Bank accounts when board resigns

Started by DonnaM16 • 25 replies • 912 views

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DonnaM16 (Missouri)
Posts: 23

Posted:

Long story, but our complete board will be resigning. What happens to the bank accounts? They say they are just going to give us checks. Shouldn't they sign over the signature cards? They say they wi not. Do we have any other recourse with the banks?

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By DonnaM16 on 09/24/2022 8:00 AM
Long story, but our complete board will be resigning. What happens to the bank accounts? They say they are just going to give us checks. Shouldn't they sign over the signature cards? They say they wi not. Do we have any other recourse with the banks?

-- First, check signing authority is a big deal. At times banks require both the current signer and the new, proposed signer to appear in person. At times banks require merely a copy of the Minutes or a board resolution saying so-and-so is the check signer. Contact the banks with the accounts to see what is required.

-- Please clarify: Are replacement directors already chosen and ready to take over? If not, can the current board have one person resign and then appoint someone else? Then another person resigns and the current board appoints a second person? This is preferable by far to their resigning en masse.

DonnaM16 (Missouri)
Posts: 23

Posted:

Long story, they are resigning, because that section of the community is "deleting" themselves from the HOA. We are ready with new board members, but nothing filed yet. All the board members will be resigning as well as the management co.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By DonnaM16 on 09/24/2022 8:35 AM
Long story, they are resigning, because that section of the community is "deleting" themselves from the HOA. We are ready with new board members, but nothing filed yet. All the board members will be resigning as well as the management co.

From an attorney some years ago, and per Missouri nonprofit corporation statute, urge this board to resign one by one, and replace each resignee one by one.

Having no directors on a board means that the only way to put new directors in place is via an election. Which means there is going to be a gap where the corporation has no board and so no entity having legal authority to pay the bills.

Use the "fiduciary duty" argument on the current directors, if you want.

If you want citations from Missouri statutes on these points (to use in a letter to the current board), ask and I will post them.

SheliaH (Indiana)
Posts: 6,964

Posted:

This isn't their money, it's the association's money. In addition to what Augustin said, I hope you have a new group of board members ready to take over because they may need to consult the association attorney to compel the former board members to cooperate.

And since they're being so contrary about this, plan now to do a complete audit of the association's finances and make sure they've turned over all association records. If you have a property manager he or she should help with this. If you don't have one, or he/she is siding with the previous board, the association attorney will have to address this as well.

The fact that the entire board up and quit enmass signals you have a serious underlying problem or several at that community. All of you will need to work together to fix it so plan for a special homeowners meeting where the former board can explain themselves.

PS - you need formal procedures regarding records, finances and perhaps a little more. If no one has a clue as to how to do this, I suggest going to the CAI website and invest in some training materials. All new board members should read them and then work to determine what would work best for your community

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

AugustinD
Posts: 1,027

Posted:

See

https://www.lawserver.com/law/state/missouri/mo-laws/missouri_laws_355-341

and

https://www.lawserver.com/law/state/missouri/mo-laws/missouri_laws_355-361

Especially the parts about filling a board position prior to the effective dates of a director's resignation, with the new director taking office the same day the resigning director resigns.

In these circumstances (as given in the first post here) The current board has an absolute duty to do this, in my opinion. They can kick and scream all they want, but they need to do this.

DonnaM16 (Missouri)
Posts: 23

Posted:

They won't resign 1 at a time, it all ends 9/30. The bank says they need both parties to sign, but they won't. We suspect they will not turn over records as well. This all started when we asked to see financial records. They gave us a 2 week notice of the date. Hoping bank will accept their resignation letters.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By DonnaM16 on 09/24/2022 9:09 AM
They won't resign 1 at a time, it all ends 9/30. The bank says they need both parties to sign, but they won't. We suspect they will not turn over records as well. This all started when we asked to see financial records. They gave us a 2 week notice of the date. Hoping bank will accept their resignation letters.

I hope you talk to the bank.

Does the HOA have an attorney? If so, your group should write this attorney now and ask him to read the riot act to the current board.

Post back if you want help with a concise polite email to the attorney.

DonnaM16 (Missouri)
Posts: 23

Posted:

The HOA attorney is only representing the board, and mgt co. He has refused to answer any questions or even talk to us. He has set a meeting for Monday, 4 days before this happened.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By DonnaM16 on 09/24/2022 9:25 AM
The HOA attorney is only representing the board, and mgt co. He has refused to answer any questions or even talk to us. He has set a meeting for Monday, 4 days before this happened.

A meeting with whom?

MaxB4
Posts: 3,513

Posted:

I wouldn't waste money on an attorney at this time. Contact the bank for the process of signing new signature cards when a new board is seated. In general, they are going to make sure you have the tax id #, properly signed minutes of the selection of officers. Depending on the bank's procedure, it can be done via email or in person.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

For once I agree with Max. I am not sure why the bank needs a resignation from them. We just had to show maybe the meeting note and/or something with the corporate seal showing the new board members. The bank isn't part of the HOA or the MC. They just process the money.

Former HOA President

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MelissaP1 on 09/24/2022 1:31 PM
For once I agree with Max. I am not sure why the bank needs a resignation from them. We just had to show maybe the meeting note and/or something with the corporate seal showing the new board members. The bank isn't part of the HOA or the MC. They just process the money.

I do this for a living.

LetA (Nevada)
Posts: 2,679

Posted:

The short answer is send a copy of those resignations to your secretary of state office. Usually in many states the SOS keeps track of HOA officers.
If you have a PM, the property manager can remove those directors, using copies of the resignation letters and the letter of removal to the SOS.
Once you have new BOD in place, sign new signature cards.

LetA (Nevada)
Posts: 2,679

Posted:

Quote:

The bank wants to make sure they aren't being snowed, they will likely need a letter from the Secretary of State office.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By LetA on 09/24/2022 6:45 PM
The bank wants to make sure they aren't being snowed, they will likely need a letter from the Secretary of State office.

Not a chance.

DonnaM16 (Missouri)
Posts: 23

Posted:

Going to try it again, with the bank, once the registration is changed. We are a small community, and funds are very tight/low due to this board spending every penny as soon as they get it. We have a water heater about to blow, and a sewer line backing up every month. But we just found out they have spent close to 30k on this atty, and they are imposing an assessment on us to pay for it. State statutes say they need 80% , they only got 72,and they are moving forward.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By DonnaM16 on 09/24/2022 7:05 PM
But we just found out they have spent close to 30k on this atty, and they are imposing an assessment on us to pay for it. State statutes say they need 80% , they only got 72,and they are moving forward.

What Missouri statute section says this?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Donna,

Remind me, Are you on the Board?

When you say that section is deleting themselves, do you mean that the Association is being broken into two Associations?
This can only be done by amending the governing documents and the money should then be split.
So, what do you mean saying "deleting themselves"?

DonnaM16 (Missouri)
Posts: 23

Posted:

Yes, two HOAs. They amended the declarations,but state statutes still say 80%, they got 72%,they first called it a withdrawal, and they realized they did need 80%, so they changed what they are calling it, to "deletion" , voted again, got 72%, and still moving on. They have spent most of not all the monies 30k on attorney alone.we have a lawsuit, but nothing is stopping themapparently

TimB4 (Tennessee)
Posts: 21,059

Posted:

It appears that you, and your neighbors, will have to get an attorney and contest the amendment through the courts.

The first thing would be to obtain an attorney (perhaps one versed in contract or property law) and get legal action started.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By DonnaM16 on 09/25/2022 5:36 AM
Yes, two HOAs. They amended the declarations, but state statutes still say 80%, they got 72%,they first called it a withdrawal, and they realized they did need 80%, so they changed what they are calling it, to "deletion" , voted again, got 72%, and still moving on. They have spent most of not all the monies 30k on attorney alone.we have a lawsuit, but nothing is stopping the mapparently

From prior threads of the OP's:

Quote:

Posted By DonnaM16 on 02/26/2022 12:42 PM
Our title is "condominium assoc" but is registered as a non profit. It consists of 24 condos (in 2 buildings) and 24 townhomes (6 buildings). The current officers have been in office over 20 yrs, you suggest voting them out, but votes are weighted in favor of townhome owners. How do you get them to vote out people that give them free in home maintenance. They hired a mgt company, cause they stated they could not find anyone else to serve, but ignore anyone in the condo that wants to serve. Even attorneys are baffled as to what these officers are doing.

Quote:

Posted By DonnaM16 on 07/30/2022 8:12 AM
We are comprised of high rise condos (2 buildings 12 units each) total 24, and 6 townhomes 4 units each, total 24. The HOA has hired an attorney (paid out of our reserves) to split our HOA in two. Note, the attorney is only representing the townhomes, will not even talk with high rise owners. The declarations refer to a withdrawal (needing 100%, state statutes say 80%). They only got 72%. They first referred to it as a split, then withdrawal, now a deletion(I think they have also used the term termination). The HOA has stopped maintenance, (except what's contracted and paid for). Highrise owners would be ok with the split, but they have not maintained anything here. They just replaced townhome gutters (3rd time) while highrise are literally falling off and are at least 50 years old.
1. Has anyone experienced a split? Cannot find a legal example anywhere.
2. Does anyone know what will happen to our deeds? The unit owners own the common areas, not the HOA.
3. More questions, too little time.

More at https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/332211/view/topic/Default.aspx

This appears to be a condominium created after Sep 28, 1983. This means the COA is subject to the Missouri Uniform Condo Act. From the latter, the OP appears to reference this statute section requiring a vote of 80% of owners to terminate a condo, "or any larger percentage the declaration specifies."

https://revisor.mo.gov/main/OneSection.aspx?section=448.2-118&bid=24913&hl=

Quote:

Posted By DonnaM16 on 07/31/2022 8:19 AM
We have a lawyer, a Declaratory judgement and restraining order have been filed, they've been served, they have said they are proceeding anyway. Long expensive road ahead. There is already another lawsuit against them for refusing an owner access to records, they refuse to settle that, our insurance has now doubled. In their plan, they will get a new name, we get the current name, with the increased insurance rates, and we think the plan will be for us to acquire the other lawsuit.

From other threads of the OP's this past year, this appears to be a highly, legally hostile situation between two condominium factions: The townhome side (the enemy, per the OP) and the high-rise side (the good guys, per the OP). The COA attorney appears to have "chosen" to represent the townhome faction at this point. I am not sure how the COA attorney can justify this. I expect the COA attorney (representing it appears the townhome section) is doing a great job of promoting dissent and so increasing his billable hours.

I suspect this is a gold mine for at least two attorneys (both the townhome side's attorney and the high-rise side's attorney).

The high-rise condos are not at present a corporation separate from the present condo association (consisting of high-rises and townhomes). Whence I wonder from whom the OP's high-rise owners' attorney takes direction. I guess whoever is paying this attorney's bills is the attorney's client. The high rise condos number only 24, so I guess it's quite possible that all 24 are paying the attorney, and these 24 high-rise condo owners meet with the attorney en masse or have selected someone to serve as a liaison to the attorney.

Maybe I will take a look at Missouri court filings and see if anything becomes apparent.

AugustinD
Posts: 1,027

Posted:

If I have the facts right, now I think I see why the current board (being on the townhome side) is not signing over pretty much anything (check signing authority or otherwise) to the alleged incoming board: The current board does not want the high-rise condo group to steal the money the current board believes belongs to the townhome side.

I can just imagine what the banks involved are going to say.

I think the high rise condos' 24 owners should let their attorney handle all of this.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By DonnaM16 on 07/30/2022 8:12 AM
They just replaced townhome gutters (3rd time) while highrise are literally falling off and are at least 50 years old.

Of course, if this condominium was in fact created before 1983, then the OP is wrong about the applicability of the Missouri Uniform Condominium Act (applying to post sep 1983 condos). Instead the Missouri Condominium Property Act (applying to pre 1983 condos) applies. The earlier statute does not have a section on termination. Whence the owners here would have to turn to their declaration for guidance.

The townhome owners may very well have a decent argument in claiming that they have seceded.

Split? Withdrawal? Deletion? Termination?

It's all in dispute.

Folks on both sides should figure out a way to settle this legally once and for all, and stay out of court.

Was mediation attempted?

DonnaM16 (Missouri)
Posts: 23

Posted:

Agreed, but townhomes owners started this about April of 2021, and just notified us a week ago, effective 9/30.

RogerJ1 (Texas)
Posts: 550

Posted:

Quote:

Posted By DonnaM16 on 09/24/2022 8:35 AM
Long story, they are resigning, because that section of the community is "deleting" themselves from the HOA.

Hijack - sorry - I would like to know more about this and how that section was able to do it as I would like to do something like that.

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