Running for BOD but deliquent on dues ?

Our Developer requested to turn over the POA. We are prepared to elect BOD. Two folks have indicated they want to run for the BOD. The Developer as well as the two members stated they are delinquent on paying dues for quite awhile. Now, we have five running for BOD which is great. HOW can they run knowing they are not current on dues? How do we handle?
We would appreciate your help.

Margo,

Is your Association incorporated yet?

Another way to ask this would be: is your developer transferring control of the Corporation he created or just transferring property, etc. to the homeowners who are supposed to create their own corporation?

If you don't know, you had offered to send copies of the transfer so it could be figured out. If you still want to do this, I can be reached at

[email protected]

Margo,

In Georgia, the law for a Non-Profit Corporation says in section 14-3-802, "Directors shall be natural persons who are 18 years of age or older but need not be residents of this state nor members of the corporation unless the articles so require. The articles or bylaws may prescribe other qualifications for directors."

So here in Georgia, it is your Bylaws that govern BOD qualifications.

Our Bylaws say, "Any director who has three (3) consecutive unexcused absences from Board meetings or who is delinquent in the payment of an assessment for more than thirty (30) days may be removed by a majority vote of the remaining directors at a meeting." So for our HOA, a homeowner delinquent in dues may be elected, but can also be removed without a vote of the members. Your situation will probably be different. You should read your Bylaws to see what applies.

Here's my opinion on this. We had some in our HOA that were behind in dues that chose to run. Here's the deal. The member behind in dues may not be in good standing. Which translates to losing their right to vote. It doesn't mean they can't run for an office. However, how many people are going to vote for someone who is behind in their dues? That is the queery. If they want to run, they have to justify to the people and acknowledge they are behind in dues. This way it's up to the people to decide if these are the type of people they want on their board despite not paying.

TimB4

I really don't know how small home owner associations could get started or survive without you folks giving expert advice. Nobody can afford Attorneys until you elect you BOD and take control of the POA checking account.

We are a not for profit corporation filed with the Secretary of State in Georgia. We have NO BY-LAWS. Our ccr’s are written for a developer controller property which are very clear about paying dues/assessments, are “collective” and the restrictions run with the land.

The Developer disclosed AND during our informal neighborhood meetings (open to everyone), the home owners “personally” told us they were severely delinquent. Several home owners had legal problems with the Developer in the past (since first eight homes built 2005) but didn't hire an Attorney to handle their business. They also refused to pay dues because the Developer never furnished a budget or held an annual meeting. These folks let their statute of limitations run out! Today is Aug. 29, 2011 those folks still no budget or annual meeting!

In 2008, several folks purchased a home here because the location is absolutely perfect and the floor plan is one level. We love our home. Soon, we started holding informal neighborhood meetings. We are business professionals and worked tenaciously towards a solution to get the Developer to turn over the POA and he has agreed. Nobody is a licensed, practicing condo and law attorney in our group but we are ready to retain one after we elect the BOD.

I was given advice from another local hoa that had transitioned to POA. Since we don’t have BY-LAWS, won't have financial records until After the BOD is elected, let every home owner vote to and/or run for the BOD. It will be our POA and you have to start somewhere. The POA Attorney advised to proceed with the BOD election.

Once the BOD is elected, we will meet and this is when I feel they have to PROVE (or pay up immediately - can't vote they are current) they are members in good standing. Three members running are in good standing and two are not. So, we can proceed with a President, Treasurer and Secretary. You can rest assured these two won’t have control of our checkbook!

Margo:

I just had to track down our bylaws, not sure how your state runs but my guess is they are not required to be filed with the state. I had a copy of our covenants and saw the name of the law firm that drew them up and asked them if they had a copy. I also contacted our developer and asked if he had a copy. Both did and they sent it to me, albeit they were orginial so any changes are not there. You may also try your state, it might be filed with your articles of incorporation but I doubt that.

I agree 100%...

BradP

If they are not required to be filed with the state, maybe that explains why nobody has found them. Once we hold the BOD meeting, the POA Attorney gave us an Association Turnover Checklist. Also, another member on this discussion provided an excellent link for HOA Transition from Developer to Homeowners. Now, we have two to compare and won't miss anything.

Margo:

not sure how Georgia is run, but in Kansas the articles of incoporation are with state, the covenants are with the county and bylaws are the ugly stepchild and belong to no one!

Margo,

In Georgia the CC&Rs and Bylaws are both filed in the land records with the county court. You can usually search these records using your subdivision name to find all legal filings, including warranty deeds, liens, your CC&Rs, and your Bylaws.

The Articles of Incorporation will be filed with the Georgia Secretary of State in Atlanta.

LawrenceC1

Thank you - perfect timing. I am going to visit the Tax Commissioner tomorrow so I may be there for awhile.

Margo,

Thanks, it does not matter. I was just curious, because I am not familiar with POAs at all.
Lawrence provided you with important info, so I would like to add a guideline required in Florida. It may be helpful to you when talking to attorneys.

All this is done at the Developer’s expense. I quote:

‘The developer is obligated to deliver to the Board at the time your community takes over. These may be:
1. All deeds to common property owned by the association
2. Originals of all documents, including certified copy of the Articles
3. Financial records from the date of incorporation and any association money (audited by a CPA)
4. Copies of all existing contracts, insurance policies
5. Agreements with utility companies'

There could be more papers I guess.

Since you are incorporated, you will need to comply with GA Non-Profit Corporate laws. If you don't have it, here is a link to GA laws:

http://www.lexisnexis.com/hottopics/gacode/ (need to open up the trees on the left by clicking on the + mark for each area and then finally on the actual code.

Nonprofit Corporations are covered under Title 14, Chapter 3.
These will address various things like what is required to be in the bylaws, how proxies are handled, etc.

I'm not sure that, once elected by the membership, you can prevent them from casting a vote as a Director. If the Director who was denied the vote wanted to challenge it in a court of law you might not win as there are no bylaws specifying this qualification. However, once the Bylaws are adopted with that clause, there should be no issues.

Hope this helps,

Tim

Margo,

Lot's of stuff here. First I need to provide the disclaimer that I am not a lawyer and you cannot rely on this site for legal advice.

If your POA is mandatory then all homeowners in the covered area will be members by reason of owning a Lot. A member at large would be someone who is a member of the association but does not own a Lot, which is a situation not covered in the POA act. A member at large might be someone who wants to pay dues and use the common areas while not being a mandatory member.

A director at large is something completely different. This is also known as a Director Without Portfolio, and means only a director who does not also hold an officer position. If you have five board members one will likely be President, one will be Vice-President, one will be Treasurer, one will be Secretary, and one will be a director "at large." All directors, whether officers or a director at large, should attend all board meetings and will count toward a quorum. A director at large is a full member of the board and votes on all motions.