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BB2 (Missouri)
Posts: 36
Posted:
Do the officers/board of an HOA have a "fiduciary" duty to the membership? V.P owns 8 properties is only going to pay for 1 if road project is approved also heading up the project and getting only one bid. The secretary/treasurer without the knowledge of the membership reduced the dues for an owner (2 properties)because he doesn't use one of them the same owner will only be paying for 1 if road project is approved. Nothing in by-laws allows this. Could this be considered a breach of "fiduciary duty"
SusanW1 (Michigan)
Posts: 5,202
Posted:
Sounds like abuse of power but I can't be sure.

Please use puncuation in your sentences!

It is not unusual for a member to have ONE vote in spite of the number of properties owned. But road assessment for paving is by the lineaur foot of each property.

Check you documents for voting rights.

SandyS3 (Colorado)
Posts: 4
Posted:
Your secretary/treasurer was acting out of capacity. Things like this should be addressed by the entire board and voted on. Your docs should state you need a majority vote by the board. I personally, would not reduce the dues or any other assessment no matter how many properties this person owned or how it was being used. When they bought their property, they were given a copy of the covenants, etc. and agreed to abide by them for each property they closed on.
MaryA1 (Arizona)
Posts: 7,043
Posted:
BB2,

The members of your BOD need to realize that they must operate in accordance with the gov docs of your assn. They cannot make up their own rules!!! Look for wordage in your CCRs comparable to what is stated in the CCRs of my assn (under the article entitled "Assessments"): ". . .each owner, by becoming the owner of a lot, is deemed to covenant and agree, to pay assessments and charges to the association in accordance with this declaration". And, "In order to provide for the operation and management of the assn and provide funds for the assn to pay all common expenses and perform its duties and obligations, . . .the Board, for each assessment period, shall assess against EACH lot an annual assessment." As you can see, each member is obligated to pay assessments for each lot they own. If particular lots are to be assessed differently it will be so stated in the CCRs, otherwise every lot shall pay the same assessment. The Sec/Treas does NOT have the authority to arbitrarily change the assessment of any particular lot. If any changes are warranted they should be approved by the majority of the BOD and the changes should only be made in accordance with the gov docs (most likely the CCRs). If the Sec/Treas is incapable of performing her duties properly or will not follow the directors of the BOD she should be removed from that position.

In an HOA, all the members pay for the maint of all amenities whether they use them or not. That is the way HOAs are designed to operate. If yours is different it would be so stated in your gov docs. If assessments are charged, as in my assn, the member whose assessments were lowered by the sec/treas should be billed for the assessments that have not been charged to him in error. If the V.P. does not pay the assessments for the remaining 7 lots he should receive a delinquent notice and if not paid the same action should be taken against him as would be taken against any other member of the assn. In fact, being delinquent may be cause for his removal from the board of directors.

The V.P. should be obtaining the required number of bids as outlined in the board's policy. Sometimes it's difficult to obtain bids, and only if that is the case concerning this road project, should only 1 bid be allowed to be considered. If the V.P. is incapable of performing the duties required to handle the road project then another board member should be put in charge of the project. The fact that he is V.P. should not prevent the other board members from taking action against him if he does not perform his duties properly. Being an officer or director of the board does not give a person the right to be treated differently than any other member of the assn.

The board members have a fiduciary resp. to the assn, not the membership. Fiduciary means involving trust. The members of the assn have placed their trust in the elected board members, who, in turn, have a duty to act in good faith and with care and loyalty in fulfilling their obligations. Mismanagement or non-management are grounds for a breach of fiduciary duty. Most courts will not interfere with the decisions of the board as long as the decisions were reasonably made. Board members may be subjected to personal liability if found to have failed their fiduciary duty. A board member who knowingly fails to take steps to avoid illegal actions taken by the assn's BOD is subject to a breach of fiduciary resp. and subject to personal liability. Courts use the "business judgment rule" as a basis in rendering their decision. Simply stated, the business judgment rule means, the BOD will act in good faith in what they consider to be the best interests of the assn and with the care that an ordinary person in the same position would exercise in a similar situation.

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