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Subject: Board decision from 2003 still in effect?

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SarahV1
(California)

Posts:5

03/04/2008 12:35 PM
I became a homeowner and then a member of the Board of our small HOA (9 units and cottages) in 2004. Apparently, in 2003 the Board and HOA members approved a side fence along the property line and allocated $1000 for this expense. The work was never done. Another Board member has suddenly re-produced the minutes from that 2003 Annual Meeting and has announced by email that she is enacting the fence-building next week. She is also withholding $1000 of her dues in exchange for paying for the fence. The other Board members are not allowing the dues 'exchange' because this fence was not in the approved budget for this year. She argues that the expense should still be 'held' in the Reserve Fund since 2003. The Board reminds her that the budget is an annual exercise and this should have been raised at the Annual Meeting 6 weeks ago. The Reserve Funds have since been spent in other ways (e.g., mediation with her in 2006) and we are re-building the reserves this year. We can schedule a new Board meeting to vote on the expense but that is the only acceptable step for amending the budget. The Board is also reminding her that this fence runs along Common Area and requires the approval of the HOA members. New HOA members would also like to give input on the design from 5 years ago. My questions are: 1) If such work in a Common Area is to be done in 2008, does it require approval of current HOA members, or is the 2003 vote sufficient? 2) Does the Board need to re-approve such an allocation of funds if the 2003 expense never occurred? Thank you.

GeraldT4

Posts:932

03/04/2008 1:51 PM
SarahV1, It stands to reason that if the fence project needed to be approved in 2003 then it needs to be approved in 2008. And approved the same way unless something changed in the ability of the Board to approve such expenses. The Board needs to decide to get the project on their official agenda, and decide to send it out to bid all over again. The Board member that suddenly "re-produced" the minutes that says she is going to enact the fence-building next week is doing it unilaterally? The other Board members are going to permit it? That's pretty nervy. Reserves funds are for the eventual replacement of existing elements, not for capital improvements such as the $1,000 fence project. Why is the Reserve fund being spent on mediation?

PaulM
(Pennsylvania)

Posts:1347

03/04/2008 3:01 PM
SarahV1: The previous poster has raised some valid issues for your Board to review and consider. 1) Review your official documents to learn where money is to come from for an 'unbudgeted' expense--example; fund overflow from another budgeted area; OR a special assessment divided equally among all residents (with a member vote to be taken); OR as the new fence would now be a NEW capital asset, it will require a member vote which to include it as an added Capital Asset within the Declaration. It also will require future care and maintenance which impacts the Reserve Fund. 2) Monies designated for Capital Reserve Fund are to be used ONLY for the capital assets (items as stated in your Declaration) and NOT for other purposes. 3) The Board member/owner CANNOT independently decide on installing the fence (see member vote in point 1), nor can she withhold her dues to pay for it. If she is in arrears on dues payments, she runs the risk of being a 'member NOT in good standing', may be in violation and lose her ability to be a voting Board member. You need to get your information and 'ducks' in a row, and nip this in the bud. You may need to send her a certified letter detailing the specifics and the impact her actions may have.

SusanW1
(Michigan)

Posts:2116

03/04/2008 4:45 PM
Shame on the Board for letting this "unfinished business" to slide for years!! The motion stands; it just hasn't been acted upon. The Board needs to cough up the money and hope to heck they can still do it for $1,000. In the meantime, this lady should not play games with her dues.

GlenL
(Ohio)

Posts:1362

03/04/2008 7:24 PM
If the fence is needed and you have the funds (not reserve funds) then build it or if you have the votes you can move to build it next year or even move not to build it at all. Now I'm not familiar with Sterling-Davis but Ohio law and our documents allows the majority of the BOD to take action outside of a meeting as long as it's recorded in the official minutes. F. Actions Without a Meeting. All actions, except removal of a Trustee, which may be taken at a meeting of the Association, may be taken without a meeting with the approval of (not less than three (3) Trustees, and in writing or writings signed by members having a percentage of voting power required to take such action if same were taken at a meeting. Such writings shall be filed with the Secretary of the Association.

RobertR1
(South Carolina)

Posts:2072

03/04/2008 8:08 PM
I expect the fence is a minor player here. It sounds as if this upset homeowner may have a personal agenda. She is not looking for progress in getting the fence build, she is trying to bully and push the Board. Not a good thing to allow happen. If she waants to sue, nothing anyone says that don't agree with her approach, is not going to change her mind. So there may have been some lapse a couple years ago. That $1000 then is not $1000 now so the amount is irrevelant. I would write this lady a nice strong letter stating she or any owner is not going to threaten the association by withholding fees or dues, and cite appropriate document. The Board will not take action umtil all the facts are known, it is discussed in detail by the board and a recommendation made to the members. If she would like to be informed or would like to participate in the procees, we agree to allow your personal involment into the process, however, any decisions will be made by the board after all the facts are know. State that the process is under investigation by the Board and thank her for her input.

MicheleD
(Kentucky)

Posts:1675

03/04/2008 8:26 PM
What concerns me is her reasoning behind the withholding of dues. She plans to ERECT THE FENCE HERSELF -- or have it erected -- and deduct from the dues she owes the cost out of her pocket to have gotten that done. I would send her a very strongly worded letter that she is to cease and desist from encroaching on the common area for the purpose of erecting a fence, or from hiring someone to erect a fence, or from contracting with someone to erect a fence. If a fence is to be built, it will be built with and managed by HOA funds and the HOA board or its delegate.

GeraldT4

Posts:932

03/05/2008 5:34 AM
RobertR1 - I agree with you that there's more to it than the fence, it's about power/control. And for that reason I would rehash the whole thing for discussion, let the new board members review the necessity and re-vote if necessary. Let this disgruntled owner hold her breath for bit, show her that the decision resides at the front of the table. The cost for eventual fence replacement will need to be added to the reserve funding schedule. Depending on the circumstances doing so may not be possible. $1,000 is a small expense so probably not any kind of hardship. Though I doubt the cost isn't going to be $1,500 or double now in 2008.

RobertR1
(South Carolina)

Posts:2072

03/05/2008 6:05 AM
This post does present some procedural problems, but with a 9 unit condo, it appears they are having trouble with community reloations during the last few years. Maybe they should have a "change" in operation. I assume they have a 3 member board, so that leaves 6 folks to be satisfied. There is one outrider that has caused trouble in the past, from the initial post by causing some extra expenses in 2006. (Court appearence or at least hiring a lawyer) If this is all factual and this "maverick" is again threatening a law suit, this whole thing should be resolved, and resolution will not come from another court case. Given that the Board apparently is keeping records and having meetings and criminal charges are not involved, I believe this homeowner could be rightly considered by the courts as harassing the board. The Board clearly has the authority to act as they feel will benifit the association, and certainly has the authority to resceind any action by a prior board, at least, this one. So what is the board to do? I would say do the boards business and inform this person she will be subject to a restraining order if she does anything to the common property. Then the board shopuld call a special meeting, re-hash the whole thing publicaly, get comment from all and make a decision by voting in front of all present. Then that is the position of the association, including this maverick. She may oppose the decision all she wants but the die is cast and she has to accept it or move. That should be the Boards decision, they speak for the owners by law, she needs to get over it and move on. What I am describing, under control of the president, should take no more that 30 minutes to discuss and 15 minuites to vote and rule, then adjurn the meeting.

JosephW
(Michigan)

Posts:753

03/05/2008 7:00 AM
First, read this article and then send it along to the owner - she can't withhold assessments, for any reason: http://www.meeb.com/legal_alert/legal_alert_04_05_04.htm And has been pointed out, the motion is still in effect, but the current board can vote to deny funding for this year also and to revoke the motion, if it so desires. Joe

Joseph West Official HOATalk.com Sponsor Community Associations Network, LLC www.CommunityAssociations.net *See legal notice below (end of page) or go to www.hoatalk.com/legal

GeraldT4

Posts:932

03/05/2008 7:06 AM
JosephW - We all know the motion has not been acted upon. But why is the motion still in effect, especially given it's at least 4 years since ratification? This appears to be a Board motion and Board ratified capital improvement. It's not like the community voted on the matter and there's been no turnover in ownership since 2003. Therefore no probably change in sentiment. Since 2003 there's been Board turnover, and perhaps new sentiment. Procedurally is there no precedent for a statute of limitations on Board inaction?

JosephW
(Michigan)

Posts:753

03/05/2008 7:30 AM
Unless there is something in your documents, or your state corporate law, there is nothing that says the decision expires. If that was the case, every motion that adopted a rule or procedure would have to be re-voted on every year. To my knowledge, nothing kills a properly adopted motion other than another one revoking it. The "out" may be if it was proper? Your documents probably require a vote of the owners for any capital improvemen, which this fence appears to be. So the original vote may have been beyond the scope of the board. All the current board has to do is vote to revoke it on the basis that it is a capital improvement that would require a vote of the owners and special assessment. Tell the lady, it was beyond the authority of the board to adopt a capital improvement without the vote (I'm assuming here that your documents require a vote for a capital improvement) and you'll put it up for a vote or all the owners, as well as the special assessment to pay for it. Also, in California, reserves can only be used for the meaintenace and repair of common areas, not for a capital improvement. Gerald - not to my knowledge. Joe

Joseph West Official HOATalk.com Sponsor Community Associations Network, LLC www.CommunityAssociations.net *See legal notice below (end of page) or go to www.hoatalk.com/legal

BruceF1
(Connecticut)

Posts:525

03/05/2008 7:33 AM
Does the Board have to build the fence? No. The motion passed in 2003 doesn’t automatically go away, but it is easy to fix. When the original motion to build the fence back in 2003 was approved, and the money for it was appropriated, that money should have been set aside for that purpose until the project was completed and not spent on anything else. The "official" answer is that once a motion has passed, that motion remains in effect until it is either amended or rescinded, whether its 5 years, 10, years, or 100 years later. But that’s “water under the bridge” now. But, the answer is simple. Since the fence has not been built, simply vote to rescind the motion that was passed in 2003. You can always vote to rescind a motion that was passed previously, whether it was five years ago, last year, or last week, as long as the approved action has not already been taken and cannot be undone. In other words, if the fence were already built, (by the board) it wouldn’t make sense to vote to rescind the motion which was approved in 2003, because the fence is already there. The board does have the right to change its mind. So. simply vote to rescind the approval granted in 2003. If, later on, you decide you want to build the fence, you can’t just go ahead and do it; you would need to approve a new motion to build a fence since you rescinded the old one. As for the single board member who wants to take it upon herself to have the fence built: 1. No single board member has the authority to unilaterally complete a task on behalf of the board unless the board has authorized the person to perform that task. Who is going to build the fence? Only the BOARD can decide that. No single board member can do it unless authorized to do so. How will the builder be selected? Again, that is a BOARD decision. The decision cannot simply be made by any single board member. 2. The individual has ABSOLUTLE NO RIGHT to withhold payment of association fees in order to pay for the fence. The board can take whatever action is allowed in its governing documents and according to the law. This could include charging late fees for unpaid assessments, interest, collection fees, and on and on. Even to recording a lien against the property. What if the person has gone ahead and already built the fence? The board has some options here, too. 1. Vote to have the fence removed and then bill the person who had it erected without board approval (remember, the person was acting alone) for the cost of having the fence removed. If the bill for removal and the assessments go unpaid, take action as above. 2. Leave the fence there and write a letter of thanks to the board member who had it put up thanking them for their donation. Remind them that assessments are still overdue and appropriate action will be taken if they are not paid, and then follow through accordingly.

GeraldT4

Posts:932

03/05/2008 8:22 AM
JosephW - A statute of limitations for a resolution of a capital improvement that was never put into effect is a very interesting discussion. Would be a good amendment to be added to the governing documents. I don't equate this particular motion's failure to occur to negate all those properly adopted motions that have occurred. I do think that if a motion for a capital improvement takes 4 years to come to the agenda for commencement it must be officially rehashed, re-bid, and re-ratified. It was a motion to approve an agreed upon expense, in this case $1,000.00. Not $1,000.001, $1,000.002, $1,000.003, so on and so forth. Not even a motion to install the fence with a cost range of $1,000.00 - $2,000.00.

RobertR1
(South Carolina)

Posts:2072

03/05/2008 8:51 AM
Gerald, Interesting synopsis and I expect correct. I think if I was one of the owners in this condo I just might hire a hit man or turn a gun on myself. To ressurect something this far in the past, to me, demonstrates a clear action to raise a problem, with the sole purpose of seeing how many buttons she can push, and if truth was know, the fence don't have anything to do with it, and she clearly demonstrates she has not given the issue much thought except to stir the pot with it.

SarahV1
(California)

Posts:5

03/05/2008 11:39 AM
How can I thank you all for this input, even the honest tsk tsks? Great forum. For the past year we have worked very hard to bring our election rules into compliance and to enforce good governance on the Board after what had been years of casual and inconsistent enforcement of CC&Rs. The feedback helps us break with old habits and create new practices. Thank you, all. The fence was begun to be erected yesterday, and apparently will stand in just a partial section of the property line, behind the owner's cottage and the the adjoining common area! It's ridiculous. Apparently, there is no permit, so we are objecting vociferously on that ground, and have called a Special Board meeting for next week to address this. It is a matter of liability, procedure, and budgeting. The fence is actually a good idea and a nice design--but the process has been a rogue act. My main thinking is that the Board must re-authorize expenses every year. When the work was not done in 2003, the expense was not included in any subsequent budget, nor in this year's. Thus, it must be re-ratified. And, where is the contract, where is the permit, what are the materials.... Even if the 2003 motion stands, the lack of budgeting, liability and oversight are all in violation of CC&Rs. The hard part of this is that all 9 owners are on the Board, including the owner who has started the fence. And to thicken the plot, her contractor is another owner. Together, they have been doing construction and remodeling for the past 4 years on her units, plus trying to appropriate a common area yard (in exchange for 'not suing for damages due to delayed contruction'--the Board was able successfully thwart this maneuver), withholding dues (both of them withheld for 12 months last year--we finally did our first suspensions and hearings and got full payments), taking the HOA to mediation over architectural requirements (in which the Board mishandled doing payment of legal fees from our so-called Reserve, then learned how it must be done properly), and they issue slander upon slander in emails and at the meetings. It is beyond painful.

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