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Subject: Submitted my Shed Request to the ARC
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Author Messages
BenA2
(Texas)

Posts:77


01/12/2018 2:30 PM  
Posted By JohnC46 on 01/12/2018 8:49 AM
Posted By BenA2 on 01/12/2018 8:35 AM
HOA's are created for the benefit the owners but, sadly, this is not an example of a board and ARC that is doing their job.




In what respect not doing their job? If it was taking 60 days to approve keep in mind the BOD/ARB is not a full time, paid staff, standing there at attention, waiting there for your business. I am on my BOD and if you think we are going to drop everything and work as per your schedule, you are wrong. We will do so and have done so in the case of an emergency but for a non-emergency (such as a shed approval) within a month or three is generally acceptable.




I have served on the board for the past four years and have served on the ARB so I appreciate the fact that they are volunteers. Nobody has suggested that anyone drop everything when a request comes in but the members of an HOA deserve to have a board and ARB that acts on requests in a reasonable amount of time.

Any volunteer who does not have the time to do their job efficiently should resign. The members deserve better.
PaiN


Posts:0


01/12/2018 4:16 PM  
Posted By BenA2 on 01/12/2018 2:15 PM
Posted By PaiN on 01/12/2018 9:58 AM
NOPE

The Corporate Board of Director's function is to serve the CORPORATION.

The Corporation's function is to 'serve' the COVENANTS.



The owners ARE the association/corporation. The covenants must be followed but the board's fiduciary responsibility is to the members, not a document.




NOPE

The BOD's Fiduciary Responsibility is to the CORPORATION, which they direct.

That is the legality of the relationship.

When this is not understood THEN the attorneys get new cars.


The 'pro' of this is that the members are under the 'corporate shield' re: liability.
BenA2
(Texas)

Posts:77


01/12/2018 4:30 PM  
Assuming the home owners association is incorporated, then the association is a corporation.

Whether you call it an association or corporation, it is made up of the member owners. So we are saying the same thing. The board's fiduciary duty is to the corporation = the board's fiduciary duty is to the members.

This is Community Association 101.
RichardP13
(California)

Posts:2202


01/12/2018 4:36 PM  
Posted By PaiN on 01/12/2018 4:16 PM
Posted By BenA2 on 01/12/2018 2:15 PM
Posted By PaiN on 01/12/2018 9:58 AM
NOPE

The Corporate Board of Director's function is to serve the CORPORATION.

The Corporation's function is to 'serve' the COVENANTS.



The owners ARE the association/corporation. The covenants must be followed but the board's fiduciary responsibility is to the members, not a document.




NOPE

The BOD's Fiduciary Responsibility is to the CORPORATION, which they direct.

That is the legality of the relationship.

When this is not understood THEN the attorneys get new cars.


The 'pro' of this is that the members are under the 'corporate shield' re: liability.


WRONG!
The board of the directors and the officers have direct control over the corporation, and therefore they owe fiduciary duties to the owners, who are the shareholders. Directors' Duties The directors of a corporation owe duties of care and loyalty to the shareholders of the corporation.
PaiN


Posts:0


01/12/2018 8:25 PM  
Fiduciary Responsibilities: Corporations - Lawyers.com


www.lawyers.com › Small Business Law

Like directors, corporate officers owe a fiduciary duty of care and duty of loyalty to the corporation and its stockholders in carrying out their corporate responsibilities. Officers are expected to act in good faith and to use the same care that a reasonably prudent person would use in similar circumstances in making decisions and taking action on behalf of the corporation.



Perhaps I was being a bit 'pedantic'.

W'all seem to agree.




GenoS
(Florida)

Posts:1761


01/13/2018 12:35 AM  
Posted By BenA2 on 01/12/2018 2:15 PM
The owners ARE the association/corporation. The covenants must be followed but the board's fiduciary responsibility is to the members, not a document.

This is not exactly true. Directors owe a fiduciary duty to the Association. Homeowners are members of the Association and that, really, is the extent of their "ownership" of it. Along with their homes, of course.
BenA2
(Texas)

Posts:77


01/13/2018 8:00 AM  
Associations are, by definition, made up of people. Board control is limited. Each owner may have little control but all of the owners together have complete control of the association.
KerryL1
(California)

Posts:4632


01/13/2018 8:53 AM  
While all Owners together MAY have complete control--or whatever the governing docs say for control of various a sects of the HOA, inability or unwillingness to "Acting together" is a potential that's not easy to achieve.

I think where we might have a semantics issue is that some posters seem to see the Board as owing their obligations of loyalty and care to EACH individual owner vs. the Owners as a group, which of course, includes directors too. We should work for the greater good.
PaiN


Posts:0


01/13/2018 12:23 PM  
Since 'we' are directors of a CORPORATION, we should work for the greater good of said CORPORATION.

An unincorporated HOA does NOT have directors.


Semantics, perhaps.

Facts, definitely.
BenA2
(Texas)

Posts:77


01/13/2018 12:35 PM  
Posted By KerryL1 on 01/13/2018 8:53 AM
While all Owners together MAY have complete control--or whatever the governing docs say for control of various a sects of the HOA, inability or unwillingness to "Acting together" is a potential that's not easy to achieve.

I think where we might have a semantics issue is that some posters seem to see the Board as owing their obligations of loyalty and care to EACH individual owner vs. the Owners as a group, which of course, includes directors too. We should work for the greater good.



I absolutely agree that the duty is to the owners as a whole. This debate started because someone implied that the board does not owe anything to the owners, only to the "corporation" as if it was separate from the owners.
PaiN


Posts:0


01/13/2018 12:37 PM  
to repeat:

Fiduciary Responsibilities: Corporations - Lawyers.com


www.lawyers.com › Small Business Law

Like directors, corporate officers owe a fiduciary duty of care and duty of loyalty to the corporation and its stockholders in carrying out their corporate responsibilities. Officers are expected to act in good faith and to use the same care that a reasonably prudent person would use in similar circumstances in making decisions and taking action on behalf of the corporation.
TimB4
(Virginia)

Posts:15081


01/13/2018 1:51 PM  
Ben,

The Association is created by the CC&Rs.
The members of the Association are the individual property owners who have those CC&Rs attached to their deed.
The members elect a Board to make the decisions for the Association.

The Board applies to the State for incorporation.
The State creates the corporation.
Corporate law specifies that the Board and Officers have a fiduciary duty to the corporation - not the members.

HOA/Condo laws typically specify that funds shall be handled in a fudicary capacity.
The funds belong to the Association/Corporation.

Often the Board must make decisions based on what is good for the Association/Corporation over what the membership wishes or desires. Some examples:
Specifying no boating or swimming in a storm water retention pond due to liability risk.
Seeking legal action to enforce a covenant violation
Seeking legal action and potential foreclosure due to failure to pay assessments
Removing trees due to liability risks
Not replanting trees due to liability risks or funding


Looking at Cornell University Law School for a definition and example of Corporate Fiduciary Duty one would find the following:

Directors of corporations, in fulfilling their managerial responsibilities, are charged with certain fiduciary duties. The primary duties are the duty of care and the duty of loyalty.

Duty of Care: This duty requires that directors inform themselves “prior to making a business decision, of all material information reasonably available to them.” Whether the directors were informed of all material information depends on the quality of the information, the advice available, and whether the directors had “sufficient opportunity to acquire knowledge concerning the problem before action.” Moreover, a director may not simply accept the information presented. Rather, the director must assess the information with a “critical eye,” so as to protect the interests of the corporations and its stockholders.

Duty of Loyalty: As the Delaware Supreme Court explained in Guth v. Loft, 5 A.2d 503, 510 (Del. 1939): “Corporate officers and directors are not permitted to use their position of trust and confidence to further their private interests. . . . A public policy, existing through the years, and derived from a profound knowledge of human characteristics and motives, has established a rule that demands of a corporate officer or director, peremptorily and inexorably, the most scrupulous observance of his duty, not only affirmatively to protect the interests of the corporation committed to his charge, but to refrain from doing anything that would work injury to the corporation, or to deprive it of profit or advantage which his skill and ability might properly bring to it, or to enable it to make in the reasonable and lawful exercise of its power.”

Additionally, courts have imposed the following duties:

Duty of Good Faith: Requiring the director to advance interests of the corporation, not violate the law, and fulfill his or her duties. For a thorough discussion of this duty, see In re The Walt Disney Co. Derivative Litig., 906 A.2d 27 (Del. 2006).

Duty of Confidentiality: Required directors to keep corporate information confidential and not disclose it for their own benefit. Consult Guth v. Loft, Inc., 5 A.2d 503 (Del. 1939) for more information.

Duty of Prudence: Requires a trustee to administer a trust with a degree of care, skill, and caution that a prudent trustee would exercise. Consult Amgen Inc. v. Harris, 136 S. Ct. 758 (2016) for more information.

Duty of Disclosure: This duty requires directors to act with “complete candor.” In certain circumstances, this requires the directors to disclose to the stockholders “all of the facts and circumstances” relevant to the directors’ decision.
PaiN


Posts:0


01/13/2018 1:54 PM  
well said

should be a 'sticky'

BenA2
(Texas)

Posts:77


01/13/2018 2:43 PM  
Tim, thank you for the lesson. I am fairly well versed in how HOAs work being a Certified Manager of Community Associations, although I don't know everything.

Your statement, "Corporate law specifies that the Board and Officers have a fiduciary duty to the corporation - not the members" tells me you have missed my point. The corporation, in the case of an HOA, is made up of owners. A duty to the corporation means a duty to the owners.

While corporate law generally applies to all corporations, most states have laws that apply specifically to community associations. Looking only at corporation law does not give you the whole picture.

GenoS
(Florida)

Posts:1761


01/13/2018 6:45 PM  
Posted By BenA2 on 01/13/2018 8:00 AM
Associations are, by definition, made up of people. Board control is limited. Each owner may have little control but all of the owners together have complete control of the association.

An incorporated association is a legal person in the eyes of the law. All of the owners together may elect directors. The directors control the association.
TimB4
(Virginia)

Posts:15081


01/14/2018 5:43 AM  
Ben,

I believe each of us sees the others points.

Tim
DouglasM6
(Arizona)

Posts:537


01/15/2018 9:14 AM  
Posted By PaiN on 01/12/2018 9:58 AM
NOPE

The Corporate Board of Director's function is to serve the CORPORATION.

The Corporation's function is to 'serve' the COVENANTS.



We are NOT social clubs.


CAVEAT EMPTOR


(I did not, now I am financially 'stuck' having invested WAY too much in improvements.)





Correct me if I'm wrong, but didn't you say you were no longer a member of an HOA? That you had moved to a non HOA neighborhood and would "never" purchase in one again?

GenoS
(Florida)

Posts:1761


01/15/2018 1:00 PM  
PaiN post count 0. (Uh oh here we go again.)
DouglasM6
(Arizona)

Posts:537


01/15/2018 4:34 PM  
He'll be back......
KerryL1
(California)

Posts:4632


01/15/2018 4:59 PM  
And I though this go-around was his most useful efforts yet....
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