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Subject: ALL TRUSTEES HAVE RESIGNED
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KathyS15
(Ohio)

Posts:15


08/30/2017 3:54 PM  
We are a planned community (non-profit corporation) in Ohio with 28 townhomes. Today all homeowners received a letter that all three of our Board members are resigning, effective immediately; and they will NOT be calling an election meeting or special meeting. Also says, "as soon as a duly elected Board is voted in by the Association, we will turnover all Board records and information to the new Board".

The only thing I can find in our bylaws on how to elect a new Board pertains to when officers are removed. There are people that want to be on the new Board. Not sure if we can call our own meeting and vote new officers in.

The outgoing Board has had our lawyer in their back pocket for years, so I hesitate to call him right away. Pretty sure they want to catch us making a mistake (as stated in their letter - better be "DULY elected Board").

Needing advice to try to figure this out.........

Thank you.
MelissaP1
(Alabama)

Posts:6650


08/30/2017 4:56 PM  
The owners can call a special meeting it doesn't have to be the board. However, considering the board are also members of the HOA, they can also attend. The special meeting can be called for the re-election of a new board or to work out issues in doing so.

As for the lawyer... He is NOT your lawyer and is the HOA's lawyer. The board is responsible for correspondence with the HOA lawyer not the individual homeowner. It costs money to contact the lawyer which is going onto the HOA bill. Who pays that bill? You and your neighbors. Plus you could be sent the bill directly to yourself as it's not an approved expense.

I went through a similar issue. Most of my board was gone by the time elections had rolled around. Your HOA is going to need board members to run. So don't see why a special election meeting can't be held. Especially since your HOA is going to need someone to be a signee at the bank for the checks.

Former HOA President
GenoS
(Florida)

Posts:1446


08/30/2017 7:46 PM  
What a dirty thing to do. They could have resigned one at a time and let the sole remaining trustee appoint replacements for the other 2. Then the last could have resigned, leaving in place the 2 replacement directors to get things up and running.

I don't know the Ohio laws but I imagine there's some way for a percentage of homeowners to call a special members meeting where a new board could be elected. Check your governing documents as well. If they're silent about how to fill vacancies on the board then the laws of Ohio should be your starting point.
TimB4
(Virginia)

Posts:14509


08/30/2017 9:52 PM  
Shame on them.
They should have called a meeting or petitioned the court for recievership prior to resigning.

However, you can't unring that bell.

My suggestion, step forward and offer to arrange the general membership meeting for elections if someone who resigned will show you what steps need to be done.

Out of curiosity, why did the all resign at once?
JanetB2
(Colorado)

Posts:3355


08/30/2017 10:16 PM  
I agree with others ... was a dirty and slimey thing to do. You need to call a special meeting of the owners meeting requirements in your governing documents and State Laws. If you are incorporated as a Non-Profit here is those laws:

http://codes.ohio.gov/orc/1702

LOL ... Jerks such as your past BOD members potentially should have read their laws. One section states:

(E) (1) Subject to divisions (E)(2) and (3) of this section, a director is liable in damages for any act that the director takes or fails to take as director only if it is proved, by clear and convincing evidence, in a court with jurisdiction that the act or omission of the director was one undertaken with a deliberate intent to cause injury to the corporation or was one undertaken with a reckless disregard for the best interests of the corporation.

LOL ... all resigning at once ... was that a deliberate intent to cause injury to the HOA corporation or undertaken with a reckless disregard for the best interests of the corporation???

Now you see why many of us say it was a dirty thing to do to their fellow homeowners.
TimB4
(Virginia)

Posts:14509


08/30/2017 10:41 PM  
Posted By JanetB2 on 08/30/2017 10:16 PM

LOL ... all resigning at once ... was that a deliberate intent to cause injury to the HOA corporation or undertaken with a reckless disregard for the best interests of the corporation???




I do think that there is more of a back story there then we are being told.
GenoS
(Florida)

Posts:1446


08/31/2017 12:29 AM  
Posted By TimB4 on 08/30/2017 10:41 PM
I do think that there is more of a back story there then we are being told.

I think that's a given.
KathyS15
(Ohio)

Posts:15


08/31/2017 6:40 AM  
Thanks for all the input! Yes, there was a petition sent to have the Board removed (long story why - lots of reasons) with 72% of membership signing it. It was done correctly. The Board then invited the homeowners to a meeting to discuss why people are unhappy. This notice was from the Association's attorney on his letterhead. Only a handful attended. Two days later, the Board president left for their other home out of state. Then one week after their little meeting we all received notice of their resignations. So basically, instead of them arranging a meeting for us to vote them out and then elect new trustees, they just quit.

Now we're scrambling trying to figure out if the neighborhood can arrange a meeting and elect a new Board. We should by rights be able to call our Association lawyer for advice but we're pretty sure he's the one who told them to resign. In the meantime, no bills are being paid, etc.

Basically just worried about them saying "duly elected Board" and want to make sure we do things right again.
AugustinD


Posts:508


08/31/2017 6:47 AM  
Posted By KathyS15 on 08/31/2017 6:40 AM
Thanks for all the input! Yes, there was a petition sent to have the Board removed (long story why - lots of reasons) with 72% of membership signing it. It was done correctly. The Board then invited the homeowners to a meeting to discuss why people are unhappy. This notice was from the Association's attorney on his letterhead. Only a handful attended. Two days later, the Board president left for their other home out of state. Then one week after their little meeting we all received notice of their resignations. So basically, instead of them arranging a meeting for us to vote them out and then elect new trustees, they just quit.

Now we're scrambling trying to figure out if the neighborhood can arrange a meeting and elect a new Board. We should by rights be able to call our Association lawyer for advice but we're pretty sure he's the one who told them to resign. In the meantime, no bills are being paid, etc.

Basically just worried about them saying "duly elected Board" and want to make sure we do things right again.




Immediately get a group of interested people to be the organizers of a special meeting to elect a new board. Attempt to dot every i and cross every t when it comes to notice of the meeting and election procedures. If the current attorney will not cooperate in advising this interim group, go out and hire a new one. If the manager is a fool and will not release funds to pay this new attorney, pay out of your pockets and apply for reimbursement later. (Hopefully you will be reimbursed.) Meanwhile, if the former board members try to mess with things, be aware that there is no such thing as a temporary resignation. My former HOA had a board member explicitly attempt such a "temporary resignation," using this in an extortionate way. The remaining board went to the attorney and said a temporary resignation has as much validity as being 'a little pregnant.' One is either on the board or off. Your HOA is presently board-less. Furthermore, as others have said, the former board members resigned in a way that has caused expensive chaos to the HOA. As needed, get an attorney to write them a letter to stand down. Make sure the manager understands his or her obligations during this interim period.
SueW6
(Michigan)

Posts:194


08/31/2017 7:34 AM  
Wonder if the lawyer is aware that no one is at the helm now. I can't imagine that person advising the entire Board to resign at once. Yes, someone should call that lawyer ASAP.

Make sure this "resignation" is valid. Hopefully it was in writing. It needs to be accepted by the membership. At this members meeting, accept the resignations of all the Board.

Someone get up and take nominations and get another Board elected, according to your bylaws or state regulations.

Consider getting another legal firm to guide the new board.

SheliaH
(Indiana)

Posts:1889


08/31/2017 7:46 AM  
Interesting how 72% of the homeowners signed a petition to remove the board, but only a handful bothered to show up at the meeting to explain why. While I agree the ethical and professional way to behave would have been to stay on to ensure a smooth transition to the new board, part of me understands why these folks basically said: “to hell with it – they want us gone, we’ll leave and they can run the show their damn selves!”

As others have said, you and a group of like-minded homeowners should read the documents to call a special meeting to get a board seated – and I hope you consider stepping up. You need to do this immediately so the new board can sit down with the property manager to ensure the bills get paid. While you’re at it, you may want to plan to have an audit of the finances done to check for any irregularities.
Once you have a board, contact the former group and association attorney to arrange for the handover of the records – and tell them they will be expected to sit down with the new board and answer any and all questions completely and honestly. Don’t be afraid to go after the former members if you do find anything inappropriate or downright illegal.

Finally, you might also consider coming up with a formal procedure on how resignations and recalls are to be handled. Your documents may already have something, but a board resolution may be sufficient to handle details (e.g. all resignations must be done in writing and list an effective date, otherwise it takes effect immediately, all documents in the member’s possession must be turned over to the Board secretary or president within 24 hours, etc.)

PS – you say the previous board had the association attorney “in their back pocket for years”. Don’t know if you have any verifiable proof of this, but if you don’t trust the guy or lady, prepare to have a frank discussion with him/her on any concerns. As Melissa said, the attorney works for the HOA and takes direction from the board, so you can’t entirely blame him/her for doing something you don’t like. Give him/her a chance to tell their story – if trust is still an issue, you can start looking around for a new one.
KathyS15
(Ohio)

Posts:15


08/31/2017 7:57 AM  
We have decided to give him a call. Could he be under contract? Maybe he doesn't know what they've done. But he has helped them pull some doozies lately. That's why we wanted to remove them now instead of waiting until the next annual meeting next spring. There's only 28 townhomes here and of course there aren't a lot of people willing to get involved (about seven of us trying to fix all this).

This is a major legal issue now. You're correct in stating that it might not even be a valid resignation. We sent them nominations for a new Board with the petition. Bylaws do not state what happens when the whole Board resigns. The language in Ohio regulations are complicated and vague. Can't find many HOA attorney's in our area. Would love to get a free consultation with someone new. Geez....

Thanks for your insight!!! Much appreciated. Any help welcome!
AugustinD


Posts:508


08/31/2017 8:06 AM  
The current HOA attorney may have an agreement with your HOA, spelling out how and with whom communications may be made, per hour cost, and the costs of various ancillary service. It's common for such an agreement to permit termination at any time without consequence.

When you contact the attorney, send him a copy of all documentation that you have showing that the board resigned. From the sound of things, it sounds like your new board needs a fresh start, including a new attorney. Attorneys are corruptible, and from what I have seen in the last five years or so, the attorney market is flooded with incompetents. I think this goes beyond an attorney just taking foul instructions from the board. Many attorneys are looking for ways to inappropriately add billable hours. After 'taking the temperature' of the current attorney, I would consider getting a new attorney as soon as possible. Try googling for "real estate attorneys" in your area. Interview at least three. Usually there is no charge for such an interview, unless the attorney is hired as general counsel subsequently.
KathyS15
(Ohio)

Posts:15


08/31/2017 8:11 AM  
There are only 28 townhomes in our community and we don't have a property management firm.

The meeting wasn't called by them for us to explain why we wanted them removed. They ran to our lawyer and he sent everyone a five page letter addressing the issue they heard we are upset about. Their meeting was to further discuss concerns the residents may have. All the homeowner's were already quite aware of what the concerns are and that's why they signed the petition. Maybe we could have called for a special meeting to discuss things with them before going ahead with the petition. But they have been totally self-serving and we'd had enough.

Right now the Association doesn't have a Board. We aren't sure if we have an attorney. We are going to contact him to see what he has to say. But how will he get paid? We don't even know if he's under contract!

We do have people ready to step up, including myself. We plan on hiring a new attorney and getting an outside audit done right away (never had one in the 18 years we've been here). And we're going to go over the CC&R and Bylaws word by word and change and add as necessary.

Thanks so much for your insight! All the help we can get is greatly appreciated!
JohnC46
(South Carolina)

Posts:6802


08/31/2017 9:06 AM  
Kathy

Were you one who signed the petition for the BOD removal? If yes well darling you made your bed, now sleep in it.
KathyS15
(Ohio)

Posts:15


08/31/2017 10:18 AM  
Yes I did, along with a very strong majority. There are a lot of issues that have occurred the last few years that the Board would not justly address. We just want a united community with a Board that is transparent and fair and thinks of all the owners, not just themselves. Which is apparent, once again, in this latest misfortune they've contrived. Their personal feelings outweigh any good that should benefit EVERYONE. We followed the rules in our declaration and bylaws. It's a shame they didn't.

We'll figure it out. Or if we don't, they'll go down with the ship along with the rest of us. They are members of the Association too.

I am on this Forum just to try to gather information that might help all my neighbors.
JohnC46
(South Carolina)

Posts:6802


08/31/2017 12:31 PM  
I believe enough have told you how to go about seating a new BOD.

1. Check your docs as to how to call a Special Meeting. Usually this requires 10-20% of all owners requesting such. Also when calling for such, the purpose of the meeting must be defined. Yours will be to Hold BOD Election to replace the resigned members.

2. Appoint somebody to chair/run the meeting.

3. Hold an election. If only 3 run, no need for an election. They become the BOD.
If two run, then no need for an election and they can appoint a 3rd.
If 4 or more run, get out the ballots. and vote for 3.

With only ?28? of you, this should not be a major project. Solicit proxies from those that cannot attend. Get those proxies signed over to you and you could control the outcome.


GenoS
(Florida)

Posts:1446


08/31/2017 3:59 PM  
I know you're not in Florida but if you were, that recall petition signed by 72% of the homeowners would have effectively recalled them. The board would have 5 days to call a meeting to certify the recall and hold a member vote for replacement directors. The time for discussion would be over.

You say Ohio corporate Ohio regulations are complicated and vague. Time to roll up your sleeves and try to understand them. Or hire an attorney to advise you. Getting a new board in place would seem to be the highest priority and it should not be that difficult, although it probably requires some leg work.
KathyS15
(Ohio)

Posts:15


09/02/2017 5:30 AM  
Thank you. We're meeting today. Appreciate your help! Have a great holiday weekend!
SueW6
(Michigan)

Posts:194


09/02/2017 6:36 AM  
The lawyer probably saw the 72% petition and advised the entire board to resign. ("You can't fire me, I quit")

So - there you have it. No need to replay the event: you need a board.

Their resignation is the reason for your new election. The positions must be filled, or the HOA could get turned over to the court.

Focus on getting a board and getting stabilized.





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