HOA VIOLATIONS

Started by CharlesR5 • 29 replies • 2772 views

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CharlesR5 (Texas)
Posts: 28

Posted:

I am in an HOA in Texas, where the HOA itself is violating it's own bylaws. the directors are making changes to the bylaws by a veryyyyyyyy simple majority vote and then recording the "new" bylaw changes with the county clerks office. To me this is fraud at it's best. does anyone have any suggestions on how to remedy this. these simple majority changes are done on a regular basises.

JohnH18 (Georgia)
Posts: 17

Posted:

First of all, by majority vote do mean a majority of the residents or a majority of the board?

SusanW1 (Michigan)
Posts: 5,202

Posted:

Only if your CCRs or the bylaws themselves state that the board can create, recind or amend the bylaws.

Ask them what and where they get the power to make changes to the bylaws without the vote of the general membership.

CharlesR5 (Texas)
Posts: 28

Posted:

majority means ---of the property owns

LynetteB (Texas)
Posts: 141

Posted:

CharlesR5,
Check your docs. In the POA I am part of, our CC&R's and Bylaws both say that the board has the authority to amend the Bylaws. Texas Law says to follow what is in the governing docs. If your CC&R's and Bylaws are silent on the subject, which is unlikely, then be sure to research the Articles of Incorporation or Certificate of Formation. That document will state whether the affairs of the corporation is to be vested solely in the members or is to be vested in its board of directors (who are elected to represent the association).
If your docs allow this, then it is not fraud.
The best way to remedy unwanted actions by your board is to get elected to the board yourself. You could also encourage the election of members you know feel the same way you do, although if you are relying on others to do your will, you may be disappointed.
Lynette

CharlesR5 (Texas)
Posts: 28

Posted:

this board has more turn over by new members because of a hand full of board members taking charge and holding the majority vote of the board. 75% of the residence are located out of state and feel being so far away that they can't get involved or don't want to get involved. this has been this HOA's history since founded in 1976.none of the board seeks legal counsel before making changes to covents or bylaws. we could be in court 5 days a week,and since the HOA Board members are not sued personnally for their actions they have nothing to lose, but the HOA has to pay for their defense.

MichaelK11 (Texas)
Posts: 432

Posted:

Quote:

Posted By CharlesR5 on 11/01/2009 6:08 AM
we could be in court 5 days a week,and since the HOA Board members are not sued personnally for their actions they have nothing to lose, but the HOA has to pay for their defense.

If the HOA or the Directors are being sued, does your HOA have a D&O (Directors and Officers) insurance policy to pay for such defense? May not cover, if due to misconduct or initiated by the HOA, but have you looked into this?

MaryA1 (Arizona)
Posts: 7,043

Posted:

Charles,

You haven't answered the question -- do your bylaws allow the BOD to amend w/o a vote of the members?

If a director violates the gov docs and/or state law, the assn's D&O ins will not cover his defense. Otherwise, of course the HOA has to pay for their defense. Wouldn't you expect your employer to pay for your defense if you are being sued over an action associated with your job? Makes no difference that our board members are volunteers and not paid officials. I've heard this remark made so many times as though it shouldn't be that way. IMO, it's a ridiculous assumption.

CharlesR5 (Texas)
Posts: 28

Posted:

our bylaws state that NO changes can be made unless it is agreed upon by a super majority of the property owners

MaryA1 (Arizona)
Posts: 7,043

Posted:

Charle,

Thank you!

IF a lawsuit were to be brought against the board for violating the bylaws (if, in fact, they have amended the bylaws w/o a vote of the members), IMO, the D&O ins will not cover them -- they will be on their own. Perhaps if this is brought up to them they will amend their ways. If they don't believe you tell them to contact their ins. agent.

LynetteB (Texas)
Posts: 141

Posted:

CharlesR5,
Just out of curiosity, how many memberships/lots make up your association?

SusanW1 (Michigan)
Posts: 5,202

Posted:

Are you saying a 2/3 vote of all members to change bylaws? That seems high.

In any case, it seems incredulous that the board just made these changes by themselves.

So . . . if you have your document language, simply write the board a letter and tell them that their "amendments" are Out of Order and the membership is not legally bound to follow them as amended.

Then begin a recall process for the board. Do it by written ballot, if needed.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Susan,

First of all, 2/3rds is not high but the norm. Florida Statutes reccomend "2/3rds IF the governing documents do not have" a number to pass amendments.

I am not sure what "the directors are making changes to the bylaws by a veryyyyyyyy simple majority vote and then recording the "new" bylaw changes with the county clerks office. To me this is fraud at it's best. " (Charles, amendment changes are required to be filed in the County Clerks office.)

Your statement of "this is fraud at it's best" is pretty harsh. Are you positive that they are intentionally deceiving the members? Any chance that they do not fully understand what super majority means? Any chance that they are following a procedure from previous Boards? Why don't you copy for us the exact wording on amendment voting procedure, especially where it addresses the number of votes required.

And then Charles answered with "majority means ---of the property owns"

So he states that the majority of the property owners has voted to change the bylaws??? What is wrong with this seeing that his docs require a super majority of votes to pass any changes. Super majority should be spelled out in the docs otherwise that is to ambiguous.

CharlesR5 (Texas)
Posts: 28

Posted:

we have 2004 lots ,with 900 prperty owners

CharlesR5 (Texas)
Posts: 28

Posted:

donna,
you must of misread my statement. i was ask to define super majority,which in our bylaws, it states that a super majority of the property owners (900) must vote for change/no change to bylaws. what i was saying is the board will send out 900 ballots, they will receive only 200 back (appro) they will then say if the majority of ballots recieved back is a majority of for or against a bylaws change. when they should be saying the "change" is dead because not enough votes were recieved to make the change for/against it.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Charles,

You have 2004 lots with 900 owners. Who owns the lots in excess of the 900? Is it one person (developer) or who? Have you had turnover from the developer? 1104 lots is a lot of vote power if there is basically one owner of them. I sure hope not.

CheyenneJ (Texas)
Posts: 11

Posted:

Have you tried showing the directors the bylaws that specifically state the vote results required? The directors are probably taking majortity vote because they can't get enough people to vote on the problems. Usually, if you can't get majority of the membership to vote, the item is tabled and dropped. At least that is the way CID/HOA rules are in California, could be different in Texas. The directors are probably not being fradulent on purpose, they are probably just tired of trying to get a majority vote so things can get done. How many people in your community?

CheyenneJ (Texas)
Posts: 11

Posted:

Hi CharlesR5, Your comments are interesting - and unfortunately common in large associations. What kinds of things are your directors voting on that you would like to see voted on differently?

CheyenneJ (Texas)
Posts: 11

Posted:

Forget the lawsuit, just show the board the bylaws that require super majority, and remind them that any changes they made outside the bylaws are invalid. It is not worth a lawsuit, just talk it over. Of course talking things over patiently and intelligently with board members is the biggest problem I have run into with the associations I have been a member of. I can't believe the egos involved in BOD members. Do you have a HOA manager? This is the kind of thing HOA managers are paid to do.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Cheyenne,

Great Advice about not going the lawsuit route. That should be the last resort, and I do stress last!! Everyone loses and the woulnds heal very slowly.

RogerB (Colorado)
Posts: 5,067

Posted:

Quote:

Posted By CharlesR5 on 11/01/2009 11:48 AM
our bylaws state that NO changes can be made unless it is agreed upon by a super majority of the property owners

Charles, Do your Bylaws define "a super majority"? If it is 2/3 and the developer still has 2/3 or more of the votes then his Board controls amending the Bylaws.

The Declaration of CC&Rs may give class B members (the developer) more than one vote per lot. For example if class B is provided 3 votes per lot (those for which a title transfer to a new owner has not occured) and class A get 1 vote per lot the developer will maintain control of 2/3 of all votes until he sells 60% of the lots. Example: 2000 lots and developer sold 120 and still owns 80; Class B has 3x80=240 votes; class A has 120 votes; thus class B controls 240 of 360 total votes or 2/3.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Charles,

I am not a lawyer and I do not know TX law. I did do a little research and per Texas corporate law, chapter 9 [covering non-profit corporations], you probably have a legal issue that needs clarified by a competent authority. Perhaps your State Attorney General could clarify this [just be sure to provide them your governing documents].

Texas Title 32 says:

Art. 1396-2.09. BY-LAWS. A. The initial by-laws of a corporation shall be adopted by its board of directors or, if the management of the corporation is vested in its members, by the members. The by-laws may contain any provisions for the regulation and management of the affairs of the corporation not inconsistent with law or the articles of incorporation.

B. A corporation's board of directors may amend or repeal the corporation's by-laws, or adopt new by-laws, unless:

(1) the articles of incorporation or this Act reserves the power exclusively to the members in whole or in part;

(2) the management of the corporation is vested in its members; or

(3) the members in amending, repealing, or adopting a particular by-law expressly provide that the board of directors may not amend or repeal that by-law.

Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.09. Amended by Acts 1993, 73rd Leg., ch. 733, Sec. 5, eff. Jan. 1, 1994.

It appears that Paragraph B gives the Board the power to actually change the Bylaws. If your Bylaws state that members must approve it may be in conflict with this Law which would make that requirement mute. If your Articles of Incorporation says that the members must approve bylaw changes, then you would be in compliance with this law.

The following address is where I located this law:
http://www.statutes.legis.state.tx.us/Docs/CV/htm/CV.32.9.htm

I believe that you will get varied advise about the interpretation of the above law. This is why I said you will need to get actual legal advise on this issue and it should be from someone knowing corporate law and has access to the exact language contained within your legal documents. As I said earlier, I am not that person. However, this research now gives you the knowledge to ask a better question:

Are our bylaws in conflict with State Law on how they may be amended and if so how can they be corrected to require membership vote to change them?

Hope this helps,

Tim

CharlesR5 (Texas)
Posts: 28

Posted:

donna,
some property owners own multiple lots, there is no developer owned lots

CharlesR5 (Texas)
Posts: 28

Posted:

cheyenne,
they are raising assocation fees, changing wording in the bylaws,etc

CharlesR5 (Texas)
Posts: 28

Posted:

we are self governed, with no outside management company. and yes egos is the biggest problem we have, they belief is" i was elected and this is HOW is see it"

GlenL (Ohio)
Posts: 5,491

Posted:

Charles as I see it you have four options:

1. Sell your property and move to somewhere you like better.

2. Do nothing except whine, moan and gnash your teeth over it.

3. Step up and change things. You can do this by:

A. Getting involved and elected to the Board.

B. Getting other likewise thinking people to run for the Board.

C. Get the off-site owners involved; get their home addresses (the tax bills have to be sent somewhere) and write to them and get their proxies.

4. Sue the HOA, spend a lot of money both your's and the HOA's and hope that a judge sees things the way you do.

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

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By CheyenneJ on 11/04/2009 10:58 AM
Forget the lawsuit, just show the board the bylaws that require super majority, and remind them that any changes they made outside the bylaws are invalid. It is not worth a lawsuit, just talk it over. Of course talking things over patiently and intelligently with board members is the biggest problem I have run into with the associations I have been a member of. I can't believe the egos involved in BOD members. Do you have a HOA manager? This is the kind of thing HOA managers are paid to do.

Cheyenne, this is the second time I've seen this advice referenced in a response from you.

HOA managers are not paid to manage the board of directors. They are paid to execute various responsibilities assigned to them by the board of directors.

Running/managing a vote on an amendment to any of the governing documents may be delegated to them, but the HOA manager is not the person to tell the board what they must or can or can not do, per the association's own by-laws.

An HOA manager may suggest to the board that it might be misinterpreting the documents, but it's not their place to direct the board on how to interpret the documents.

Now, to Charles, the voting situation sounds even worse that you are alluding to and may be even more skewed than you think.

First of all, in many HOAs, the voting power is One Lot, One Vote, not the number of owners of all lots.

So that would mean that if there are 2004 lots, then the number of total eligible votes is 2004. (assuming no one is not in good standing).

The people with multiple lots actually have multiple votes.

So if you require a super majority (2/3's?), then the required number of positive votes to pass an amendment or by-law change would be 1,336, not 900.

As someone up-thread mentioned earlier, it would be very helpful if you could share the exact wording your documents contain that address VOTES.

You can XXXXX out the name of your development.

DonnaS (Tennessee)
Posts: 5,671

Posted:

That would be me Michelle,

1 vote for each lot. That is why I asked who owned the 1104 other lots. The answer was, the owners so we cannot get a good grasp of any numbers here.

CharlesR5 (Texas)
Posts: 28

Posted:

donna,
we have 900 owners and 2004 lots. some owners may own 3-5 lots. in ours association you get ONLY 1 vote per owner, not per lot. so if you own 10 lots or 100 lots all you get is 1 vote. so our super majority is from 900 owners

MichaelK11 (Texas)
Posts: 432

Posted:

Quote:

Posted By CharlesR5 on 11/08/2009 6:10 AM
we have 900 owners and 2004 lots. some owners may own 3-5 lots. in ours association you get ONLY 1 vote per owner, not per lot. so if you own 10 lots or 100 lots all you get is 1 vote. so our super majority is from 900 owners

Charles,

Please, could you quote for us the language from your governing documents about voting.

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