Board Removed for unethical behavior

Started by TwilaB • 4 replies • 1366 views

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TwilaB (Minnesota)
Posts: 2

Posted:

I live in an assication of 144 units and have just been elected to the board of directors this past month. The previous board consisted of 5 members and during their term they voted to reimburse the secretary for attorney fees that she and the current president had incurred in seeking the removal of the 2007 board of directors. They said the board was engaging in "illegal" activities by receiving as monthly reduction of their association of $50. This has been going on for the past 20 years and was listed as a budget line item. I and another person were on the board when they voted to reimburse the secretary for paying #5,400 in legal fees and the vote was amongst the board of directors. The secretary could not vote since it was her reimbursement. I and the other board member voted against it and the president and the member at large voted in favor of it. The president then stated that he could vote to break the tie and he broke the tie in favor of the reimbursement. I and the other board member who had voted against the reimbursement immrediately resigned and the remaining board wrote the check the next day. I do not feel this vote for reimbursement was legal and since we have now removed these people from the board, I and the new board would like to seek criminal charges to recover this money. What do you think the next step should be as we hope to not incur any further legal expenses if possible. Could this be filed with our state AG office? How have other HOA's handled something like this?

RogerB (Colorado)
Posts: 5,067

Posted:

Twila, the motion to reimburse did not pass. The vote was 2 for and 2 against; the President can not vote twice. As to whether or not it is illegal to pay Board members, that depends on your controlling docs and state's Nonprofite Act. Often the By-laws state that Board members shall receive no pay. Surprisingly, the Nonprofit Act may allow payment to Board members.

Your state AG office will probably tell you this is a matter for your HOA to consider for civil court. If you don't want to incur any further legal expenses forget it and learn a lesson. Set up better internal controls in your HOA. BTW the cost to collect may be more than the potential loss.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

I agree with Roger, the motion did not pass. As he said, the vote was 2-2 and the president cannot vote twice. If any payment was made, it was not authorized. Shame on your president!

MicheleD (Kentucky)
Posts: 4,491

Posted:

Ditto. The president can certainly cast a tie-breaking vote, if there were a tie, but it appears that without his vote it was 1 to 2 against. So there wasn't a "tie." Once his vote is cast, he can't then vote a second time to "break a tie" that didn't exist prior to his vote.

Crazy!

TwilaB (Minnesota)
Posts: 2

Posted:

Glad that most replies concur with what we think. I am not sure what our AG's office will say but we definitely cannot afford to have any more legal expenses at this time. We do feel it was fradulently obtained and will check further as to what can be done. These legal fees were incurred by those two using an outside law firm and not the HOA attorney we had at the time.
Thanks for the input.

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