Closed meetings by the board

RodF1 (Michigan)
Posts: 2

Posted:

Our board has voted to illegally terminate a valid contract with our grass cutting service. we are being sued by them to enforce the contract. I have approached the President and asked him if I could speak to the board on this matter however he tells me all board meetings are closed. There is nothing in our By-laws that designate them as such. How do I get him to open this meeting up? Does anyone know of Michigan law that he might be breaking? The last meeting minutes showed the next meeting at same place, same time.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Rod:

I don't know what the rules/laws are for either Michigan or your HOA, so sorry, can't help you.

However, sometimes it becomes necessary to break a "legal" contract with a vendor. And sometimes they threaten to sue.

I'm sure as a homeowner you would want to be informed as to why the contract was broken.

We had a similar situation in our HOA. Our longtime lawncare provider (he had the contract for at least 5 or 6 years) threatened to sue us for his termination, and one of our former board members spread all sorts of incorrect information regarding why we severed our contract with the previous provider.

We normally don't hold our board meetings open for the general association to attend, however we did call a special meeting to provide information as to why this provider was "fired."

We discovered during the course of an audit that we did not have his social security number and that we were not filing 1099 forms regarding our payments to him. He is a self-employed lawncare provider. We were paying him something like $1,500 to $1,800 a month and the former board member had "negotiated" the contract with him. This former board member, it turns out, had "cooked" the bids to give the appearance that this provider was the low bidder. They are next door neighbors, by the way. He told the treasurer at the time that we didn't need to file 1099s on him. That treasurer is also the one who we discovered through the same audit was not even filing the association's OTHER tax forms! But that's another tale.

When we went to the lawncare provider to obtain his SSN and to let him know of the oversight, he told us that if we were going to file 1099s then he would have to increase his monthly fees to accommodate for the taxes that he would now have to pay on his income.

We told him we could not do that and that if he were to insist on the increased fees, then we would have to terminate the contract.

He then threatened to sue us and sue us for back "pay" since we were going to be filing 1099s for the previous year as well. He said that we would have to pay him roughly 30% additional each month because his bid was "reduced" by that amount as a "favor" to us.

He was alleging "breach of contract" claiming that the former board member had promised him that we would never file 1099s. Over course, if that indeed ever happened, it was clearly verbal and NOT an agreement that the board would have ever entered into. Our contract was pretty simple. And there was nothing in writing that specified we would not file 1099s.

Opps.

So what gets told to the community by him and the former board member? That we were "illegally" severing his contract.

We ended up finding a new lawncare provider who is providing 3 times more coverage at a monthly rate of $1,200 each month. In other words, we got more cuttings over more acreage throughout the year with $300-$500 on average less per month.

We did end up calling a special meeting to address this contract debacle with the association members.

In case you're wondering, he never did file suit against us.

GlenL (Ohio)
Posts: 5,491

Posted:

Rod how do you KNOW they ILLEGALLY are cancelling the contract and even if you do speak to the BOD they may not respond, legal matters are the one item States generally seem to deem that the BOD can maintain confidentiality about.

As to whether they have to open the board meetings to you, check your documents then check Michigan's HOA law (if any) and their laws concerning corporations. If you are a stockholder to a corporation you may have the right to attend the annual meeting but not the BOD meetings.

Studies show that 5 out of 4 people have problems with fractions

DeborahW1 (Michigan)
Posts: 10

Posted:

Here's a link to the Michigan Condo act:
http://www.michigan.gov/dleg/0,1607,7-154-10573_45007_45038-160301--,00.html

But I'm not sure there's anything about meetings in it. You might want to call your management company and find out when the next meeting is and request to be put on the agenda with a co-owner concern. We do a portion of our meetings for co-owner concerns, you could try addressing the board that way.

Deb

SusanW1 (Michigan)
Posts: 5,202

Posted:

Rod didn't say if he was in a condo situation or not. In any case, looks like there's no MC and the Board is entering into contracts with service providers.

That is within their power. There must have been a reason for them to sever the contract. (poor service?, poor quality of work?) How do you know it was not for good reason? How is it that you think you should speak at the Board meeting?

Anyone can sue anyone . . .

What did you want to say to the Board about this?

(Usually the meeting belongs to the body that is meeting. That means Board members at Board meetings. Check your bylaws about general members' particpation at Board meetings.)