Small building, everyone on Board, Board violated CC&Rs, what to do?

Honestly, in my opinion, with that small of an Association you will likely have to go to court and request receivership along with an audit.

This will be expensive and will not place you in good relations with neighbors.

The other option is to sell and move.

The final option is to live with it.

This is why I've always thought that establishing HOAs with fewer than 15 units was a waste of time.

I know you don't want to do do a lot of money, but given your list, it appears nearly everyone has done something crazy. Especially the president - it would be nice 8f the rest could bsnc together and remove him from the position,, nuf sho would replace him if people ignore IDRs or serve on the board even though they aren't owners.

Hate to say it,, but I don't see any options except what Tim suggested- petition for receivership, learn to live with it (and develop ulcers or a drug habit to help you cope), sue everyone ir move. I think I'd opt for moving. You may .one money, but you'd have peace of mind.

You don't say what you have in the way of common area but if it isn't very much and your homes are detached, sybd you could look into dissolving the association. That's not as easy, or timely, or cheap as you may think and your neighbors would have to go along with it

California does have a HOA ombudsman, but I don't know what type of power they have ?Googleit fir details). You might also file a complaint with the state attorney general's office, but they don't represent individual homeowners in private disputes. So you're back to taking private legal action against everyone or moving. Those appears to be your only options at this point. Good luck in whatever you decide to do.

How does receivership work, please?

Yes, funds were diverted - the insurance company, insurance amount, deductible, policy, etc. were never voted on by the Board. The President just picked whatever insurance he wanted and used HOA funds to purchase it without approval or authorization from the Board.

Thanks. Does anyone know how, exactly, this petitioning is done?

Thanks, Ellen. I assume this means get a lawyer - or is this something I can do, myself? As in, paperwork I can file, etc?

Thanks. I already did IDR. Had the meeting, reached an agreement, but the Board representative refused to sign it with no explanation. Thanks for your help.

It should be noted that if your HOA was to go into receivership it is the absolute worse thing it can do. The owners lose every voting ability. The receiver decides what has to be paid. Which includes their bill. It also destroys the HOA's credit. Meaning it may cost more to refinance. Worst yet it loses many loan/mortgage options. Meaning no more FHA loans or higher rates for new potential buyers.

So it should not be taken as a "solution" to not liking your HOA. It should be taken as your HOA needs to get it together before someone else does it for you all.

It is not that I don't like my HOA. It is that they violate the CC&Rs and statutes repeatedly. We are half a year overdue for elections and more than half a year overdue for a meeting. There is no transparency, no oversight, and no hope of fixing anything because I am working within the confines of our CC&Rs and they are ignoring them. I am loathe to do receivership for all the reasons you mentioned, but I have tried everything from polite emails to IDR and have run out of options.

So, thank you, for trying to help - it is appreciated.

Fair enough. To be clear, the Board President removed funds from the HOA account for an item the Board did not vote on and did not authorize.

Obviously the HOA needs insurance. But the Board must vote on what policy it wants – it is not up to one person to unilaterally decide how and where to spend HOA funds.

There is one other option (and I misread the part about diverting funds, I thought the funds were diverted for something else instead of paying for liability and D&O insurance), is to sit down and work things out.

I expect that you were the party in the IDR. If this is correct, then your options at that point would be to bring legal action based on the unresolved IDR.

However, it sounds like the issue is more of a lack of communication and the President just doing things they think is right without prior approval.
If this is the case, suggest motioning removing the individual from the office of President and volunteer to perform those duties yourself. May or may not happen but at least you will know if you have support from the other owners.

If you do not have support, your only option may be legal action (which likely won't make you friends).

A couple quibbles:

Courts often appoint an attorney as the receiver, or at least someone who is knowledgeable about the law.

Also. depending on what state you're in, receivership may be open-ended. That is, a member must file a second lawsuit to petition the court for termination.

I totally agree that receivership is bad news, and homeowners should not treat it lightly or play chicken when it comes to electing a functional board.

Believe what you want to believe. Making statements that are untrue and or libelous or slanderous is not right. Your board has a fiduciary duty to pay the D&O insurance premiums.
These items are not voted on, they are reoccurring expenses. The only time something like this comes up for a vote is when the board votes to change carriers or policy terms.
Your false statements can get you in a lot of hot water and even sued.

If you don't want to go the receivership route, you could sue them yourself, but there's no guarantees, you'd have to prove all of the allegations you listed did occur - and then who's going to run the association if everyone else is booted off by the judge? That would force the receivership issue, and as you've seen it's not a road you want to travel.

You'll have to think long and hard about your options and how far you're willing to go. Some people may fold as soon as they get a nastygram by an attorney - and others may react in kind, and it won't be pretty. I'm not saying you shouldn't take action (this is your home after all), but you may also be running into a situation where the best solution may be to cut your losses and move. It's a shame because you wouldn't have posted if you didn't care about the community and love your home - too bad it seems the others are looking at the collective pot of association resources as their personal piggy bank and/or do whatever they want because they are.

Since my community is now flirting with receivership, I've been looking into it more closely, and I've come to one conclusion:

You do NOT want to go into receivership if you can avoid it. A small HOA will have all of the same types of expenses and many of the same requirements as a larger one - thus the receiver will have to do much of the same kinds of things he'd do for a larger community. The difference is that his salary will only be spread out among 4 homeowners, not among 50 or 100 or more. You literally can't afford it.

* Receivers are paid, and can make more per hour than an attorney.

* Receivers answer to the court, not the homeowners. You will have no say in how the receiver runs your community.

* Depending on your state's laws, a homeowner may have to file a second lawsuit at their own expense to terminate the receivership.

You really really really want to think twice about this. You can always make this situation worse for yourselves.

In addition, the court will decide if your community is even suitable for receivership. It's usually a solution for a community that can't elect a board at all. There are different solutions for board members who aren't doing their jobs properly. That said, a 4-unit HOA will have some issues implementing some of those because of its small size - you don't have a luxury of choice that a larger community would.

In your place, if the board's shenanigans were getting on my last nerve, I'd be thinking seriously about moving before the situation blows up since it sounds like the property is at least being maintained pretty well. If I loved my home for some reason and didn't want to sell, I'd buy some time with a knowledgeable attorney so that we could discuss other options. I'd say you should probably forget about receivership - the economics work against you, and you can assume that you will permanently damage your relations with your neighbors and will probably end up selling anyway as a result. Don't underestimate the unpleasantness of living in a building where everyone hates your guts.

I'll repeat: you can always make this situation worse for yourself, so play the long game. Get a reality check and don't set anything in motion that you can't easily reverse course on.

I have read all the responses. Most of these issues can be resolved in small claims court with little expense to you. The court can order board to comply with CC&Rs or fine them. I've had to take this route because it's the only thing our board will listen to.

Thanks, Terri.

1. Can you clarify about taking them to small claims. Most of the issues are not $-based (like refusing to hold required meetings), so what would I ask small claims for – I thought small claims had to be $?

2. I know the CC&Rs are enforceable by a member or the board, but if I point out that our CC&Rs says we are half a year overdue for elections and the Board still refuses to hold them, what can I do?

Thanks.

This is a 4 unit complex with all units on the Board. Exactly what do you think is going to happen? One against three ain't real good odds. Just my opinion mind you.

Terri - once again, you are brilliant. I am very grateful.

(Max - I have one heck of a paper trail! That should even up the odds a bit.)

Keep in mind that Liz will have to live with the results of whatever happens. It's one thing to antagonize folks who live a few blocks over and whom you seldom see. It's a whole 'nother issue to live in the same small building with angry neighbors whom you see every day.

A friend of mine had a name for situations like this. She called it "dying in full possession of the right of way."

I remember reading up on some well-publicized HOA cases where the plaintiffs were clearly in the right and the boards were clearly in the wrong. They won their cases, but all of them sold their homes afterwards, in part because the neighbors were so unpleasant.

The trouble with these tiny condo communities is that actions can have oversized consequences. Stuff that works just fine in a large community won't necessarily work in a small one - or it will work but the negative consequences will outweigh the positive ones. People tend to focus entirely on what success will look like without considering all the ways in which things can go wrong. Rosy scenarios without a good dose of reality can lead to unpleasant experiences, and not just for the person who initiates the action.

(Disclosure: I've lived in a 6-unit condo community, although these were townhouse style homes that offered more privacy than a multi-unit building with a single front entrance that everyone had to go through.)

how do you know the board didn't vote on it?
What makes you think the board wouldn't have gone with this company anyways?
When we got insurance I told the other board members this is what we should get and they said ok?
You really think other board members are going to read insurance documents?

you are complaining about getting insurance? Maybe you need to calm down.

I agree that sometimes a lawsuit is the only thing that works.

In this case, the would-be plaintiff needs to take a hard look at how that's likely to play out - including the time, money and effort needed to pursue the lawsuit, the likelihood of success, and the end result even if the plaintiff wins (damaged personal relationships, people refusing to serve on the board, and the effect on future assessments, including and especially as regards to obtaining insurance).

I was thinking last night about tiny condo communities in general and the challenges they face. As I'd mentioned upthread, things like economies of scale that benefit large communities actually work against the tiny ones. This means that the risk-benefit calculation will change depending on community size. I finally concluded that issues I'd call out in a larger community I would let slide in a tiny one, because I believe that the negative consequences of trying to correct the issue could result in greater harm. Obviously this will depend on the issue and the players involved, but lawsuits will almost certainly cause economic harm that a tiny association (and one or more neighbors!) may not recover from. (*)

I vaguely remember one of our regular posters once commenting that he would never live in a tiny community. And after 14+ years serving on condo boards and 17 years working for a new home builder (I hear scuttlebutt), I firmly agree with that poster's comment.

(* In many states, community association laws exempt tiny communities from some of the provisions because of this reality. Anyone in a very small community who is contemplating the lawsuit should be very certain before proceeding. A talk with a knowledgeable attorney is a must.)

Perhaps. In a small development (the OPs is only 4 units), it's harder as the entire development can make up the board.

Going to court as suggested think going to make things better? What if the court rules to remove the President? Who then steps up? Or does it go into receivership as the OP wants that option as well? Just because they do not like how the President does the job. If can do better then do the job. If not, let the person who wants to do it.

It is noted that the lawyer is the HOA lawyer and NOT the individual member lawyer. The lawyer represents the HOA in whole. So they are not going to be "nice" to those whom are suing them. They are not their clients.

Suing your HOA is suing yourself and your neighbors. The HOA lawyer is the lawyer you will go against if you sue.