Maintenance Fee without Board authorization

Started by JackieB4 • 41 replies • 426 views

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JackieB4 (California)
Posts: 398

Posted:

I have just received confirmation from owner of our PMC that there is no documentation of our HOA BOD EVER passing this
Maintenance Agreement that invisibly started charging ARC applicants $400 + $85 in 2015. This unauthorized fee was brought to my attention(unpon my return to BOD) by a concerned owner.
My fiduciary duty led to a 5 month futile quest...until today. There is no confirmation. I feel membership should be made aware but how to do it within my legal scope? I also feel money should be refunded to each owner. Help!

ElleN (Idaho)
Posts: 4,420

Posted:

To whom was this fee paid? The HOA? The PMC?

Are there any signs of what the purpose of the fee was?

What do you mean by "invisibly"? Did owners who submitted ARC applications have their accounts billed, without notation for what the $485 was for?

Do you agree that something must have transpired resulting in this fee being billed to owners?

There is something to be said for a party acquiescing, without complaint, to a practice (presumably being a part of the greater contract of HOA living). The courts have ruled that two parties doing xyz long enough as apparently a part of a greater contract can make xyz a part of the contract.

I would be considering no longer charging this but otherwise, taking no further action. This is because you cannot be 100% sure that this was not board approved. Just because something is not in the Minutes does not mean it was not board approved, right?

Let's see what others opine.

KerryL1 (California)
Posts: 14,550

Posted:

Along with ElleN's questions:

Do your CC&Rs include verbiage that the Assoc. has the ability to charge Owners for various aspects of Arch. change?

Do you have an ARC committee? or does the board approve such changes?

How do you know this fee began in 2015? Is it because you were on the Board prior to that year and there was no fee? Or is it becaeu you have seen an ARC app where that fee was charged?

How do you know a fee was charged to an Owner in 2015? Have you seen the application for that year?

What does the $400 + $85 supposedly pay for? Is it the same fee for every application? On your financials, how is this fee treated? What is it called?

In trying to find meeting minutes to show that the Board approved this new fee, did you also review executive session minutes? Though the decision should have been made in an open meeting in CA, some Boards do not follow the law.

In about 2013, there was new legislation about rule changes in CA whereby the proposed rule, which would include a requirement to pay fees*, must be sent out to Owners before the Board considers approving it. I'm trying to remember: at first, owners had 30 days to comment before the Board met again to approve (or not) the change. But then some brilliant person realized that it would be two months between the introduction of the rule and its final approval (if so decided). So, if this fee was introduced in '15, it should have been sent out to owners for 28 or 30 days for their comments. AND your PMC at that time probably would have done the mailing, etc.

*This wouldn't be considered a "maintenance fee," which is how an old PM of ours referred to our monthly assessments or "dues."

JackieB4 (California)
Posts: 398

Posted:

Ellen,
I was hoping my message would catch your eye. I will answer each question or comment as honestly as I can.
Purpose? Nowhere in our documents is this Maintenance agreement mentioned/explained. That's why I used the word "invisible."
Something transpired because an owner sent me a copy 2/2023 showing PM asked for $400 recording fee + $85. notary fee to accompany her ARC application for a small (typical)
landscape change. I had made the same landscape change 15 years ago without any fee.
Party Acquiescing is a stretch (lol) but ?? Property Management keeps dodging the bullet with my requests for more info? For our prior 30 years as HOA there has been no fee
attached to any ARC application. We are a simple 140 single family homes community, NO pools, club houses, tennis courts, etc.
We are a 3 BOD, and I am the odd-person out, asking the when, where, how?
One of the new Directors brought this PMC with him in 2014-2015, then dropped off BOD. The other Director is personal friends with PM. They do not support owner's concerns with
where this fee came from? This has been a 5 month Food-fight and today OWNER of PMC responded "the board can talk about this at the next meeting" = July 12.
As an FYI, I had this posted open meeting agenda for March and May, but PM booted it into EXEC. "It's a contract." I responsed "It's a contract being implemented, so Open
Session is ppropriate. Owners have asked me for F/U." I can't imagine any Court upholding "acquiescing" ...to owners expecting their well paid PMC + elected vol.
Board(neighbors) to abide by their documents(1987). Also I am clueless where this money is going? Agree: Let's see what others opine.

JackieB4 (California)
Posts: 398

Posted:

Kerry, we crossed in this messaging. Sorry! I think my chat with Ellen covers most of your questions. Our monthly fees are $135/mo. This Maintenance Agreement ISN'T our Maintenance Matrix which covers the standard stuff: landscape, streets, sidewalks, mailboxes, lightbulbs, bulletin board, etc. Alledgedly the $400 is a "recording fee" and the $85. is a "notary fee." (FYI, CA notary fee limit is $15.) I have a Board that won't discuss it; I have a PMC that won't provide validation the $485. was ever approved. I don't know where the money is going or how much? I want to stand on my roof and scream to members.."'WAKEUP" but don't want to end of in the slammer or spend thousands of my retirement fund for outside legal. Hopefully NEW Board in May 2024, but meanwhile it's like watching a chronic bank robbery.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The PM works for the Board. Maybe time to look into replacing them. This does not sound like a HOA fee. It sounds like something associated with the PM. Maybe there is some kind of fee charged if they needed to get a permit for the work being done? Do you required a permit to do certain work like a storage shed or run electrical? If this was a "recording fee" for a service/permit the PM or the HOA would be out of pocket for filing, then the charge makes sense. They have the right to be made "whole". However, if this is a charge the PM is doing for ARC requests then it should be known they are charging for an ARC request.

The HOA should NOT be reimbursing a dime if the PM is charging. It's NOT the HOA's dime. That is something the PM is doing on their own unless that money is showing up in the HOA budget.

Former HOA President

JackieB4 (California)
Posts: 398

Posted:

Yes, PM is one of many vendors. No city permits required. Yes, PM is collecting without any Portal documentation or Board approval. Yes, owners are doing what is being asked when they submit an ARC application. I became aware 5 months ago upon returning to our BOD. My fiduciary inquiry is being stonewalled by 2 Rogue directors(explained previously.) So annual election is in 1 year. Our legal vendor is very aware of my concerns and I have seen their invoices billing/receiving $159. for "Maintenance agreement."
What are my legal options now?

KerryL1 (California)
Posts: 14,550

Posted:

Jackie wrote: "As an FYI, I had this posted open meeting agenda for March and May, but PM booted it into EXEC. 'It's a contract.' I responsed 'It's a contract being implemented, so Open
Session is appropriate.' How is this fee a "contract?" It's best if contracts are in writing. So.... where is this contract? Who are the parties who entered into it and signed it?

As a member of this CA HOA, you have access to the HOA's financials. Read them and find out how this $485 is treated. Read the contract with your PMC to make sure there's nothing in it about this fee or other fees they might add.

Can the "concerned owner" who brought this matter to your attention, show you how this was "recorded" on her property? Can this owner show you the notary stamp? Can you review the file on her property to see if such documents exists? Put sort of another way, have you seen any evidence of this fee with your own eyes? This all does sound very problematic, but there seem to be missing pieces.

Is there an ARC or does the Board approve applications?

I agree with you, Jackie about the possible "acquiescence" issue. There are strict laws about making new rules (and fees) in CA HOAs and it appears that your Board did not follow them. But I'm not sure you've seen hard evidence. And then what? To make a run for the Board next May, I'd say it's too early and too premature to say anything to owners about this. start your list like JamesB in CA.

ElleN (Idaho)
Posts: 4,420

Posted:

With an eye to getting down to the brass tacks of the situation today:

It sounds like the main problem is (remains?) not having a board majority willing to order the PM to do xyz.

Regarding getting items on the agenda, I hope you are quoting back to the manager that any director can have items placed on the agenda. No board vote is needed to do so. At least, the D-S law firm says thusly at https://www.davis-stirling.com/HOME/S/Setting-the-Agenda.

I agree this is an open-meeting agenda topic.

I would go into the board meeting armed with a motion for the HOA to cease stating there is a fee, on account of there being no evidence for this fee's authorization. I would aim to be as honest as possible, stating the PM and I had looked and found no authorization for it. Nor does anyone know to whom the money was paid. Nor does anyone know if money was ever collected (right?).

Without knowing whether the money went to the PM or to the HOA, I do not think one can consider having the HOA refund the money.

I would try not to be discouraged if you are shut down. Majority rules (unless one wants to try the IDR and court routes), even if the majority is corrupt. That's life on HOA boards. I would keep biding my time until there is a new board.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By JackieB4 on 06/01/2023 6:20 PM
Yes, PM is collecting without any Portal documentation or Board approval.

Oops; missed this.

Quote:

Posted By JackieB4 on 06/01/2023 6:20 PM
Our legal vendor is very aware of my concerns and I have seen their invoices billing/receiving $159. for "Maintenance agreement."

What do you mean by "legal vendor"? Do you mean the HOA attorney? And the HOA attorney is billing for consultations on the "maintenance agreement"?

JackieB4 (California)
Posts: 398

Posted:

Ellen, Love the idiom BRASS TACKS. Yes, Board majority not sharp nor willing or supportive to look into this issue, brought to my attention (President) by a long-term owner. New Board next May 2023 has my focus; I will also re-run.

I have quoted Davis-Stirling ad nauseum re: agenda items, open session vs Exec, Directors don't need "other Director approval" to place an agenda item, etc.... but PM has the other 2 directors in her pocket. PM moves this MA into executive with 2 directors agreeing. Yesterday, PMC OWNER (difficult PM no longer part of our "team") said "Ultimately, the board can talk about this at the next meeting as far as your concerns and what you are trying to accomplish. The Maintenance Agreements are drawn up as the need arises."

I sense she is hoping to get 2 Directors to vote this MA in @ "next meeting?? (Exec session??). This will be a repeat of our past 3 bimonthly meetings...my repeated request "just show the minutes with Board approval." In March, PM asked "for more time to research this." OK.

I did see several invoices from our legal, hired by PMC, that legal was paid around $150. from our HOA funds..."Maintenance Agreement." This Legal also is paid $500/mo (retainer??) + a a different firm for "assessment recovery." Foreclosure is a rare occurance here. We don't have typical anemenities that attract lawsuits.

July 12, 2023 I will be quoting your perfect wording re ARMED WITH A MOTION. Discouraged simply isn't part of my DNA.
If I could share this "mismanagement" with owners I am sure the meeting woild be well attended. Any suggestions?

KerryL1 (California)
Posts: 14,550

Posted:

Jackie, what the heck ARE these "maintenance agreements?" Who signed this agreement? When?

JackieB4 (California)
Posts: 398

Posted:

Kerry, They must have dropped from some iCloud? Not posted on Portal; not found with ARC application; PMC + prior Directors remain radio silent; It's been 5 months of "kick the can down the road" by our "leadership.

ElleN (Idaho)
Posts: 4,420

Posted:

JackieB4, you asked about options within your legal scope. Sometimes there just are not any appealing options. I tend to think pursuing a complaint against a board while serving on the board is inadvisable in general. It is messy legally. It can lead to a board majority having the lawful right to not include the director in certain board discussion. You could resign from the board and pursue IDR and certain issues worthy of California small claims court. But stonewalling and delay might be the board's approach. Stonewalling tends to be effective, at least for the roughly one year that remains until the next election. My sense is you are at least a little better off staying on the board.

I do validate your concerns. Not to be nice, but more to say that yes, I agree what is going on is a big deal. I loathe that the PM seems to be hiring the attorney and deciding when to consult the attorney, without any board input. These MAs sound like a scam. And so on.

You went straight to the CC&Rs to see if the HOA could charge for ACC applications, and this is so admirable. Then you checked to see if any documentation exists for a board vote (even if charging is not allowed under the CC&Rs). It would annoy me enormously that nearly $500 is being charged for an ACC application. This forum does not see charges in general for ACC applications, unless maybe something highly complicated is involved, like maybe a roof solar installation. It sounds like another scam. The evasiveness on what this ACC charge is seems to support that this is a scam.

My personal enemy is often cognitive dissonance. If if is for you as well, maybe one goal in the next 11 months should be not letting the cognitive dissonance get to you, because you have an eye on causing change at the 2024 election and you need to conserve energy.

Like you posted, maybe the best thing to do is to continue to get these topics on the open meeting agenda and then asking questions at meetings. Hopefully some owners will add their questions and resentment during the open forum segment. In other words, and as I think you know well, the mission is to get information out to owners so as to abet electing a new board in 2024. Staying automaton (briefly quoting covenants and statute sections) and having a demeanor of "just the facts" at all meetings is important to maintain sanity. Do not let the many losses in board votes, that you likely will suffer, affect your morale. Motion, discuss, vote, lose (or maybe win now and then) and move on. Vent here early and often. Alcohol in moderation is appropriate self-medication AFAIC.

JackieB4 (California)
Posts: 398

Posted:

Ellen, Idaho is lucky to have you. Your confirmation just lowered my blood pressure, along with my alcohol budget. I have a good life and this is just a dip in the road. But to ignore what has become the obvious just isn't in my DNA. Crossing the legal line vs silence has been my challenge; I agree 100% and THANK YOU BIG TIME with this discussion.

ElleN (Idaho)
Posts: 4,420

Posted:

JackieB4, you are welcome. Watch closely for retaliatory maneuvers. Chief among these is a board majority consults the HOA attorney without you present and comes up with a scheme to legally harass and attempt to humiliate you, undoubtedly with the manager helping and egging on the effort. The HOA attorneys who are jerks will explain that you are an "adverse party" to the board majority, and so you are no longer privvy to all communications on certain subjects.

I happen to believe you are tough. But I think it helps if one can anticipate unsavory moves in particular by rogue directors.

JackieB4 (California)
Posts: 398

Posted:

Ellen, "Retaliatory maneuvers" started a month ago... NOT in the way of "violations" because I have not committed any violations. Apparently there is an obsolete way to still harass called Censure. PM + 2 directors held a closed Executive Session: Executive Committee meeting, of which I was blocked to attend. The jerk attorneys sent me a 3 page letter "censuring" me for everything Generic/nonspecific they could drum up..."but you remain President of the Association." This was meant to intimidate me (didn't) but actually made me LOL. I am holding their feet to the fire for possible financial mismanagement (?fraud) and their letter reminded me of my FIDUCIARY DUTIES AS A DIRECTOR. OMG...you can't make this stuff up. Fortunately my recent re-election was an overwhelming success: 60, 30, 25. I just learned yesterday that jerk attorney will be attending our July meeting. Onward!

ElleN (Idaho)
Posts: 4,420

Posted:

Wow. I have seen this before.

This board majority and its (sic) attorney are ass----s.

I hope its tattooed on the back of your hand that this law firm is doing what the board majority tells it to, using bad rationalizations like "the law firm takes instruction from a board majority." And it does not hurt its revenue either. The more conflict a law firm can help support in a HOA, the more money it makes. No question.

Funny how they will not remove you as President.

At the July meeting I hope you sit there and calmly rebut everything the attorney says. Pound on the importance of how following the law is in the best interests of the corporation. Ask the attorney point blank: Do you think the board should follow the law? Isn't this in the best interests of the corporation? Mr. (Ms.) Attorney, don't you have a fiduciary duty to promote what is in the best interests of the corporation?... Then why aren't you telling the board to follow the law?"

The numbers for your re-election say it all. Way to go!

JackieB4 (California)
Posts: 398

Posted:

Ellen, I will add your questions to my list for Ms. Attorney. It's been a pleasure to have this conversation with you. I will definitely update after July 12.
If I wasn't living this unbelievable conflict, I'd think it was a spoof from SNL.

KerryL1 (California)
Posts: 14,550

Posted:

Please clarify, Jackie: When did two directors become an "executive committee," which requires Board approval? In other words, were you a part of approving this "committee?" If not, was the executive session to censor you posted two days before it was held as required by the (Davis-Stirling) Act?

Is Ellen's advice for the open July board meeting? Is that the meeting the attorney will attend? How many owners usually attend board meetings. do I remember right--they're held in your home?

JackieB4 (California)
Posts: 398

Posted:

Kerry, I happened to see a posting on our Bulletin Board (only), announcing an "EXECUTIVE Session: Executive committee" meeting for the next day. As President of the Board, I was NEVER/NOT included in discussion/scheduling etc. As a matter of fact, I googled Executive Committee to see what this was? Censure rogue director? I signed into this meeting but was blocked. Simply, the PM + 2 directors were having their trial without defendant allowed. It didn't succeed with their intimidation goal. The July meeting is our next bi-monthly meeting and I assume our Director positions will be determined ...then Open Session. I have asked that open session agendazize (?) MAINTENANCE AGREEMENT, which is why Ms. Attorney will attending.I have several owners attending July 12, but often PM + Directors change date/time 5 days before, making it impossible for owners to flex at last minute. The past year, 6 meetings, not one was at original date/time. Our meeting are both virtual and local(my home.)

ElleN (Idaho)
Posts: 4,420

Posted:

I say that the President presides at the meeting. I say that you should not permit Ms. Attorney to come into home without a warrant from say Merrick Garland, and that Ms. attorney must attend virtually. I say that you control the mute button and who speaks when. Without question, you will be far more fair than the other two directors. The reason this is fair is because if the two rogue directors (forming a rogue majority) do not like it, they can remove you as president at any time.

Be ready for a spontaneous vote to remove you as president.

JackieB4 (California)
Posts: 398

Posted:

"They" (rogue directors) can/could remove me as President but not as a Director...so essentially it's a moot issue. We 3 Directors have equal responsibility and power. Actually if I was OFF the board, this financial scam would be easier exposure to members. But off the Board would limit my access to information. I am on the board until our next election 5/2024. YIPPEE!!

KerryL1 (California)
Posts: 14,550

Posted:

If you intend to ask the attorney questions at the 7/12 open meeting, Jackie, you now have two questions about the two directors opposing the D-S Act. Oh, but wait. Perhaps they did post the ES 2 days in advance? Do you know for certain when it was posted? If so, they only needed to post it and nothing else. If so, they adhered to the statute.

But, if your Board at a duly noticed open meeting did not did not vote to form an "Executive Committee," your Board does not have one. Only boards in non-profits can form committees. As a "committee," then they have no authority to censor you. This is the first question I would ask the attorney, if you do follow ElleN's advice: "Tell us about the legality of a so-called 'Executive Committee' censoring me if no such Committee exists. Does this mean the two directors' "censor" is not legal?

Did you tell us that the reason for the attorney's presence at the 7/12 meeting is to explain the so-called "maintenance agreement?" This topic will be on the agenda, then, right, as you previously reported on this thread? The only contract matters that may be in executive session, in case someone tries to play it there, is contracts "in formation," i.e., one or more proposals that the board needs to discuss to award a contract. Existing contracts do NOT a qualify for ES.

Next, in the 3 pager censoring you from the attorney, are you instructed to do or not do anything? Are you, for instance, not permitted to take part in executive session agenda items on certain topics? Are you told to "cease and desists" from certain activities or behavior?

As president, of course you preside. But remember the board majority cannot vote to remove you from that office unless something like "Reassign Officer Positions" is on the posted agenda 4 days ahead of the open meeting. (Say, have you told us previously that the PM presides at meetings)? They may try to claim that removing you without any relevant agenda item is OK, becausee it's an "emergency." But then you simply point out to the attorney that the "censor" letter was written on xx/xx/xxxx, "so how can this matter be an emergency tonight?"

JackieB4 (California)
Posts: 398

Posted:

Kerry, I appreciate your message and thought given to this BS. I am focusing on the main issue and not all the side issues. I refuse to sacrifice great health and a good life to
the various tangents "possible fraud" could take. NO, the 3 page censure letter was simply THE POT CALLING THE KETTLE BLACK. "You have a responsibility to your community...". I have not violated anyone/anything!

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By KerryL1 on 06/03/2023 1:40 PM
But, if your Board at a duly noticed open meeting did not did not vote to form an "Executive Committee," your Board does not have one. Only boards in non-profits can form committees. As a "committee," then they have no authority to censor you. This is the first question I would ask the attorney, if you do follow ElleN's advice: "Tell us about the legality of a so-called 'Executive Committee' censoring me if no such Committee exists. Does this mean the two directors' "censor" is not legal?

It's "censure," not "censor." You should know, as you frequently advise people here to censure directors, as some sort of fifth grade punitive action.

A board majority has a right to meet with the HOA attorney without certain other directors present if the other director is deemed to be an "adverse party" on certain issues.

I agree with JackieB4: Skip the side issues.

ElleN (Idaho)
Posts: 4,420

Posted:

If this censuring issue comes up at the July board meeting, sling it right back at the other directors. "Ladies and Gentlemen, the directors who should be censured here are ___ and ___, for permitting a $485 for ARC applications when the governing documents do not allow this. And this is just for starters... "

JackieB4 (California)
Posts: 398

Posted:

LOL-Hopefully, July 13 will provide me sanity to send the F/U. Remember, the past 18 months (9 meetings) hasn't met on original date/time. Members give up trying to stay connected.

KerryL1 (California)
Posts: 14,550

Posted:

Ooops, of course it's censure. So sorry! I've advised censure 2-3 times, and it's a very adult and legitimate action advised by grown-up legal firms and others. Our Board censured committee members a couple of times for exceeding their authority and it's been very effective in bringing them back into compliance with their charters and returned them to their previous effectiveness.

The action against you, Jackie, of course is plain harassment & bullying.

Individual Board members have no right to authorize the expenditure of Assoc. funds for the attorney to write letters or attend a board meeting. Or is the latter included in the retainer? Only the Board may authorize such action. Indeed, since Jackie's assoc. has a retainer with this attorney, such docs usually state that only the president may contact her/him, not just any directors.

Since Jackie had not yet been voted to be "deemed" an adverse party (what conduct would comprise that definition?) in a noticed meeting, she was NOT, until, apparently she received th letter. . This, and the board majority's seeming illegitimate formation of an "executive committee" are just a part of the board majority's refusal to follow the law. I was supporting ElleN's approach to ask the attorney something like her, "Then why aren't you telling the board to follow the law?"

Yes, the mystery "maintenance agreements are drawn up as the need arises" according to your PMC is the big issue. You've seen this wording in your contract with the PMC, right? Perhaps by 7/12, Jackie, you'll have copies of invoices that have been sent to owners who had to pay this ridiculous amount that you can get from the monthly financial statements.

As I advised waaaay above, follow JamesB's of CA's approach and line up your ducks for next May, Jackie. Having done something similar, though I had to leave the
Board at the end of my term for a year to do it, I'd surely continue to be professional at your open meetings and hold off on letters communication to Owners about the Board majority's misconduct for a severe months. Sure, keep your list and add to it, but HOA Owners have short memories so, again based on my lived experience that was successful, start your campaign with your fellow owners late this year. You, of course, want to stay close to your current supporters.

Best wishes for your July meeting.

JackieB4 (California)
Posts: 398

Posted:

Thank you Kerry. It's been an interesting topic...that several of us have experienced: Same book, different chapter.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By KerryL1 on 06/03/2023 5:07 PM
a very adult and legitimate action advised by grown-up legal firms and others.

My opinion: Publicly humiliating a committee member in particular is dumb. It is about flexing muscle and demonstrating 'whose is bigger.' fails to go towards educating effectively. Call the person to a meeting with the board and explain the problem. If needed, have the attorney write a C&D letter. If the committee member resists, remove him/her.

Jackie, what are the chances that the rogue majority and HOA attorney cite a clause in the governing documents that says that expenses caused by less than all owners can be charged back to the owner? This is a popular maneuver. Sometimes it is legit. Sometimes not. Be ready and all that.

JackieB4 (California)
Posts: 398

Posted:

Ellen, I will verify each and every excuse. That's what started this SNAFU.

KerryL1 (California)
Posts: 14,550

Posted:

The two occasions our Board censured a committee chair, and a different entire committee was entirely in executive session as a disciplinary matter. The individuals involved first received respectful letters from the Board via the PM pointing out the problems and reminding them of their charters. At the executive session meeting, the president led a civil discussion and the committee members involved verbally promised to follow their charter, which they did.

We on the then-Board valued their service and wanted them to continue. Two of the total of five later became board members.

It's a shame that your experience, or what you have read, ElleN, is so disgusting and involves open meetings. We don't know if Jackie's board majority will censor her at an open meeting, when the Board states its executive session(s) disclosures.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By KerryL1 on 06/04/2023 9:29 AM
The two occasions our Board censured a committee chair, and a different entire committee was entirely in executive session as a disciplinary matter. The individuals involved first received respectful letters from the Board via the PM pointing out the problems and reminding them of their charters. At the executive session meeting, the president led a civil discussion and the committee members involved verbally promised to follow their charter, which they did.

What you describe is some flavor of corrective action. It's not a "censure."

KerryL1 (California)
Posts: 14,550

Posted:

Our Board prez, at the time had very strong skills & experience with meetings, agendas, parliamentary procedure, etc. as an MPA who was administrator of a large dept. with LA City Schools*. He also had served on a large HOA Board in SoCal. He & the rest of us 6 had just taken over the Board from an abusive and ignorant previous Board. There were 3-4 existing committees, that we wanted to retain, but that were demoralized and also ignorant due to the previous board's misconduct.

So just one of our many areas of reform at our HOA was to get the Committees back in their lanes and effective. The prez wrote and the Board tweaked a policy that we passed with a board resolution. There IS no law about the content of censures nor anything in our governing documents. The censure activity always occurs in executive session, used twice in 14 years, produced excellent results for our HOA, i.e., all committee members subject to it, corrected their misconduct stayed on their committees and helped them AND our HOA flourish.

And, your experience with censures, ElleN? Are there hard and fast rules about them in HOAs that you insist our Board--or any board-- should obey concerning committee members? What IS the propose of a censure? How are you qualified to judge our resolution and policy?

* If not the "real" name of the District, I'm sure ElleN will correct me. It's interesting to note that of the eight Board presidents with whom I served, the two with MPAs were most skilled at presiding at meetings, keeping them moving along, delegating tasks, and showing respect for all at the meetings including Owners at the two Owners' open forums held at each monthly open board meeting.

ElleN (Idaho)
Posts: 4,420

Posted:

When a committee member or directors violate the covenants, bylaws or rules and regs, constructive action is need. What "constructive" is AFAIC: A hearing; possibly getting the person to agree she or he violated xyz but will not do it again; and documenting this. If the person will not admit to a mistake, and will not agree to not repeating the mistake, then the committee member or officer gets removed, or if the person is a director, the director gets a C&D letter from the attorney. All to protect the corporation.

If "censure" had any value in corporate America, then I believe for profit corporate America would use it, and charitable nonprofits would use it. They do not.

I have every confidence HR departments also advise not using this approach, for defamation reasons.

I never seen a HOA or condo association where I lived use "censure." They all took constructive action like I describe above.

I do have every confidence that every single director (past or present) here has done something deserving of rebuke and much of the time, never was subjected to a "censure."

I think it's important to get people away from thinking that they are fifth graders who formed a club and have a treehouse where they meet and set their own rules instead of doing the obvious: Using the rules already on record.

Kerry, of course your HOA and others are going to do whatever they want. Your opinion is not mine.

KerryL1 (California)
Posts: 14,550

Posted:

I agree using "rules on record" is really important. If boards or Owners don't like the rules, there are methods by which to change them.

When, however, there are no rules,* the laws are silent, and the bylaws and other governing docs are silent, Boards can, should, and DO "make policy." It takes creative thinking to solve problems plus agreement by board members on a shared goal: Problem: some committee members were, as noted above, working beyond their charter. We directors, mostly new, valued the committees and wanted them to thrive -- within their charters.

As also written above, we called some on their misbehavior in executive session, and why it was important to stay within their charter's goals and activities. These members admitted they'd overstepped, promised to make repairs and the entire community benefitted. They, with the Board's support and respect, accomplished a lot. I guarantee every action from crafting a policy, to s distributing it, to using it, to the results of it were super-adult. I cannot imagine why anyone would think otherwise.

There seems to plenty of discussion online about censure of board members, which might interest some here. A couple of years ago, our Board included a fairly new director who'd already said and done some harmful things. When, for example, we were interviewing building engineers, he asked a candidate if he had children and what he would do about child care! The candidate's supervisor was visibly taken aback & the Board prez shushed the director. At an executive session, when discussing a thorny delinquency that we'd turned over to our collection attorney, "Al" proudly told us how he'd "helped." He'd phoned the delinquent and personally invited him to make some kind of financial arrangement. The president immediately called him on this potentially dangerous conduct. Al was so angry that we didn't appreciate his Lone Ranger heroics that he resigned. If he had not, I do believe this is a case when censure would have been appropriate.

* E-bikes, as just one example, for various reasons bring up the need for new policies.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By KerryL1 on 06/05/2023 7:47 PM
When, however, there are no rules,* the laws are silent, and the bylaws and other governing docs are silent, Boards can, should, and DO "make policy."

This is a gross conceptual error. Where statutes, the covenants and the bylaws are completely silent on a topic, a board should either stay silent or consult the HOA attorney.

KerryL1 (California)
Posts: 14,550

Posted:

ElleN wrote: "Where statutes, the covenants and the bylaws are completely silent on a topic, a board should either stay silent or consult the HOA attorney." I cannot perceive how any board can function effectively within the constraints that ElleN insists prevail.

Here are just a few cases, among many, where our boards made policies that clearly require no attorney's opinion.

"The temperature in the common areas and corridors is to be set at 76 degrees cool except the fitness center to be set at 70 degrees cool between the hours of 6:00AM and 10:00PM." "Non-compliance issues are to be closed after 6 months if there have been no further violation." "The water[fall] feature hours of operation are 8:30AM to 9:00PM." "Any Board Member or owners in good standing may place an item on the open board meeting Agenda no less than 10 days prior to the next board meeting." And clarification: "All agenda items must be submitted in writing no fewer than 10 days prior to the meeting using the Board approved form."

"All capital improvement requests over $5,000 shall go to the Finance Committee for its recommendation prior to Board review." "Management to waive a one-time late fee for Owners showing good cause for said late payment. Any recurrences shall come to the Board for review." "The order of signing contracts is President, Vice President, Secretary, Treasurer, and Director. The order of signing Reserve checks is Treasurer, President, Vice President, Secretary, and Director." "Management is authorized to make repairs and maintenance up to $5,000.00. Management is to put in weekly updates and Management reports any expenditures between $1,000 and $5,000." "Electric bicycles only may be stored in the P-2 Room #4 Bike Storage Room, but in no others, or in the separate interest condo Unit."

It's perhaps time to preview the Business Judgement Rule that is national. In Calif. Corps Code 7231: "(a) A director shall perform the duties of a director... in a manner such director believes to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. 
(b) In performing the duties of a director, a director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by: (1) One or more officers or employees of the corporation whom the director believes to be reliable and competent in the matters presented;  (2) Counsel, independent accountants or other persons as to matters which the director believes to be within such person's professional or expert competence..."

"Best interests of the corporation" are defined in an association's Articles and declaration (CC&Rs; covenants).

So I don't think I made a "gross conceptual error," and I'm not sure how "conceptual" is used in this overall context except to sound "educated?" I think I need to see some case law or statutes showing that HOA boards shall not make policy without their attorney's advice.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By KerryL1 on 06/06/2023 7:16 PM
ElleN wrote: "Where statutes, the covenants and the bylaws are completely silent on a topic, a board should either stay silent or consult the HOA attorney." I cannot perceive how any board can function effectively within the constraints that ElleN insists prevail.

Here are just a few cases, among many, where our boards made policies that clearly require no attorney's opinion.

"The temperature in the common areas and corridors is to be set at 76 degrees

Kerry, your HOA's covenants give the board the right to make reasonable rules about the common areas.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

To me, censure is about effective as a slap on the wrist from a wet noodle especially if on a committee member. Just remove them.

JackieB4 (California)
Posts: 398

Posted:

John....Ditto! Long live pasta. A Censure is meant to intimidate, discourage. If there was a legitimate concern it would be addressed via a VIOLATION. It's a joke and easy money for the attorney.

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