HOA Board, Possible Recall

Started by TerriM8 • 4 replies • 383 views

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TerriM8 (Missouri)
Posts: 21

Posted:

From Missouri:

Not sure where to start, but here is the situation.

We have a three-member board. At our annual meeting last August, two topics were a major discussion resulting in disagreement about the way the board handled elections and budget ratification.

1. Elections: Staggered terms, one member voted on each year and a three-member board of directors. Last year we had to vote on three board members due to one term expiring, and two moving away. The board President had just been appointed to the board a month earlier, as an interim board member/president, and I will call him "A". Three members were running for the three positions. Two of the three have condos in the same building. Our bylaw states: The board shall consist of three unit owners, not more than one who shall have an interest in the same building. Many owners questioned and expressed concerns that only one of the two from the same building could serve on the board and cited the byaw. Suggestions were made to take nominations from the floor (which has been done before, although I am unsure of the legality of this, I should research).

The current President (interim) "A", stated he had consulted a lawyer who looked at the bylaw and said it was fine for two board members from the same condo to be on the board. He was asked to share this legal opinion and he stated, "Get your own lawyer." Finally the property manager representative who runs the meeting, said we needed to move on. All three board members were "voted on" and of course all three elected. A vote was taken to determine a staggered schedule. Person with most votes (3 year term) "A", second most votes (2 year term) member "B" , and least votes has a one year term, member "C"

Fast forward to this year. Board member "C" whose term expires is running for re-election. So the issue exists again of two owners in the same building cannot be on the board. Another owner has also turned in a nomination form to run for the board. Several weeks ago, that owner sent a letter to the board, reminding them of the bylaw and that "C" cannot run this year since he has an interest in the same building as "B." This owner received an email from the board (which I have personally seen).

The board stated in the email, "The board held a meeting on 7/17/22 for the purpose of amending the bylaws. The Board, (A, B, and C), voted unanimously to the following change: "Board shall consist of three unit owners." (they took out about interest in the same building. The email ended with saying, "your point is now moot."

Bylaws have to be voted on by the membership, and needs a majority to be amended.

About 5 years ago there was a lawsuit due to board members not having an annual meeting and not having an election for several years. An attorney came to a meeting and addressed a lot of questions from owners. One was bylaws. Our bylaws actually do state the majority of the board can change bylaws. The attorney addressed this (and it is in writing) that this is incorrect and not enforceable (and that we follow Mo Nonprofit Corporation Act), which is a majority of membership votes on bylaw changes. The other person running for the board shared this with the current board so they would be aware and could research this themselves. So far no word from the board.

Owners feel the board will ramrod owners as they did last year, with the help of the management company. Can owners do anything about it? Owners don't really want to recall the board, but maybe it should be done. We know the process to start with a petition that has to be signed by 13 owners, (20%) and to have a Special Meeting. There are owners willing to be on the board. I have read that the petition should state ....to recall the board and nominate new board members.
But it must be more complicated than that. Is it?

The president "A" also sent a letter to all owners, through our property manager, recruiting votes for "C."
"C" votes to change a bylaw that will directly benefit him being able to run, seems to lack integrity.

I mentioned the budget. Last year this board "A" and the owner of management company prepared two budget options, both with a 20% increase. One had a lesser amount for the dock fund. So basically owners forced to vote on an increase, not approve or reject a budget. This was also discussed at length.

Thanks for any advice or suggestions.

SheliaH (Indiana)
Posts: 6,964

Posted:

No, the board can't "ramrod" the homeowners into doing anything - unless they're too scared or indifferent to care. You say homeowners are upset, so it's time to rally together and push for what You want. It's a matter of You and everyone deciding how far to go because this may not be pretty.

You know what your documents say about recall and It appears president A is the main problem so if there is a recall, he probably should be the target - unless the rest of you make it clear the association MUST be run according to the documents. Sometimes attending a board meeting and letting the members know where you stand can do the trick (if everyone shows up). It's not about a free for all - if there's a resident forum, various homeowners can stand up and say how they feel about a specific issue in two minutes or less (\to give others time to speak).You

You don't say how many homeowners are in your community, but if they elect the board and the board elects officers from among themselves, simple should show you that the remaining two can vote this guy out as president and one of the other take the job. That won't mean A is off the board itself - for that, you need to vote him out through a recall or the next election or a recall. Or he may save you the trouble and resign.

Regarding the amendment to the documents, you have your answer to that. For some reason, yours give the board the authority to change the bylaws, but I wonder if that's accurate (attorneys CAN be wrong). Are you sure that part isn't addresses my additional rules the board may enact as long as they don't supersede the documents? Get another opinion or read that section again.

If, however,that's correct, homeowners could pressure the board to change that too. Personally, I don't see what difference it makes it for two members to be from the same building. I could see that it you're talking about a married couple and each unit has one vote. If you want one owner from each building ,(I assume you have three), that's ok. In fact it would be easier to stagger the annual vote for one board member. When you get president A taken care of, you can address this.

In fact, it's probably past time for you to look at your documents to see what's outdated or what should be tweaked or added. That will take longer and it's not a do it yourself project because these are legal documents that must stand up in court. You can talk to the association attorney about that later. And you should form a special committee to spearhead the project.

As for the property msnaget, he or she is responsible for the association's daily operations and works at the board's direction. I don't like property managers being too involved in what should be exclusive to the board. He or she isn't a board membet, so it may be necessary for a new board to remind him/her of that.

Finally the budget - you really aren't clear on what the problem is. Budgets do increase from time to time for different reasons and sometimes higher assess ARE necessary, whether you like them or not. Focus on the rest of the budget - is anything else increasing? Do you know why? A 20% increase is hefty,but that may due to previous boards underfunding reserves and everything else and now you have no choice but to pay more. You have heard of inflation, yes?

And what about reserves? Do you have a reserve fund? Is it being funded according to the reserve study recommendations? How old is that study - if it's been over 5 years, you need an update? Don't want to spend the money? Better re-read all those articles on the Surfside disaster - those owners didn't want higher assessments either to pay for badly needed repairs - and you saw how that worked that out.

Ask these questions of the board - if you have to approve the budget anyway, you need this information to make an informed decision. Watch for the doublespeak or no response at all - that's when you need to start worrying.

In the end, determinine what's your biggest problem right now, address that and work your way from there? Good luck.

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

DeanJ
Posts: 1,786

Posted:

HOA Board memship is a political process. Get off your butt and run for office.

TerriM8 (Missouri)
Posts: 21

Posted:

Thank you for your detailed response. You advice, to deal with the biggest problem first is well-taken, and owners will put our focus there.

We have 64 units, and 8 buildings, 3 board members. Not sure about why no more than one owner can have an interest in the same building, but I suppose it is because it makes it easy for two members to vote to have improvements to their building. (which did happen when new lighting was put up in this building where two board members reside).
At one time there were fewer buildings, so that could play a part into the bylaw, also.

Our Annual Meeting is this week, and I think quite a few owners plan to speak up in a respectful way and bring up concerns.

Board Member A is definitely the "ring leader" in this situation, unfortunately B and C go right along with him, so far. This might change as they hear from owners at the meeting.

For years our association has been underfunded, thus the big increases in assessments.

My point on the budget was that members should either approve or reject a budget, yes or no to what the board presents to owners. Not two options, both with the same increase. I was in favor of the increase. Owners that were not, had no choice but to vote for a 20% increase in the annual budget, they were only able to vote on the amount of a dock increase.
Example of ballot was: Option A: 20% increase annual budget, and 10% dock fund increase
Option B: 20% increase annual budget, and 5% dock fund increase

That was last year, so hopefully it will be approached correctly this year.

TerriM8 (Missouri)
Posts: 21

Posted:

Yes. We now have several owners willing to be on the BOD!

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