Lack of Quoram to Elect Board

Our POA was turned over by the developer in 2001. Since then we have only had sufficient member participation to establish a quoram vote at 1 annual meeting. The Board is made up of hold-over members and appointees selected by the Board. Last year only 16 people attended the annual meeting including the 5 Board Members & family members. The absentee ballots mailed to the board were minimal. There are over 350 properties in the POA but apathy is rampant. My question is "do we have a legal/valid Board?". I am concerned as the POA is in the middle of a CC&R enforcement law suit and the Board has spent over $75,000 on attorney fees. Do they have legal standing to represent the POA when they have not been elected to the Board in several years, or never were. I am also concerned because the member being sued was never provided a hearing as is required by state statute. Could the law firm representing the POA have us in a fee driven law suit that we could lose due to lack of legal standing.

Louis,
I would also have to believe you have a legal Board. That may also prove out to be your biggest problem. Unbelievable situation that has been allowed to progress to this point. You all are headed down a slippery slope and are vulnerable to all kind of mischief. With 350 properties and 10 years plus of unguided leadership doing nothing to establish your credibility. But, as always, we hear one side of the story, I am sorry, your situation is one of your own making and each and every property owner is in this right up to their skinny little necks. If your Board is as bad as you say and your association is vulnerable, if falls to the members to take hold. Louis, our opinion has to be to get your house in order........one way or another.
If you question this 75K spent in legal fees, what else are you questioning.
You don't need 350 people to respond but you need to have enough to get noticed by this Board. Does this Board respond to interest from the membership? If they don't, better put them on notice there are some interested home owners. You say they are apathetic and well they may be, it is not uncommon. What is uncommon and dangerous is for this to just keep going. It is also a responsibility of the Board to involve the membership. How? They do it the same way most every other Board does...........hard work and perseverance.
But maybe you don't want to hear all this stuff, it puts the onus where it belongs..........on the membership. Or maybe I am way out in left field, someone has to decide..............we on this panel can't and we speak in generalities until your story is told with enough detail..........not personal agendas but facts about the association

Sadly, even with the mail in ballots left blank (other than a signature)there has not been a quorum. This POA is 36+acre parcles and like most similar properties in this rural area, people buy them with big ideas that burn out more quickly than gym membership commitmtnets. The member did request a hearing and to see the complaint letters. The Board told the member that it wanted to protect the privacy of the members complaining. I know that this conflicts with ARS 33-1803(D) but the conflict with the Board began prior to ARS 33-1803 becomming law.
The ARS that was in effect from 1994 until ARS 33-1803 became law was: A.R.S. 33-1903(G) UNLESS RESERVED TO THE MEMBERS OF THE PLANNED COMMUNITYUNIT OWNERS’ ASSOCIATION, THE BOARD MAY IMPOSE CHARGES FOR THE LATE PAYMENT OF ASSESSMENTS AND, AFTER NOTICE AND AN OPPORTUNITY TO BE HEARD, MAY IMPOSE REASONABLE MONETARY PENALTIES ON UNIT OWNERS FOR VIOLATIONS OF THE DECLARATION, BYLAWS AND RULES OF THE ASSOCIATION. FOR PURPOSES OF THIS SUBSECTION, A LATE CHARGE IS NOT REASONABLE IF IT EXCEEDS TEN PERCENT OF THE DELINQUENT AMOUNT OR TEN DOLLARS, WHICHEVER IS MORE.
Was it the fiduciary duty of the attorney to the POA to make sure the member had a hearing prior to moving forward with a law suit. A few years ago the Arizona Court of Appeals admonished this attorney for esculating a $10 late fee and a lost pool key into a foreclosure and almost $20,000.00 in attorney fees.

Louis

Louis,

Our Association is much the same boat you're in. Our Association was turned over in 2002 and have not achieved quorum since then, so all of the Board has been appointed. This year because there was a challenge things changed and some of the membership have pulled together to create changes that we feel we work for all of us. We also have either the Board or PM running up legal fees to the tune of $100K+ with no explanation. I spent a good two weeks rewriting the first draft from the lawyers who wanted to keep the status quo.

Here is what was posted on the Discussion Forum:

Ever wonder where the ballot you cast at the Annual Meeting every November went?

For at least the past 6 years, because quorum (the required number of Members/Owners present either by ballot, person or proxy, per the current Bylaws) has not been met, the ballots have never been opened and most likely been destroyed after one year.

The Association is in the process of amending its Bylaws which have to be approved by an affirmative vote by secret ballot of 51% of the total voting membership in 'good standing'. Two major issues that need to be addressed are reducing the quorum to host elections and insuring our Bylaws conform to new changes in Association law (Civil and Corporation Code). To this end I would start this discussion with a couple of my recommendations.

1) Restate quorum requirements for Meeting of Members (Annual or Special) that state 'Quorum is defined as Members present'
2) Eliminate the use of Proxies
3) Eliminate the use of Cumulative Voting
4) Define Qualifications for a Board Member
5) Create an Executive Committee

There is no legal requirement that says quorum has to be any number or percentage, the least it could be is 1. If the language is completely eliminated, the default per Corporation Code is 1/3. By having a quorum set as the Members present at the meeting insures that your ballot will be verified, opened and counted and not dependent on whether your neighbor voted or not.

If quorum is restated to Members present, then there is no need for the use of proxies.

Cumulative voting is used by developers to retain control of the Board while the communities are in development.

Qualifications for Board Members would include, but not limited to, 18 years of age, Member/Owner of the Association, cannot miss 3 consecutive Board Meeting or 3 Board Meetings in 9 months, cannot be 30 days delinquent in their assessments, and no more than one board member per unit.

The Executive Committee should be set up to include duties such as conducting a search for candidates for a Board position when a vacancy arises. Appointments to the Board when such a vacancy arises should not be done in secret without prior membership notice.

Louis,

IMO, this attorney needs to go! Of course no one but the BOD really knows what his advice was. The board doesn't have to take his advice but he most likely will represent them. On the other hand, if it was his advice to sue knowing the member never had a hearing and knowing the BOD is not operating by the current statutes, then his advice is certainly out of line.

Also, keeping the complaint letters from the member is also a violation of ARS33-1803 which states that if the member in violation sends a response to the BOD w/i 10 days of receipt of the violation notice, the BOD has 10 days to respond and provide the following (among other things):

The name and address of the person noticing the violation and the process the member must follow to contest the notice.

That definitely throws out the window the BODs obligation to maintain the privacy of the member(s) who noticed the violation.

Considering the type of community you're living in, I can see that it would be quite difficult to obtain a quorum no matter how low the percentage.

MaryA1

In your opinion, can the proxies taken to the Annual Meeting by other shareholders go toward the count to have a quoram????

Thanks
Jim