Board Member Allegedly made Side Agreements

Started by JenniferD8 • 9 replies • 277 views

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JenniferD8 (Michigan)
Posts: 141

Posted:

I attended my HOA condo meeting last evening. There are a lot of issues plaguing our association, so there were approximately 30 residents in attendance. The meeting started and the board president stated that residents would have 30 minutes to ask questions. (The 30 minutes included the board's response to each question.) Also, each resident could only speak for 3 minutes.

Promptly 30 minutes later, the board president said they were going to conduct the rest of the meeting in closed session and demanded everyone to leave. Their reason was that the meetings were getting out of hand with residents being in attendance and the board didn't want to be bothered. (I live in the State of Michigan.)

During the 30 minute resident session, a question was asked about cable TV fees that weren't collected from 7 residents for the past five years. This amount totals @ $18,000. The board stated that an ex-treasurer allegedly made side agreements with these residents and waived their cable tv fees. I asked if there was a written agreement in place with these residents and the answer was no. The board then stated they were doing nothing to rectify the situation -- i.e. not pursuing to have the 7 residents pay and not pursuing any action against the ex treasurer.

The association is also missing @ $24,000 in monthly dues from October 2021 to January 2022. The board states they are still looking into the situation when I asked about it last evening. FYI -- The ex treasurer resigned due to embezzlement from misusing the association's credit card. He allegedly paid back the association $7400 for the credit card misuse in exchange for the board not to press charges.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Having strict time limits in board meetings is reasonable. Board members have lives and other commitments, and they still had the executive session to follow. They needed to get on with it - meetings that are allowed to drag on are generally less effective than ones that adhere to a schedule. "They didn't want to be bothered with it" is your interpretation of what is going on, which may or may not be true

You may want to pursue legal action against the former treasurer and the residents who weren't paying their cable fees. But there may be good reasons that this isn't happening, most of which fall under the heading of "throwing good money after bad". Legal action is expensive, and sometimes it's very expensive. It's usually more effective to place a lien on homes whose owners aren't paying. It will depend, though, on the nature of the fees and what your governing documents have to say about liens and collections.

I also recommend running for a board position as the cure for any homeowner who thinks they know better than the current board. That first year of board service is a corker as far as showing you how much you don't know and how limited your options may be. And you will make your share of mistakes - or what the membership thinks are mistakes - for which the membership will hang you out to dry - loudly, publicly and at great length if you allow the meetings to run on and on. It's a lot of fun.

JenniferD8 (Michigan)
Posts: 141

Posted:

Thanks for the insight. I was on the board a few years back, but stepped down due to the corruption of the board. I actually find that it's more effective to be a mere resident than being on the board. At the meeting, the president stated that the board "doesn't want to be burdened by all the questions." Unfortunately for the board, there are a lot of issues that are concerning to the residents. Instead of recovering the missing money, they are choosing to increase our monthly dues by $45 as well as assessing an additional $100 per month. They are also recommending a one-time assessment of $300.

CathyA3 (Ohio)
Posts: 6,299

Posted:

You may be right about having more freedom when you're a homeowner. I also stepped down when I found myself outnumbered by board members who think they should be able to do whatever they want, the heck with CC&Rs and bylaws.

On the other hand, though, you really have to pick your battles as a homeowner - otherwise you'll get a reputation as the neighborhood crank, and it won't matter one bit that you're right about this stuff and they're totally in the wrong. If anything, the board being in the wrong will put them on the defensive and more likely to circle the wagons if challenged.

On the downside, a homeowner has no authority to change how things are going except through legal action, which means the issue has to be affordable and worth pursuing to that homeowner. This means homeowners won't agree on what's important enough.

Unfortunately, I think the governance structures of HOAs/COAs has an "us vs. them" dynamic baked into it. Ideally, everybody would be allies. But you won't have that when a small group (the board) has authority over another, larger group. The board also has a duty to act in the association's best interest but the large majority of residents have no such duty and are free to act in their own self interest (even if that self-interest is contrary to the well-being of the community).

What I do: I pick my battles and only tackle the items that have the potential to be expensively painful (eg. uninsured volunteers doing physical labor). I also put my concerns in writing, with quotes from the governing documents, and send the letter to our registered agent, with email copies to the board and community manager. Smaller things, even violations of our CC&Rs/bylaws by the board, I let go unless they're too blatant. I'm debating one of the smaller things now that's on the fence. Sometimes I think the current board is trying to get us sued...

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By CathyA3 on 07/13/2022 7:52 AM
You may be right about having more freedom when you're a homeowner. I also stepped down when I found myself outnumbered by board members who think they should be able to do whatever they want, the heck with CC&Rs and bylaws.

On the other hand, though, you really have to pick your battles as a homeowner - otherwise you'll get a reputation as the neighborhood crank, and it won't matter one bit that you're right about this stuff and they're totally in the wrong. If anything, the board being in the wrong will put them on the defensive and more likely to circle the wagons if challenged.

On the downside, a homeowner has no authority to change how things are going except through legal action, which means the issue has to be affordable and worth pursuing to that homeowner. This means homeowners won't agree on what's important enough.

Unfortunately, I think the governance structures of HOAs/COAs has an "us vs. them" dynamic baked into it. Ideally, everybody would be allies. But you won't have that when a small group (the board) has authority over another, larger group. The board also has a duty to act in the association's best interest but the large majority of residents have no such duty and are free to act in their own self interest (even if that self-interest is contrary to the well-being of the community).

What I do: I pick my battles and only tackle the items that have the potential to be expensively painful (eg. uninsured volunteers doing physical labor). I also put my concerns in writing, with quotes from the governing documents, and send the letter to our registered agent, with email copies to the board and community manager. Smaller things, even violations of our CC&Rs/bylaws by the board, I let go unless they're too blatant. I'm debating one of the smaller things now that's on the fence. Sometimes I think the current board is trying to get us sued...

Sound advice.

KerryL1 (California)
Posts: 14,550

Posted:

Our insurance, and I expect many assn. policies, does cover committee members, but NOT if they do physical labor. I assume an HOA policy that covers committee members who mess with electrical issues, climb ladders, etc., would cost a lot more.

PatJ1 (North Carolina)
Posts: 568

Posted:

Quote:

Posted By KerryL1 on 07/13/2022 9:59 AM
Our insurance, and I expect many assn. policies, does cover committee members, but NOT if they do physical labor. I assume an HOA policy that covers committee members who mess with electrical issues, climb ladders, etc., would cost a lot more.

Our Master Policy does not cover volunteers. We purchase a separate policy. Our HOA is volunteer driven with our applications for our cities Neighborhood Matching Grants so coverage is very important. It also covers Board members while performing Board duties like walking the property and breaking a bone. Or an overzealous homeowner climbing a ladder on community property to "help".

Our policy costs us $540.00/year.

CathyA3 (Ohio)
Posts: 6,299

Posted:

As Kerry notes, there are absolutely exclusions in "decent" insurance policies. Generalizing is no help whatever - it only matters what your particular policy says.

An association that goes from only employing licensed and insured vendors to "saving money" by using volunteers without considering insurance is setting themselves up for a painful surprise - especially if the money-saving mania also leads the board to cut corners with insurance. TANFL.

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