💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in

TimB4 (Tennessee)
Posts: 21,062
Posted:
Hello all,

Our CCO (chief complaining officer) sent an email requesting the board "do whatever is legally necessary to bring a bylaw amendment to the membership."

The proposed amendment was "Any NEW items proposed by the Directors, which require any financing, must FIRST be approved by the Homeowners, before any action is taken by the Directors."

Since the email did not have the required number of lots to call a special meeting, the board took the email as a request. We spent a lot of time discussing the issue with facts and figures. The board rejected the request and sent a letter detailing why the board would not bring the proposal to the membership. We included that we would reconsider if they would reword the amendment to address the issues we outlined and pointed out that they could bring the issue to the membership if they followed procedures outlined in the statute to call a special meeting.

The Boards reasoning for denying the request to bring the amendment to the membership was:

1) Requirements that must be met for members to vote under the TN Nonprofit Corporation Act.
(may only vote at a properly noticed meeting where a quorum is present or by unanimous written consent)
2) Cost involved in having a meeting to vote on an expense (we must mail our notices a minimum cost of $114 per meeting)
3) Subjective terminology (define "new")
4) Expense not quantified (must we get membership approval for a $10 expense?)
5) Delays in any board action that requires expenditures (an annoyance in buying a sign, a hazard in having to repair a common element)
6) Current quorum requirements (we have only had a quorum at a general membership meeting once in 20 years)

They must have gotten our reply because tonight, we received an email saying (in part):

It would have been nice if we [the board] invited them [the writer of the proposed amendment] to the meeting. That they think "we [the board - perhaps the members] have lost common sense in running our association." "With all these rules and regulations you are quoting it appears that the Board can do whatever they want, spend whatever they want and the members have no say in the matter."

I'm looking for a simple response we can send OR is no response at all a better response?

Thanks for the assist,

Tim
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Tim

The answer to him should show what the BOD can spend without member approval and when member approval must be required. Show him his "the BOD can spend whatever it wants to" is incorrect. Also as a CCO, it might be best not to answer unless he raises the issue higher such as to all fellow owners.

He is the CCO and will never be happy. One way to quiet a CCO, especially if the BOD is honest, is to get him on the BOD so he can see how you operate.
CathyA3 (Ohio)
Posts: 6,299
Posted:
His proposed amendment contradicts state laws governing non-profit corporations, since the board is the decider of everything except for a few items that are specifically reserved to the membership (eg. voting on most amendments).

If the membership becomes the ultimate authority:

* They are accountable and thus open themselves up to lawsuits.

* They are not covered by D&O insurance. They are also not protected by the Volunteer Protection Act since they are not volunteers.

* Their personal insurance may not cover them in these events.

* The HOA's insurer may decide to give your community a miss.

* Economics do not respond to votes or other wishful thinking.
CathyA3 (Ohio)
Posts: 6,299
Posted:
Quote:
Posted By JohnC46 on 12/09/2024 11:06 PM
... One way to quiet a CCO, especially if the BOD is honest, is to get him on the BOD so he can see how you operate.

FWIW, we've had a few CCOs on our boards. What happened was drama and constant disruption, making it even harder to get things done. A single CCO can prevent a unanimous decision if one were needed (eg. action without a meeting).

I prefer to allow our CCOs to discredit themselves and allow the membership to see their nonsense for what it's worth. So: transparency and education.

Our hoard is in the process of resetting things after a group of CCOs took over the board and got us into trouble. While not calling them out specifically, I'm educating the community about how money actually works. For example, "we can't pay our bills with assessments set at the previous levels, and there is a special assessment in our future if we don't right the ship now. Things will only get more painful if we kick the can down the road."
SheliaH (Indiana)
Posts: 6,964
Posted:
I'd leave it alone for now. The homeowner made the suggestion, the board did its research and determined it wasn't workable and sent a detailed response to the homeowner explaining why. It's ok for the homeowner to disagree, although it appears this is something other homeowners aren't interested in (otherwise they would have cosigned this homeowner's suggestion in large enough numbers to proceed).

If the homeowner comes to a meeting and brings this up during resident forum, refer back to the response and ask for SPECIFIC examples where getting homeonwer imput would have been appropriate. If the board hasn't had to finance anything in the past, one wonders what prompted the question in the first place, and if he can't answer that, he'll need to do more research and convince his neighbors. Then the board can take this up again.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
ElleN (Idaho)
Posts: 1,338
Posted:
The Tennessee Nonprofit Corporation Act at 48-58-101 (c) says:

"The charter of a mutual benefit corporation may authorize a person or persons to exercise some or all of the powers which would otherwise be exercised by a board. To the extent so authorized, any such person or persons shall have the duties and responsibilities of the directors, and the directors shall be relieved to that extent from such duties and responsibilities."

This HOA appears to be a mutual benefit corporation as defined elsewhere in Tennessee statutes.

What does this HOA's charter say about amending the charter? Subsequently one has to read the Tn statute about amending the charter. The legal research involved here is within TimB4's capability but I doubt it is within this CCO's capability. The Board should not be doing homework for the CCO.

What to say to the CCO (call him "John")? I suggest responding to him as follows:

Dear John,

Such a bylaw amendment would conflict with state statutes. When bylaw-statute conflicts arise, the statute trumps the bylaw.

In our experience the best way to effect change is to get elected to the board. If you wish to run for the board, please let the HOA know pursuant to the mailings sent before the annual election occurs.

Thank you,

BOD

ElleN (Idaho)
Posts: 1,338
Posted:
Quote:
Posted By TimB4 on 12/09/2024 7:17 PM

I'm looking for a simple response we can send OR is no response at all a better response?
I will amend my last response to say "no response" might be best.

I do not like responding thusly to an owner. I think a board exists partly to educate, after all. But the reality is that a substantive response to what this CCO wants is legally complicated. As well: For this HOA's board, TimB4 is likely the only director who could explain the law here. Yet it is the board that responds, not just TimB4. If the board wanted to respond, then unfortunately it should run what TimB4 says by an attorney. Getting the advice of counsel here to answer this one owner's questions is not an appropriate use of HOA funds.

The CCO is (unknowingly) fishing for legal advice. The board cannot even say "Hire an attorney," without risking some liability, as the advice "Get an attorney" arguably invites litigation or at a minimum, the guy lawyering up, forcing the HOA to lawyer up, insurers possibly becoming involved et cetera. This CCO has to figure out that he has to hire his own attorney.
TimB4 (Tennessee)
Posts: 21,062
Posted:
Quote:
Posted By ElleN on 12/10/2024 7:15 AM

What does this HOA's charter say about amending the charter?

Our charter is as bad as our bylaws.
It is basically the application (which also serves as the articles of incorporation).
This document specifies:

1) we are a mutual benefit corporation
2) we are not a religious corporation
3) we will have members (but membership is not defined)
4) the name and address of the initial registered agent
5) the name and address of the board at the time (serving as the initial incorporators)
6) the address of the principal office of the Association
7) statement that if the corporation is dissolved, the funds are returned to the then owners.

We are actually checking with an attorney to see if the Board can adopt a new set of articles of incorporation or if it must be a membership vote.
If the board can amend, we can get some of the issues our failed bylaw rewrite would have corrected (the requirement of directors, define membership, define voting rights, etc.)

We had already replied to the CCO, in detail, why the board would not bring their proposed bylaw amendment forward.

The question is what response would be appropriate for their follow up email of them complaining that we aren't bringing the issue forward.
The only question they had within that email was "why aren't we notified when you have meetings?"

This is the same person that changes the argument when you respond to them.
As an example: they wanted the bylaw rewrite to be reviewed by an attorney. The board had an attorney review the rewrite. The argument then changed to how much did that cost and why wasn't the membership included in that decision to spend money?
TimB4 (Tennessee)
Posts: 21,062
Posted:
Would a response of:

Thank you for your email, the board will take your comments under advisement.

blow things up more or would no reply blow things up more?
ElleN (Idaho)
Posts: 1,338
Posted:
Quote:
Posted By TimB4 on 12/10/2024 8:18 AM
Would a response of:

Thank you for your email, the board will take your comments under advisement.

blow things up more or would no reply blow things up more?
I think what you wrote above is better than no reply.
TimB4 (Tennessee)
Posts: 21,062
Posted:
Thanks to everyone that replied.

I sent an email with the simple "thank you for your email, . . . "

Tim
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Quote:
Posted By TimB4 on 12/10/2024 8:18 AM
Would a response of:

Thank you for your email, the board will take your comments under advisement.

blow things up more or would no reply blow things up more?

I like this response.
KerryL1 (California)
Posts: 14,550
Posted:
agree w/others your reply is good, Tim.
DeanJ
Posts: 1,786
Posted:
Quote:
Posted By TimB4 on 12/09/2024 7:17 PM
Hello all,

Our CCO (chief complaining officer) sent an email requesting the board "do whatever is legally necessary to bring a bylaw amendment to the membership."

The proposed amendment was "Any NEW items proposed by the Directors, which require any financing, must FIRST be approved by the Homeowners, before any action is taken by the Directors."

Since the email did not have the required number of lots to call a special meeting, the board took the email as a request. We spent a lot of time discussing the issue with facts and figures. The board rejected the request and sent a letter detailing why the board would not bring the proposal to the membership. We included that we would reconsider if they would reword the amendment to address the issues we outlined and pointed out that they could bring the issue to the membership if they followed procedures outlined in the statute to call a special meeting.

The Boards reasoning for denying the request to bring the amendment to the membership was:

1) Requirements that must be met for members to vote under the TN Nonprofit Corporation Act.
(may only vote at a properly noticed meeting where a quorum is present or by unanimous written consent)
2) Cost involved in having a meeting to vote on an expense (we must mail our notices a minimum cost of $114 per meeting)
3) Subjective terminology (define "new")
4) Expense not quantified (must we get membership approval for a $10 expense?)
5) Delays in any board action that requires expenditures (an annoyance in buying a sign, a hazard in having to repair a common element)
6) Current quorum requirements (we have only had a quorum at a general membership meeting once in 20 years)

They must have gotten our reply because tonight, we received an email saying (in part):

It would have been nice if we [the board] invited them [the writer of the proposed amendment] to the meeting. That they think "we [the board - perhaps the members] have lost common sense in running our association." "With all these rules and regulations you are quoting it appears that the Board can do whatever they want, spend whatever they want and the members have no say in the matter."

I'm looking for a simple response we can send OR is no response at all a better response?

Thanks for the assist,

Tim

I would include in your board minutes an amendment concerning future borrowing was discussed and no motion was made for a vote. I would then send a response stating the issue was throughly discussed at the board meeting and the board does not support this change.

If you have a newsletter, I would include the board considered an amendment concerning future borrowing and the reasons the board decided such change was not in the best interest of the owners.
DouglasK1 (Florida)
Posts: 2,046
Posted:
One more thing to note, the proposed amendment verbiage can be interpreted more than one way. The term "requires financing" could be read to only apply to things that require the association to take out a loan (financing).

Escaped former treasurer and director of a self managed association.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

  • ✓ Ask follow-up questions
  • ✓ Share your experience
  • ✓ Get expert advice
  • ✓ Access 350,000 discussions
Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here