Management Group Instead of Board of Directors

StacyM5 (Maryland)
Posts: 59

Posted:

My HOA in Maryland is having a special meeting at the end of the week. One of the topics is that they want to discuss the possibility of having management groups instead of Board of Director positions if we don't have an adequate number of officers elected. That is all the information they will give out to us.

This would be against our bylaws so are they able to do that?

MichaelT21 (Arkansas)
Posts: 462

Posted:

Our by-laws allow the hiring of a management entity to run our HOA, which is the property management company that we hire. The actions of the management company are directed by the management committee, which I am the lone member of, and I direct the property manager on what to do. Then the rest of the directors simply need to attend 1 meeting per month plus read a handful of e-mails in between.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By StacyM5 on 11/08/2022 8:29 AM
My HOA in Maryland is having a special meeting at the end of the week. One of the topics is that they want to discuss the possibility of having management groups instead of Board of Director positions if we don't have an adequate number of [directors, not officers] elected.

Maryland statutes and your covenants almost certainly require either (1) a board of unpaid, volunteer directors; or (2) a (well-paid) receiver to manage the affairs of the corporation. If the board has decided to put the HOA/COA into what is called "receivership," then the receiver legally will have the right to do as he/she deems is in the best interests of the corporation, with no input from owners or anyone else except possibly the court that appoints the receiver.

If you want more detail, like the statutes that say this, ask. Then be prepared to read carefully a lot of law.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By MichaelT21 on 11/08/2022 8:32 AM
Our by-laws allow the hiring of a management entity to run our HOA, which is the property management company that we hire. The actions of the management company are directed by the management committee, which I am the lone member of, and I direct the property manager on what to do. Then the rest of the directors simply need to attend 1 meeting per month plus read a handful of e-mails in between.

My understanding is that this would not be a management company but instead is would be a group of homeowners to split up each Board position and work together. I never heard of such a thing like this before.

MichaelT21 (Arkansas)
Posts: 462

Posted:

Quote:

Posted By StacyM5 on 11/08/2022 8:46 AM

Posted By MichaelT21 on 11/08/2022 8:32 AM
Our by-laws allow the hiring of a management entity to run our HOA, which is the property management company that we hire. The actions of the management company are directed by the management committee, which I am the lone member of, and I direct the property manager on what to do. Then the rest of the directors simply need to attend 1 meeting per month plus read a handful of e-mails in between.

My understanding is that this would not be a management company but instead is would be a group of homeowners to split up each Board position and work together. I never heard of such a thing like this before.

I have never heard of that either.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By AugustinD on 11/08/2022 8:37 AM

Posted By StacyM5 on 11/08/2022 8:29 AM
My HOA in Maryland is having a special meeting at the end of the week. One of the topics is that they want to discuss the possibility of having management groups instead of Board of Director positions if we don't have an adequate number of [directors, not officers] elected.

Maryland statutes and your covenants almost certainly require either (1) a board of unpaid, volunteer directors; or (2) a (well-paid) receiver to manage the affairs of the corporation. If the board has decided to put the HOA/COA into what is called "receivership," then the receiver legally will have the right to do as he/she deems is in the best interests of the corporation, with no input from owners or anyone else except possibly the court that appoints the receiver.

If you want more detail, like the statutes that say this, ask. Then be prepared to read carefully a lot of law.

It seems like that don't want to do a receivership but wants to change the structure of the Board so instead of having President, Vice President, etc., they want to have small groups of residents to work together for each position is what I am getting out of this. My initial feeling is that this cannot be done but maybe I am wrong.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Stacy

Do you know the BOD can fill any BOD vacancies? You say people do not want to be on your BOD so what makes you think you can get people on your "management groups? You might want to consider having "committees" on specific issues or hiring a management company. Either was, the BOD is still in charge not the committees nor management groups.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By JohnC46 on 11/08/2022 8:56 AM
Stacy

Do you know the BOD can fill any BOD vacancies? You say people do not want to be on your BOD so what makes you think you can get people on your "management groups? You might want to consider having "committees" on specific issues or hiring a management company. Either was, the BOD is still in charge not the committees nor management groups.

Yes they are in the process of trying to get people to apply right now but they are anticipating that they will not receive any applicants. That was my thought exactly when they said they wanted to do "committees" instead. They are obviously not thinking this through, or maybe they feel if the positions were split over a few people maybe more people would be interested. The Board does not have enough money to hire a management company because they have not raised dues in 18 years so we are only paying $50 annually, plus I just found out after examining the financials, that they are only collecting dues from 60% of the homeowners. Things are a bit of a mess with this HOA you could say.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By StacyM5 on 11/08/2022 8:50 AM
It seems like that don't want to do a receivership but wants to change the structure of the Board so instead of having President, Vice President, etc., they want to have small groups of residents to work together for each position is what I am getting out of this. My initial feeling is that this cannot be done but maybe I am wrong.

To determine whether this can be done or not depends on the answers to the following questions:

-- Is this HOA incorporated?

-- Is it subject to the Maryland HOA statute?

-- What do your Articles of Incorporation and Bylaws say about the Board?

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By AugustinD on 11/08/2022 9:06 AM

Posted By StacyM5 on 11/08/2022 8:50 AM
It seems like that don't want to do a receivership but wants to change the structure of the Board so instead of having President, Vice President, etc., they want to have small groups of residents to work together for each position is what I am getting out of this. My initial feeling is that this cannot be done but maybe I am wrong.

To determine whether this can be done or not depends on the answers to the following questions:

-- Is this HOA incorporated?

-- Is it subject to the Maryland HOA statute?

-- What do your Articles of Incorporation and Bylaws say about the Board?

We are a LLC. I could not find anything in the Maryland HOA statute that addresses this. It just speaks about recievership. Our bylaws are ony 4 pages long and quite silent on many issues so they only mention the various Board positions and the duty of each position.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By AugustinD on 11/08/2022 9:06 AM

Posted By StacyM5 on 11/08/2022 8:50 AM
It seems like that don't want to do a receivership but wants to change the structure of the Board so instead of having President, Vice President, etc., they want to have small groups of residents to work together for each position is what I am getting out of this. My initial feeling is that this cannot be done but maybe I am wrong.

To determine whether this can be done or not depends on the answers to the following questions:

-- Is this HOA incorporated?

-- Is it subject to the Maryland HOA statute?

-- What do your Articles of Incorporation and Bylaws say about the Board?

We are a LLC. I could not find anything in the Maryland HOA statute that addresses this. It just speaks about recievership. Our bylaws are ony 4 pages long and quite silent on many issues so they only mention the various Board positions and the duty of each position.

KerryL1 (California)
Posts: 14,550

Posted:

Say, Stacy, it's good to get the lingo of a board of directors straightend out. Meanwhile what's the size of your HOA.

1. Your CC&Rs & Bylaws require a "board of directors." How many? How many directors does your board have now?

2. Your Bylaws also require "officers," e.g. president, treasurer, secretary. Which do yours require? Is NO director willing to be an officer? If not, ho presides over meetings? Who writes th meeting minutes?

3. Officers usually are appointed from among the directors. But your Bylaws may permit your board appoint non-directors as an officer. A non-director Secretary would perform the duties as described in your Bylaws, but since the person is NOT a director, would have no vote on board of directors agenda items. The Board may further specify the secy's dues, e.g., write meeting minutes to present to the Board for its approval at its next meeting.

4. The board may form committees. So, it could have a Finance Committee to do the work of the treasurer and a board member could be treasure basically in name only.

So, with JohnC, there's a way to appoint officers in name only with that officer's function performed by a committee. I really that offer would chair the committee.

MichaelT21 (Arkansas)
Posts: 462

Posted:

In our HOA, the VP does no work at all.

The Treasurer also does not work, as we have an outside accountant handle all finances.

The Secretary does no work beyond taking the meeting minutes and distributing those. He takes those during the meeting, so his outside of board meeting commitment is close to zero.

The at large person does no work.

As for me (President), I do a ton but enjoy doing it.

So, as with others, there might be a better way to allocate the tasks or hire those tasks out that your homeowners do not want to do.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By StacyM5 on 11/08/2022 9:19 AM

We are a LLC. I could not find anything in the Maryland HOA statute that addresses this. It just speaks about recievership. Our bylaws are ony 4 pages long and quite silent on many issues so they only mention the various Board positions and the duty of each position.

I note: The Maryland HOA Act says HOAs may be incorporated or unincorporated. Being an LLC does not necessarily mean your HOA is incorporated. Can you look up your HOA here and see if your HOA is a corporation: https://egov.maryland.gov/businessexpress/entitysearch ?

The Maryland HOA Act says: "Except as expressly provided in [the Act], the provisions of this title apply to all homeowners associations that exist in the State after July 1, 1987.

The Maryland HOA Act says the HOA can have either a "board of directors, or other entity established to govern the development."

If your Bylaws (and any other lawful governing document for an LLC) permit management of the HOA as you describe, then such management appears to me to be lawful.

You say your Bylaws do speak about various board positions. To say more would require your quoting verbatim what the Bylaws say.

I advise you hire an attorney. You will pay him or her a lot of money while he/she pulls the teeth necessary to answer your questions.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By KerryL1 on 11/08/2022 9:31 AM
Say, Stacy, it's good to get the lingo of a board of directors straightend out. Meanwhile what's the size of your HOA.

1. Your CC&Rs & Bylaws require a "board of directors." How many? How many directors does your board have now?

2. Your Bylaws also require "officers," e.g. president, treasurer, secretary. Which do yours require? Is NO director willing to be an officer? If not, ho presides over meetings? Who writes th meeting minutes?

3. Officers usually are appointed from among the directors. But your Bylaws may permit your board appoint non-directors as an officer. A non-director Secretary would perform the duties as described in your Bylaws, but since the person is NOT a director, would have no vote on board of directors agenda items. The Board may further specify the secy's dues, e.g., write meeting minutes to present to the Board for its approval at its next meeting.

4. The board may form committees. So, it could have a Finance Committee to do the work of the treasurer and a board member could be treasure basically in name only.

So, with JohnC, there's a way to appoint officers in name only with that officer's function performed by a committee. I really that offer would chair the committee.

1. Our Bylaws require "Officers of the Association. It requires 10 officers. The Board President will not say how many officers we currently have, but I believe it is 9 at the moment.

2. Our Bylaws only require Officers (no directors). The President presides over the meetings. The Recording Secretary should be taking minutes.

3. We only have Officers and no Directors.

4. Our Bylaws state that the President shall have the power to appoint committees to investigate any matters of common interest to members of the Association.

StacyM5 (Maryland)
Posts: 59

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Quote:

Posted By MichaelT21 on 11/08/2022 9:37 AM
In our HOA, the VP does no work at all.

The Treasurer also does not work, as we have an outside accountant handle all finances.

The Secretary does no work beyond taking the meeting minutes and distributing those. He takes those during the meeting, so his outside of board meeting commitment is close to zero.

The at large person does no work.

As for me (President), I do a ton but enjoy doing it.

So, as with others, there might be a better way to allocate the tasks or hire those tasks out that your homeowners do not want to do.

There is not much work that our Board needs to do because we don't have any amenities to oversee. The only vendor we hire is a lawn service for the common areas. They stick with the same lawn person. Lawn service is the only regular bill they pay. I think their biggest challenge is trying to collect dues from all the people that don't pay.

Our community is still growing. We currently have 112 homes and the builder is still in the process of adding 151 more homes. I think it would be best to hire certain tasks out but most of the people in the older section don't pay their dues now and won't want to pay any for professional help. They want to keep this as a quasi HOA.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By AugustinD on 11/08/2022 9:40 AM

Posted By StacyM5 on 11/08/2022 9:19 AM

We are a LLC. I could not find anything in the Maryland HOA statute that addresses this. It just speaks about recievership. Our bylaws are ony 4 pages long and quite silent on many issues so they only mention the various Board positions and the duty of each position.

I note: The Maryland HOA Act says HOAs may be incorporated or unincorporated. Being an LLC does not necessarily mean your HOA is incorporated. Can you look up your HOA here and see if your HOA is a corporation: https://egov.maryland.gov/businessexpress/entitysearch ?

The Maryland HOA Act says: "Except as expressly provided in [the Act], the provisions of this title apply to all homeowners associations that exist in the State after July 1, 1987.

The Maryland HOA Act says the HOA can have either a "board of directors, or other entity established to govern the development."

If your Bylaws (and any other lawful governing document for an LLC) permit management of the HOA as you describe, then such management appears to me to be lawful.

You say your Bylaws do speak about various board positions. To say more would require your quoting verbatim what the Bylaws say.

I advise you hire an attorney. You will pay him or her a lot of money while he/she pulls the teeth necessary to answer your questions.

I looked it up and it does say that our LLC is a corporation. I was also going to suggest we hire an attorney, but the Board does not want to spend the money on one, and it appears that maybe they would only be able to spend $100 on one since they do not budget for an attorney so I think that is out of the question.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By StacyM5 on 11/08/2022 10:13 AM
I looked it up and it does say that our LLC is a corporation. ]

Then as a Maryland Corporation, Maryland statutes require a board that has at least one director, and that the operations of the corporation will be managed by this board.

If the board decides to take its instruction from xyz (like the committees being proposed), then IMO this is its right, just as long as the Board understands it is not required to take instruction from xyz.

Start reading here:
https://law.justia.com/codes/maryland/2021/corporations-and-associations/

Alternatively, realize that answering this fairly simple question (does your HOA have to have a board?) required several rounds of questions. No way will the neophytes on your HOA's board understand even one sentence in this exchange. Count on chaos. Be thankful the amenities are minimal.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By AugustinD on 11/08/2022 10:28 AM

Posted By StacyM5 on 11/08/2022 10:13 AM
I looked it up and it does say that our LLC is a corporation. ]

Then as a Maryland Corporation, Maryland statutes require a board that has at least one director, and that the operations of the corporation will be managed by this board.

If the board decides to take its instruction from xyz (like the committees being proposed), then IMO this is its right, just as long as the Board understands it is not required to take instruction from xyz.

Start reading here:
https://law.justia.com/codes/maryland/2021/corporations-and-associations/

Alternatively, realize that answering this fairly simple question (does your HOA have to have a board?) required several rounds of questions. No way will the neophytes on your HOA's board understand even one sentence in this exchange. Count on chaos. Be thankful the amenities are minimal.

Okay I get what you are saying, sort of.

Thank you for the link. It looks like a wealth of information for me to read and try to take in. I try to educate myself to the best of my abilities on these things. This is where an attorney would really come in handy. Our Board just likes to do what it wants so I don't expect that they will read this but I will. And yes, I am very thankful that we have no amenities except for the detention ponds and common grass area. Makes things so much easier in that respect.

AugustinD
Posts: 1,027

Posted:

StacyM5, I have been reading state corporation statutes as they pertain to HOAs/COAs for years now, in many states. The Maryland Corporation statute is one of the most difficult I have ever read. The statute's organization is strange to me.

If the Maryland Secretary of State site says more about the type of corporation your HOA is, or you can download any of your HOA's governing documents from the Maryland Secretary of State site and get more info about what type of corporation your HOA is, then this might help you to narrow down what sections of the Maryland corporation statutes apply.

I will say every state corporate state I have ever seen (1) requires that the corporation have a board and (2) gives the board the exclusive power to manage the corporation. The statutes give owners en masse only quite limited powers. Though importantly, the owners having the right to, for one, elect and recall the directors is a huge power all by itself.

KerryL1 (California)
Posts: 14,550

Posted:

Good info for you from Augustin, Stacy.

Meanwhile, what are the names of the 10 officers your bylaws say your HOA must have?

What size is your HOA?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MichaelT21 on 11/08/2022 9:37 AM
In our HOA, the VP does no work at all.

The Treasurer also does not work, as we have an outside accountant handle all finances.

The Secretary does no work beyond taking the meeting minutes and distributing those. He takes those during the meeting, so his outside of board meeting commitment is close to zero.

The at large person does no work.

As for me (President), I do a ton but enjoy doing it.

So, as with others, there might be a better way to allocate the tasks or hire those tasks out that your homeowners do not want to do.

In our association, the President and myself (VP) do the Lion's share of the work.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By AugustinD on 11/08/2022 10:53 AM
StacyM5, I have been reading state corporation statutes as they pertain to HOAs/COAs for years now, in many states. The Maryland Corporation statute is one of the most difficult I have ever read. The statute's organization is strange to me.

If the Maryland Secretary of State site says more about the type of corporation your HOA is, or you can download any of your HOA's governing documents from the Maryland Secretary of State site and get more info about what type of corporation your HOA is, then this might help you to narrow down what sections of the Maryland corporation statutes apply.

I will say every state corporate state I have ever seen (1) requires that the corporation have a board and (2) gives the board the exclusive power to manage the corporation. The statutes give owners en masse only quite limited powers. Though importantly, the owners having the right to, for one, elect and recall the directors is a huge power all by itself.

Normally I have no problem reading the laws and such but I am finding it very difficult to read The Maryland Corporation statue.

It says we are a "04 ORDINARY BUSINESS - NON-STOCK."

Yes, the power to recall directors is huge.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By KerryL1 on 11/08/2022 11:39 AM
Good info for you from Augustin, Stacy.

Meanwhile, what are the names of the 10 officers your bylaws say your HOA must have?

What size is your HOA?

It says we must have: President, 1st Vice President, 2nd Vice President, Corresponding Secretary, Recording Secretary, Assistant Recording Secretary, Treasurer, Finance Secretary, Sergeant-at-Arms, and Chaplain.

We currently have 114 homes but our community is still being developed so sometime in the next two years we should be built out with an additional 157 homes.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By JohnC46 on 11/08/2022 12:40 PM

Posted By MichaelT21 on 11/08/2022 9:37 AM
In our HOA, the VP does no work at all.

The Treasurer also does not work, as we have an outside accountant handle all finances.

The Secretary does no work beyond taking the meeting minutes and distributing those. He takes those during the meeting, so his outside of board meeting commitment is close to zero.

The at large person does no work.

As for me (President), I do a ton but enjoy doing it.

So, as with others, there might be a better way to allocate the tasks or hire those tasks out that your homeowners do not want to do.

In our association, the President and myself (VP) do the Lion's share of the work.

In my last HOA, I was Treasurer, and I did the majority of the work. The President did a decent amount of work as well. We only had one other Board member (Vice President), and she did absolutely nothing to help us. Which was okay because we managed just fine ourselves.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By StacyM5 on 11/08/2022 8:27 PM

Normally I have no problem reading the laws and such but I am finding it very difficult to read The Maryland Corporation statue.

It says we are a "04 ORDINARY BUSINESS - NON-STOCK."

This helps. I trust you saw this in the non-stock section:
===
Title 5. Special Types of Corporations (Refs & Annos)
Subtitle 2. Nonstock Corporations
MD Code, Corporations and Associations, § 5-201
§ 5-201. Applicability

The provisions of the Maryland General Corporation Law [footnote 1] apply to nonstock corporations unless:
(1) The context of the provisions clearly requires otherwise; or
(2) Specific provisions of this subtitle or other subtitles governing specific classes of corporations provide otherwise.

footnote 1
Corporations and Associations, § 1-101 et seq.
===

This seems to be a better site for the Maryland Corporations and Associations Act
https://govt.westlaw.com/mdc/Browse/Home/Maryland/MarylandCodeCourtRules?guid=N15F612709B6211DB9BCF9DAC28345A2A&originatidocumenttoc&transitiDefault&c(sc.Default)

Section 2-401 says the Board shall manage the business and affairs of the corporation, with a caveat about rights reserved to the owners.
Section 2-402 says at least one director is required.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By AugustinD on 11/09/2022 6:37 AM
Posted By StacyM5 on 11/08/2022 8:27 PM

Normally I have no problem reading the laws and such but I am finding it very difficult to read The Maryland Corporation statue.

It says we are a "04 ORDINARY BUSINESS - NON-STOCK."

This helps. I trust you saw this in the non-stock section:
===
Title 5. Special Types of Corporations (Refs & Annos)
Subtitle 2. Nonstock Corporations
MD Code, Corporations and Associations, § 5-201
§ 5-201. Applicability

The provisions of the Maryland General Corporation Law [footnote 1] apply to nonstock corporations unless:
(1) The context of the provisions clearly requires otherwise; or
(2) Specific provisions of this subtitle or other subtitles governing specific classes of corporations provide otherwise.

footnote 1
Corporations and Associations, § 1-101 et seq.
===

This seems to be a better site for the Maryland Corporations and Associations Act
https://govt.westlaw.com/mdc/Browse/Home/Maryland/MarylandCodeCourtRules?guid=N15F612709B6211DB9BCF9DAC28345A2A&originatidocumenttoc&transitiDefault&c(sc.Default)

Section 2-401 says the Board shall manage the business and affairs of the corporation, with a caveat about rights reserved to the owners.
Section 2-402 says at least one director is required.

Thank you for forwarding me the link for Westlaw.com. I read it and bookmarked the page for future reference as well. Looks like we can carry on with one director if it ever came to it, though I can't imagine it would. It seems that maybe we could have the Board President directing groups of residents to manage a specific area like Treasurer or Secretary, etc. but they would have no authority. I'm still having trouble wrapping my head around this and how it would work. Plus it puts us right back in the same spot of having to get people to volunteer.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By StacyM5 on 11/09/2022 8:03 AM
Looks like we can carry on with one director if it ever came to it, though I can't imagine it would. It seems that maybe we could have the Board President directing groups of residents to manage a specific area like Treasurer or Secretary, etc. but they would have no authority. I'm still having trouble wrapping my head around this and how it would work. Plus it puts us right back in the same spot of having to get people to volunteer.

You said your bylaws are silent on the subject of directors, right?

Have you checked the HOA's Articles of Incorporation? In the hierarchy of governing documents, and in a conflict between the Bylaws and the Articles of Incorporation, the Articles of Incorporation control.

Articles of Incorporation often speak to the number of directors on the board.

I think decision-making by committee is a bad choice. People think they are being fair, democratic yada when employing this 'strategy.' In general, I think committees are not very effective. When there are not black-and-white rules for how things are decided and the committee has no legal power whatsoever, I think the lack of effectiveness is likely to be even more pronounced.

I agree with your concerns. However I think the challenge is getting others to realize these pie-in-the-sky ways of operating are rarely practical or wise.

I do support the occasional survey of owners (via hand vote or actual written surveys sent out to owners or presented on a web site) on topics. It's a good way to pacify owners. It also now and then turns up some good ideas for the board to consider.

A little comment on vocabulary: Usually, the "President" at a HOA is the President of the Association. The president is not merely the president of the board. Yes, the board usually selects the President. But this does not change the President's authority. Said authority is limited to what the Bylaws, Articles of Inc, and state law dictate.

You might want to post the exact wording of your bylaws here on the subject of officers. People here are pretty experienced reading bylaws and might see things that you missed? More pairs of eyes on a document is often better.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By StacyM5 on 11/08/2022 8:30 PM
Posted By KerryL1 on 11/08/2022 11:39 AM
Good info for you from Augustin, Stacy.

Meanwhile, what are the names of the 10 officers your bylaws say your HOA must have?

What size is your HOA?

It says we must have: President, 1st Vice President, 2nd Vice President, Corresponding Secretary, Recording Secretary, Assistant Recording Secretary, Treasurer, Finance Secretary, Sergeant-at-Arms, and Chaplain.

We currently have 114 homes but our community is still being developed so sometime in the next two years we should be built out with an additional 157 homes.

Stacy

Are you still under declarant/developer control? If so they can change the Covenants/Bylaws without owner approval. I suggest you have them change to a BOD of 3 to 7 Members and the BOD elects its own officers. This would be more standard. 10 is overkill especially for an association of 157 homes.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By AugustinD on 11/09/2022 8:20 AM
Posted By StacyM5 on 11/09/2022 8:03 AM
Looks like we can carry on with one director if it ever came to it, though I can't imagine it would. It seems that maybe we could have the Board President directing groups of residents to manage a specific area like Treasurer or Secretary, etc. but they would have no authority. I'm still having trouble wrapping my head around this and how it would work. Plus it puts us right back in the same spot of having to get people to volunteer.

You said your bylaws are silent on the subject of directors, right?

Have you checked the HOA's Articles of Incorporation? In the hierarchy of governing documents, and in a conflict between the Bylaws and the Articles of Incorporation, the Articles of Incorporation control.

Articles of Incorporation often speak to the number of directors on the board.

I think decision-making by committee is a bad choice. People think they are being fair, democratic yada when employing this 'strategy.' In general, I think committees are not very effective. When there are not black-and-white rules for how things are decided and the committee has no legal power whatsoever, I think the lack of effectiveness is likely to be even more pronounced.

I agree with your concerns. However I think the challenge is getting others to realize these pie-in-the-sky ways of operating are rarely practical or wise.

I do support the occasional survey of owners (via hand vote or actual written surveys sent out to owners or presented on a web site) on topics. It's a good way to pacify owners. It also now and then turns up some good ideas for the board to consider.

A little comment on vocabulary: Usually, the "President" at a HOA is the President of the Association. The president is not merely the president of the board. Yes, the board usually selects the President. But this does not change the President's authority. Said authority is limited to what the Bylaws, Articles of Inc, and state law dictate.

You might want to post the exact wording of your bylaws here on the subject of officers. People here are pretty experienced reading bylaws and might see things that you missed? More pairs of eyes on a document is often better.

I was never given the Articles of Incorporation but I just got them now off of the State of Maryland site so this is what it says: "The Corporation shall be governed and directed by a Board of Directors consisting of not less than three(3) or more than then (10) members who shall be elected by the members, in accordance with the By-Laws of the Corporation."

Since the Articles of Incorporation trumps the By-Laws, I won't post those. But now, the State law would trump the Articles of INcorporation though.

AugustinD
Posts: 1,027

Posted:

Quote:

Posted By StacyM5 on 11/09/2022 8:56 AM
But now, the State law would trump the Articles of Incorporation though.

Remember, only if there is a conflict. I see no conflict here. This is because Maryland state law requires at least one director. The Articles of Inc require more directors. By having three or more directors, the HOA complies with both the statute and the Articles of Inc. (And this is not myself just talking. This is how covenants and statutes are interpreted for the purpose of identifying a conflict.)

If a hypothetical state's statute requires a minimum of five directors, and a HOA in this state has Articles of Incorporation requiring exactly three directors, then this is a conflict, and the statute trumps the Articles of Inc.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By JohnC46 on 11/09/2022 8:33 AM
Posted By StacyM5 on 11/08/2022 8:30 PM

Posted By KerryL1 on 11/08/2022 11:39 AM
Good info for you from Augustin, Stacy.

Meanwhile, what are the names of the 10 officers your bylaws say your HOA must have?

What size is your HOA?

It says we must have: President, 1st Vice President, 2nd Vice President, Corresponding Secretary, Recording Secretary, Assistant Recording Secretary, Treasurer, Finance Secretary, Sergeant-at-Arms, and Chaplain.

We currently have 114 homes but our community is still being developed so sometime in the next two years we should be built out with an additional 157 homes.

Stacy

Are you still under declarant/developer control? If so they can change the Covenants/Bylaws without owner approval. I suggest you have them change to a BOD of 3 to 7 Members and the BOD elects its own officers. This would be more standard. 10 is overkill especially for an association of 157 homes.

No, we are not under declarant/developer control even though our governing documents say that we would be until the community is 100% built out. Our community was established is 2004 with the first developer. Since that time, the community has had 4 different developers with some years of no development going on. During that time the HOA became inactive. When the current builder came into the community in 2020, he needed to get the HOA started up again so he was going to charge somewhere around $110 a month, and the residents fought back and started the HOA up again with them being in control. They kept the fees at the original 2004 rate of $50 annually. I know it's crazy to keep them that low but I just moved in last year so all the original residents are stuck in their way and really don't want an HOA.

I think you misunderstood me - our community is currently in the process of adding an additional 157 homes, so when we are all done we will have a total of 261 homes. I agree that 10 is overkill, even with 261 homes. We are an easily managed community with the common area lawn being the only routine bill that gets paid, and even that is just for certain months out of the year.

StacyM5 (Maryland)
Posts: 59

Posted:

Quote:

Posted By AugustinD on 11/09/2022 10:39 AM
Posted By StacyM5 on 11/09/2022 8:56 AM

But now, the State law would trump the Articles of Incorporation though.
Remember, only if there is a conflict. I see no conflict here. This is because Maryland state law requires at least one director. The Articles of Inc require more directors. By having three or more directors, the HOA complies with both the statute and the Articles of Inc. (And this is not myself just talking. This is how covenants and statutes are interpreted for the purpose of identifying a conflict.)

If a hypothetical state's statute requires a minimum of five directors, and a HOA in this state has Articles of Incorporation requiring exactly three directors, then this is a conflict, and the statute trumps the Articles of Inc.

Thank you so much for the explanation. This helps me understand how it works.