," do not give keys to Mr. Milc.

Inform your vendors in writing that as of such & such date, they must contact you or the bookkeeper if appropriate for all instructions and questions. As prez of this assn., the PM no longer is to be contacted for any reason.

Btw, Thomas, he e doesn't sound like a property mgr., but like a handy man.

I do not agree that "the Board." The Board must comprise real humans who are elected or appointed. they are acting agents in their social processes just as is the president.

My understanding is that in very small HOAs, the prez, indeed, often supervises vendors and makes certain decisions. Similarly, the treasurer may be very active in checking "the books." And a secretary actually writes meeting minutes and keeps track of the ownership records. Otherwise, as syndicated columnist, HOA attorney, K. Richardson insists: "the president is not el jefe." And, indeed, I think most bylaws, or perhaps only in larger HOAs, say that the Board may delegate many functions to committees or officers or a (real) pretty manager. Do note it's the board that does the delegating.

We actually did have a prez long ago who claimed, "I am the Board." (In my terrible French, a king insisted,something like, 'Le etat et moi."

Well, there's been some development. We may be back to a Board of three. The person who resigned did so by saying she was resigning as the Treasurer, and wrote, "My service in this role will terminate no later than 8 March 2022". This is just another example of people here not understanding how things work. They have always assumed the Owners elect Board members directly into officer positions. Yes, I know how it really works.

It's universally understood she meant leaving the Board. I sent a group email to everyone thanking her for her service on the Board, and received no reply that, no, she's still staying on the Board, she meant simply no longer being the Treasurer.

I was able to get the other Board member to respond to my request to talk, but by the time I saw his text, he "wasn't feeling well and wanted to wait until the next evening". He knew what the topic was. I replied that was fine, but that there was one important slice that I wanted to share with him now, and he requested we interact by texting. I then explained my perspective and that while I believe I had the authority to contact the Association's attorney to confirm this, and then proceed to suspend the 'PM' until the Board could meet its obligations under the By-Laws to have a written contract, I wanted to get his input before I did that.

Almost three hours went by before I received a response. The response I received was that he wants to hold a special board meeting tomorrow, including the person who resigned. I told him I didn't see what purpose that served, as the two of us needed to move forward with however this is dealt with and the third was gone on Tuesday.

During this back-and-forth, there were considerably long breaks. He is unwilling to meet, either one-on-one or with all three, informally. Or, at least he has not responded to me asking him that as I've agreed not to contact the attorney, will he not agree to meet informally?

I strongly suspect he first went to the 'PM' and the two of them hatched a plan, and then went to the person who resigned to get her to go along with it because if there's a Board meeting with just two people, both have to agree to move forward. If all that's desired is not to take any action, then the other Board member could accomplish this simply by saying no.

A Special Meeting requires a minimum two-day notice, but if all three people show up for it, then the notice provision (and the ability to object to improper notice) is waived *and any business may be conducted*. I may have been born at night, but it wasn't last night.

These three are part of the original group of 4-5 Owners, and liked the situation where the 'PM' ran the Association as if it were his own building and everyone else is his tenants, and the 'PM' was free to spend the Association's money however he pleased. His behavior has been such that most of the people in this building, but not quite 75% who will go on the official record in a vote to remove (they got close with the person who resigned last fall) can't stand him, not only as this power to himself, but simply as a fellow Owner they have to live around. That's changed with my arrival and joining the Board.

I'm not sure exactly what they have cooked up to try to get a Board meeting called to order under the conditions that anything may transpire, but I'm not going to agree to this, especially as there's no agenda and no notice (I've made transparency to the Association paramount), but they're smart enough to know they need both of them to do it. I think if I were them, I'd vote to remove me as President so no one's minding the henhouse and the 'PM' can get back to stuffing his pockets with the Association's money with no one to stop him. Then, the person moves forward resigning, and we're left with a Secretary and a Board member, but no Treasurer or President, and this Owner-'PM' with access to our money but no D&O insurance coverage. Yeah, that sounds about right for the way things have gone around here since the Association was started.

I'll also note, removing the other Board member by the 75% method isn't desirable, as it also requires immediately filling the position by election, and that would open the door for the 'PM' to return to the Board if no one else ran, and if he won't respect the law now, just imagine what he'd be like on the Board. I'm better off working with this one other person and giving that person every opportunity to fail to be honest about their behavior and then act on my own when "executive supervision" is called for and waiting until the Annual Meeting in late fall to worry about who fills the two seats up for election.

And the 'PM'? He's not a real Property Manager; that's just the title he gave himself so he could order other people around and make up work here to bill the Association for. He's an ophthalmologist who's winding down his practice, has plenty of time on his hands, and no friends or hobbies. So, he's made our Association his side hustle. He's done a number of things I know aren't correct from my previous time on the Board in another condo, like cutting limbs off trees that will now risk disease and death. But, no one ever stopped him before, and I'm finding it extremely difficult to stop him now.

If you're interested in a more authoritative update, let me know how to contact you privately. I can't find a way to send an email to your profile email address in this Forum.

It seems to me that all the signs are that you are in fact getting a response. You have directors who want a meeting, but you are resisting calling one, as follows:
Naturally a rogue president would say (inaccurately):


Two other observations:

-- In situations like the OP has described, a board majority speaks for the association. This keeps rogue presidents in check.

-- If you do not like what the other directors are doing, and the other directors remove you as president, then your recourse is the same as any director in the minority: Either ask the new president for a Board consult with the HOA attorney, with all directors present. Or hire your own attorney.

-- The director who wrote she is resigning as treasurer "no later than March 8, 2022" can rescind this at any time before March 8. Furthermore, despite your insistence that she is resigning as director, the evidence is just not there. And of course you prefer to assume she meant she is resigning as both director and treasurer without getting clarification. A non-response from the treasurer-director is not confirmation that she meant she is resigning from both positions.