board protection from liability

Started by BarbaraD6 • 8 replies • 1340 views

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BarbaraD6 (Florida)
Posts: 347

Posted:

The president and secretary have been giving orders to the manager. A majority vote of "the board" has been ignored. The last straw is, my fellow board member found out that the other 2(pres and secr) gave manager permission to foreclose on a property. My fellow board member and I send emails pointing out the violations to the manager asking for info but our emails are never answered.We know that every board member is responsible for actions taken by other board members and the manager. We don't want to be sued(my fellow board member will be fired from her job).I have now requested a board meeting with the association lawyer and our manager's supervisor to be present. Is their anything else we can do to protect ourselves from being sued for the actions the others?
thanks
Barbara

MicheleD (Kentucky)
Posts: 4,491

Posted:

I don't know how your contract with the management company is set up, but it seems to me that the manager cannot be beholden to multiple masters.

There needs to be one, at most 2, points of contact between the board and the management company.

The management company cannot be playing "guess who is your boss today."

It's ineffective and inefficient.

So it appears the manager has determined, in some fashion, that she/he is to communicate with and take marching orders from the president and/or secretary. My guess is she/he decided on the president and the president may have directed her/him to work with the secretary as well.

Without knowing both sides of the story, I can only presume that the president is acting in good faith regarding whatever direction is being given the management company.

So it sounds like an internal board issue, with competing factions.

It seems you guys need to work out some communication and pecking order issues between yourselves.

By the way, we don't have a management company, but we do have an attorney.

Our president is the primary contact, with me as back up. If our attorney were to receive either direction or requests for information from other board members directly, he would immediately confer with our president regarding whether or not to respond to either the direction or the communication.

We would probably fire him if he did otherwise.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Okay. Sorry I didn't answer your question.

Perhaps you need to look into the details of your HOA's D&O insurance.

While anyone can basically be sued by anyone at any time for any reason, winning a legitimate cause of action is something different.

I think you are overstating your exposure in a lawsuit in this case.

If the board members are acting in an illegal fashion, and you are aware and condone it, then maybe you have some "exposure."

But simply having board members carrying out what they consider their fiduciary duties, while you may differ in opinion with them, that doesn't necessarily make you a target for a lawsuit.

If they are acting in what they consider good faith regarding the association, and they are not doing anything illegal, then I'm not sure what you would be held liable for.

Who would be suing them (and therefore, you)? and for what?

SusanW1 (Michigan)
Posts: 5,202

Posted:

Barbara - what is the PROCEDURE for filing a lien?

Perhaps the president simply told the MC to carry out the step by step procedure.

The entire board does not implement ALL and EVERY administrative procedures. That would be micro-managing. That's why the MC was hired.

As a board members, you should all know that XYZ address is in lien status.

In no way do these actions by the Pres. and the MC fit into a board liability realm.

DwightT (Idaho)
Posts: 664

Posted:

For the most part I agree with Michelle and Susan: the management company should be taking their direction from one or at most two Board contacts. The President and the Secretary would probably be a good choice for that role.

However, I think we are missing a big chunk of info from Barbara. She stated A majority vote of "the board" has been ignored. If the Board as a whole voted on the issue but the Pres and Sec. took actions contrary to that vote, then there are some problems with that Board. While the Pres and Sec. could be held liable for their actions, I don't think the other Board members would be. As long as the results of the vote where recorded in the minutes, you should be able to show that those two are not following the decisions of the Board.

On the other hand, the matter shouldn't be dropped either. If they are indeed acting contrary to the Board, then the Board should take steps to sanction them or remove them from their positions. If their behavior continues, it could result in problems for the other Board members and the HOA.

MicheleD (Kentucky)
Posts: 4,491

Posted:

To some degree I agree with you, Dwight, but if the majority vote of the board was for something the board can't/doesn't have leave to vote on, then who knows?

For example, the board might have voted on something it has no jurisdiction or ability to control/change. There might be state or local laws that trump the vote, and, upon being notified of that by the MC, the president told the MC to act in accordance with the law.

Then again, they may have just arbitrarily reversed a board decision.

It would be nice to know what the board voted on and how the action was different from the vote.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Michele writes:

>>>If they are acting in what they consider good faith regarding the association, and they are not doing anything illegal, then I'm not sure what you would be held liable for.<<<

I disagree. What one "considers" is acting in good faith in performance of duties isn't determinative; their actions are. Negligence in performing one's duties on the BOD is covered by our D&O insurance regardless of subjective observations by the perp.

However, in this case, hard to see any damages that would be recoverable.

I do agree with Dwight that having a point person as liason with the PM makes good sense, and of course, no actions should ever be taken by a BODer w/o consent and approval of a majority.

FrancescaM (Washington)
Posts: 264

Posted:

I will say we too had a very bad collection policy in place a few years back. Some people had payment plans others owed many many months with NO actions in place. OUr board was inconsistent.... it was bad.

Our local laws indicate we MUST have a collection policy in place... saying that when a homeowener goes to foreclosure...it's must be done in open forum.. under a account # and the majority is yes or no.. simple... but that is what isn't happening with your board.

May I suggest you take a literal review of your laws? If they are not following them.. suggest you bring copies of this to your next meeting.. as a courtesy. OUr current president has to do this constantly to make the few ignorant members we have follow the law>.>>>>

I suggest a review of your state law, cc&rs and rules.. Also.. on or two board members should NOT be speaking for the entire board.. that is a no no.

BarbaraD6 (Florida)
Posts: 347

Posted:

The actions that have been given to manager has financial hurt our community.
Governing Body- The BOARD OF DIRECTORS shall govern the associations affairs.Each director shall have ONE vote.
WE are a townhouse community of 196,and are supposed to have 5 board members,we have 4.WE were asked by manager in Oct by email how the BOD would like to proceed on property xxx,in regards to foreclosure. WE are in bad financial situation so I asked how much would it cost. My fellow board member sent an email seeking info on the history of property xxx. Neither one of us received any response. Now we find out that our community filed for foreclosure. WE had a right to vote on that issue. WE don't have any procedures for foreclosure. The money for this was not in the budget(manager is not allowed to spent over budget w/o prior board approval)Our community can't afford to do this.
ACTION WITHOUT A FORMAL MEETING- Any action to be taken or which may be taken at a board meeting may be taken w/o a meeting if ALL directors sign a consent in writing.
Barbara

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