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Subject: No volunteers for Board
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Author Messages
JimmieF
(Texas)

Posts:2


11/27/2018 8:29 AM  
Good Morning,

The association that I manage is located in Texas. I have a board member that is not planning to re-run and will then leave a vacant seat on the board. I just had an election for another position and did not get one single volunteer so the incumbent was re-elected. What happens if I am unable to fill the vacancy? I know that the board will not meet quorum and things will not get done. I have read that in other states an owner can request a state appointed official to step in until a volunteer is found. I cannot find anything that states this would be the case in Texas, is it?

Thanks for any advice!
RoyalP
(South Carolina)

Posts:203


11/27/2018 8:36 AM  
'search' for [court appointed receiver]
KerryL1
(California)

Posts:5950


11/27/2018 9:02 AM  
Once you find receivership, let the membership know it'll cost them plenty if one is appointed.
SheliaH
(Indiana)

Posts:2311


11/27/2018 9:06 AM  
You'll have to contact an attorney to see how receivership works in Texas, but to start, how many people are left on the board? It sounds like two, so you'll have to start there. Have a sit-down with the outgoing board member and the person who was re-elected and tell them what receivership is and what it'll mean to the management of the association. Basically, here's what they have to look forward to:


A court will have to appoint a receiver to run the association - he or she only answers to the court, so homeowners will have NO SAY WHATSOEVER on how the community is run. For example, if the receiver finds a special assessment or two (or more) are necessary to pay the association's bills, it will not matter if the association documents state these have to be approved by the homeowners. All the receiver will have to do is explain the situation to the court and if it agrees it's necessary, the receiver will be able to assess it according. There won't be a damned thing the homeowners can do about it.

Even if there's no need for a special assessment, the association will have to pay the fees of the receiver, plus court costs, so homeowners can expect assessments to be increased (a lot) because it still has to pay the property manager (you), operating costs and fund reserves (although I wouldn't be surprised if this bunch has a reserve fund and probably doesn't know what a reserve study is).

Property values will take a beatdown because no one will want to move in a community where the homeowners don't have a say in how it's run (because they didn't care enough to volunteer to run for the board).

Hopefully, that will scare the remaining board members to death, who will then send a strongly worded letter to homeowners explaining the situation. They should also call for volunteers to step up or call a special meeting to have an election. I'd also set a deadline - if no one volunteers by a certain date, the last thing the remaining board members will do is talk to the association attorney about petitioning the court for a receiver. And then do it if the deadline comes and goes, but everyone continues to sit on their hands.

Another alternative might be to dissolve the association, but if it has common areas it's responsible for, its maintenance will have to be taken over by something or someone - which can take time and cost more money (which would also be the homeowners' responsibility until the areas change hands). The board will have to speak to the association attorney to see if this can be done and how to do it.

Since you're property manager, you may also want to speak with your supervisors and/or company attorney, if you have one, and decide what you will do next, as you don't want to be held liable for something the board should do but can't or refuses to and you know you can't do anything without the board's approval. You might want to have that conversation before meeting with the board, as well as review your contract to see what it says about terminating the contract. Have your supervisors or company attorney (maybe both?) attend that meeting with you so they will understand what's at stake.



AugustinD


Posts:1208


11/27/2018 9:07 AM  
JimmieF, Are you a paid manager or volunteer manager?

It appears a HOA owner in Texas may ask a court to appoint a receiver. If certain conditions are met, the HOA owner may be successful. Texas Business Organizations Code 11.404 appears to be one of the main, relevant statutes. As an introduction, see
https://statutes.capitol.texas.gov/Docs/BO/htm/BO.11.htm#11.404

Receivership is expensive to the HOA members. Generally nationwide I understand that courts are reluctant to appoint one if even one volunteer from the HOA is willing to run the HOA. I believe rules on quorum get thrown out the window, all in the name of avoiding imposing an expensive receiver on a HOA. Bear in mind that governing documents (Declaration, Bylaws) do not usually treat how a HOA is governed when a receiver is in charge. The receiver will follow state statutes (to which the HOA is subject under state receivership yada law) instead.

As the manager, what is your goal?
JimmieF
(Texas)

Posts:2


11/27/2018 9:14 AM  
Thanks for all the information! I will research the receivership and consult the associations legal team. As the manager, my goal is to keep the board full as per the governing documents. I would like to present to the current board what will happen if a replacement is not found and either convince the current member to re-run or to convince one of the owners to volunteer.
DouglasK1
(Florida)

Posts:1278


11/27/2018 11:08 AM  
A court appointed receiver will bill by the hour for any time spent on association related tasks. Since the receiver could be a lawyer or other professional with a high billable rate, this could easily cost 200-300/hour. The receiver will typically hire a manager or management company of their choosing, which might not be the most cost effective one available. The dues would be adjusted to cover this additional expense. As stated above this would probably not be cheap.

Escaped former treasurer and director of a self managed association.
TimB4
(Virginia)

Posts:16045


11/27/2018 12:17 PM  
Other things to consider:

The courts don't look favorably on large Associations (100+) that can't find volunteers when appointing receivers.

The Receiver answers to the courts not the membership.

Typical imposed limits on assessments are out the window.
As has been mentioned, the assessments will increase (by court order) to pay the receiver and their assistants.
If the receiver determines work needs to be done that there are no funds for, the court will likely approve special assessments to pay for the work.
If the reserves are not funded, the court may raise assessments to fully fund.

Consequences:

Sales will likely drop as few will want to purchase within an association that is under receivership.
If sales drop, sellers may need to sell well below market value to make the sale. If enough of that occurs, your property value can be affected.
RoyalP
(South Carolina)

Posts:203


11/27/2018 1:17 PM  
.... another consequence:

properly funded reserves


.... just sayin'
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