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Subject: Bylaws Typo
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StephanieD7
(Texas)

Posts:10


03/13/2019 1:39 PM  
I am at a loss of what to do and looking for suggestions. Last year we had a board member state that they would like to increase the board size from 5 to 7. I've included several excerpts from our bylaws to explain the problem which is why this is so long, but essentially I believe a section was removed, throwing off the numbering. And now there's disagreement as to what the maximum board size is. I believe it's clearly 5, but I'm not sure how to end this argument. At our last meeting she tried to motion to increase the board size but whenever I advise it's in conflict with our bylaws she just insists it isn't.

4.02. Number and Qualifications. The number of directors which shall constitute the entire Board of Directors shall not be less than three (3), nor more than five (5). The initial Board of Directors shall consist of three (3) directors. The directors need not be Members, nor residents of the State of Texas nor residents or citizens of the United States.

4.04. Change in Number. The number of directors may be increased or decreased from time to time within the limits specified in Section 5.02 by resolution of the Board of Directors or by the Members at the annual meeting, but no decrease shall have the effect of shortening the term of any incumbent director.

4.06. Removal. At any special meeting of the Members, duly called as provided in these Bylaws, any director may, by the affirmative vote of the holders of two-thirds (2/3) of each voting class of Members; be removed from office, either with or without cause. At such meeting a successor or successors may be elected by a plurality of the votes cast, or if any such vacancy is not so filled, it may be filled by the directors as provided in Section 5.07.

4.07. Vacancies and Additional Directorships. If any vacancy shall occur among the directors by reason of death, resignation, removal or otherwise, the directors then in office shall continue to act and may fill any such vacancies by a majority vote of the directors then in office, though less than a quorum, or by a sole remaining director. If a vacancy arises as the result of an increase in the number of directorships, the vacancy shall be filled by election at an annual meeting or at a special meeting of Members called for that purpose. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office.

5.02. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President or any director. Notice of the call of such special meeting shall be in writing and delivered for transmission to each of the directors not later than during the third (3rd) day immediately preceding the date for the meeting.

5.07. Deadlock of Directors. The Chairman of the Board of Directors, or if there is no Chairman of the Board, the President, shall be given an additional vote with which to break the deadlock of the directors solely on the matters on which the deadlock has occurred.

4.02 is the section in question, 4.04 is the section she says allows the board or members to increase the board size to any number, because even though it references 5.02, 5.02 doesn't actually specify any limits (it should read 4.02). I included 4.06 because it's the same thing, it references 5.07 which is irrelevant, but clearly should reference 4.07. I included 5.02 and 5.07 to show that they're irrelevant.

In our CCRs there's something along the lines of stating if there's a disagreement of the CCRs the interpretation that's most clearly in line with the intent stands but there's no such language in the bylaws. I have tried finding something that would indicate the same to no avail. Our HOA is located in Texas. Our bylaws advise that an amendment requires majority of vote of each class (impossible, even if everyone agreed one way or the other we don't have a lot of participation.)

It's important to note that we only had 8 nominees this year, there isn't an abundance of volunteers. In my opinion, for her this is about ensuring she has a spot on the board, not that there's a need for more members. Is there some sort of guidance that would help end this argument?
AugustinD


Posts:1785


03/13/2019 1:47 PM  
I agree with you that the number of directors must remain between 3 and 5. Any change to a number outside this range requires a vote of the HOA membership. I also agree with your reasoning. Given the ambiguity and/or seemingly obvious typo, a court will seek intent as well.

Can you persuade the board to consult the HOA attorney? Write a polite letter asking the Board to do this. If no response, send a demand letter. Google for what this looks like.

At some point it might be helpful for you to post what the enforcement provisions are in your CC&Rs.

StephanieD7
(Texas)

Posts:10


03/13/2019 1:53 PM  
Thank you! Is there any sort of guidance I could look to that would talk about the importance of intent? I've included that in my argument and it's just dismissed as if judges only consider verbatim what is written, which I disagree with, though I claim no expertise in this area whatsoever.

I'm actually the President of the BOD. Two amazing board members have quit over the animosity within the board created by this argument. I would prefer not to have to spend Association funds to counter an argument made by an extremely small group of homeowners. For example, at our last meeting I advised that it was against our bylaws, but asked how many homeowners agreed that it was within the bylaws and that it would improve the management of the Association to increase the board size to 7 and 9 out of about 40 present agreed. 2 of those 9 would be added to the board if it was increased, and I believe the others would change their minds if they understood the reasoning behind the request. Our HOA has 175 homes.

Can you clarify what you mean by enforcement provision? Was this only applicable if I was trying to force the board to engage the attorney?
KerryL1
(California)

Posts:6418


03/13/2019 2:09 PM  
I agree with Augustine. Nowhere do your bylaws say you can have more than 5 or fewer than 3 directors. Ask the person who wants seven to show you evidence that 7 are permitted without adding your bylaws.

As president, you might have some control over the agenda and you might state that until someone brings the Board evidence that you may have more than 5 directors without a bylaw amendment, do not permit the subject to be raised again.

What a shame you lost tow good directors over this. It sound like directors went on way too long or way too often about this topic.

I think Augustine means there should be a clause in your CC&Rs that says how to enforce your CC&Rs. How do you make sure owners or the board adheres to or complies with them?
JohnC46
(South Carolina)

Posts:8434


03/13/2019 2:19 PM  
I agree with the others. Your BOD must be 3 to 5 Directors with the BOD or the Membership voting to the actual number 3-4-5. The Bylaws could be changed to allow a different size BOD (say 5 to 9) but the owners would have to vote for that.

You are letting one person bully you. Make a ruling and say if they disagree, they are free to seek legal counsel. Throw the ball back to them.

AugustinD


Posts:1785


03/13/2019 2:25 PM  
Posted By StephanieD7 on 03/13/2019 1:53 PM
Thank you! Is there any sort of guidance I could look to that would talk about the importance of intent? I've included that in my argument and it's just dismissed as if judges only consider verbatim what is written, which I disagree with, though I claim no expertise in this area whatsoever. [snip for now]


Your intuition is correct. There is formal guidance on this subject. It's called, "statutory interpretation" or similar. The rules derive from case law. The general rule is to start with the "plain meaning" ("verbatim" as you put it) of the language of the statute. If ambiguities result from a "plain meaning" reading, then the courts look at a larger context; what was said during hearings when the law was first proposed for passage; and more, to determine intent. Here's the wikipedia overview: https://en.wikipedia.org/wiki/Statutory_interpretation#General_principles

There are some caveats to this when it comes to covenants. A covenant is also a part of a contract. Whenever a part of a contract is ambiguous, it is interpreted in favor of the person who did not write the contract or, for covenants, in favor of an individual's free enjoyment of property. This does not apply here, in my opinion.

Please clarify or confirm: Is your Board down to three directors? Are you one of the directors? (I ask because sometimes a HOA's CC&Rs allow the president to be a non-director.) One director wants to just have the board (unlawfully, IMO) increase the number of directors to seven, correct? You say, "not allowed" (I agree). What does the third director say?

Disregard what I said about "enforcement" for now. I did not know you were the Board President, and I need the head count of the directors and which director wants what on this issue.
StephanieD7
(Texas)

Posts:10


03/13/2019 2:41 PM  
Kerry - thank you for the suggestion, I hadn't thought of just refusing to discuss it without evidence to the contrary (as dumb as that sounds as I type it).

Section 7.1. Enforcement. The Association, as a common expense to be paid out of the Maintenance Fund, or any Owner at his own expense, shall have the right to enforce, by proceedings at law or in equity, all restrictions, covenants, conditions, reservations, liens, charges, assessments, and all other provisions set out in this Declaration. Failure of the Association or of any Owner to take any action upon any breach or default of or in respect to any of the foregoing shall not be deemed a waiver of their right to take enforcement action upon any subsequent breach or default.

Thank you Augustin for the suggestion of looking into statutory interpretation, knowing the language I should be looking for should be a great help.

We are down to three directors, and the person who tried to increase the board size to effectively automatically add her wife and next door neighbor is now stating that her and her wife should be added. Fortunately, our bylaws allow the remaining directors to fill the positions, but I know she's going to lose it when that happens (or doesn't). I am one of the directors, and it's important to note that my husband is a director as well. Sounds odd, but the short version is that I've been on the board for 5 years, and my husband joined last year when there were no other nominees. He works in HOA management which is why I believe homeowners supported us both serving. I was voted in at the annual meeting, along with my husband and her next door neighbor, and the two that quit last weekend. The first time the director brought it up 2 were in favor, 3 opposed. When it was brought up the second time 1 was in favor, 4 were opposed. After the vote and with the board as it stands it is 1 in favor, 2 opposed. If we add two more it's likely to add at least one in favor, possibly 2 giving them the majority, but I still think it's against our bylaws...
MelissaP1
(Alabama)

Posts:8297


03/13/2019 4:07 PM  
What is the requirement to be on the board? Because typically it's 1 person and they have to be the owner on Title. Maybe 1 per household as long as owner but each home only has 1 vote. So not sure how a spouse or any kind of renter would qualify.

Let me advise you all this about increasing Board membership. Do NOT do it. Reason being is your HOA will have APATHY. Meaning you may have people who want to participate NOW but 10 years from now? Our HOA reduced that requirement because we could not even get 5 - 7 people to attend a meeting never the less have that many board members.

Believe me when people start screaming "Our board can't vote because there is no quorum", you will regret the increased number. It means it takes more to make a quorum. Which once apathy sets in, not going to happen. My HOA board started at 7 went down to 5 (107 members) and never made a quorum. My last year in office? I lost EVERY board member till it was just me and my Vice-President. He was behind in dues because of a "protest". I had even moved. All my other members had sold out. Plus our laws did not allow anyone to fill empty slots. Had to wait till election time in January.

Former HOA President
JohnC46
(South Carolina)

Posts:8434


03/13/2019 4:53 PM  
As is common on here after a few posts the "dirt" comes out. The 3 person BOD consists of the OP, her husband, and one other. So one might ask, are our HOA decisions a matter of "pillow talk"?

I understand people questioning to situation and/or suggesting alternatives.
StephanieD7
(Texas)

Posts:10


03/13/2019 5:07 PM  
Melissa - There's not a requirement that board members are on the owners, or even residents of Texas. The bylaws state that as members members of the same household only have one vote, but it doesn't address as directors. Fortunately I think the board can reduce the board size as low as 3 so that we could avoid the quorum issue. I do agree that the more members there are the more it seems like everything is someone else's responsibility and apathy grows.

John - I don't consider it dirt that my husband and I are both on the board. As I mentioned, when he first joined it was because there were only 4 nominees, no one else was running and we had 5 open positions. This year he was voted in by the homeowners, and beat the next closest by 7 votes. The person with the most votes had about 50, so it was a pretty wide margin. The only reason we're 2/3 now is because two members resigned due to all the drama being created, we were 2/5. The 2 that resigned also totally supported us both being on the board, along with the majority of homeowners.

Aside from increasing the board size above 5 being against the bylaws, I was against increasing it to 7 specifically BECAUSE my husband is on the board. I would rather be on a board of 5 without him than on a board of 7 where people think we increased the board size so that he could stay on. I don't see how only having 5 board members would enable us both to serve, I think it'd make it harder. Don't forget that the 2 that want to be added are also married...
SueW6
(Michigan)

Posts:503


03/13/2019 5:13 PM  
Stephanie
You and the other 2 members should come to some kind of consensus on like- minded people, and appoint 2 more people to fill that board to its maximum number.

Then put that idea of increasing the board in deep freeze.

Deal with it only if the Members want to increase the board number. They will have to jump over hurdles to change it.
StephanieD7
(Texas)

Posts:10


03/13/2019 5:23 PM  
Sue - yes, ideally we'd have more volunteers. If we don't, we'll just have to take what we can get to get it to 5, especially since my husband and I are both on the board... I just no longer feel like the nominees have the best interests of the Association at heart.

I've been looking at statutory intent information and the most relevant so far is "Where two provisions appear to cover the same matter, and are inconsistent, the more specific provision controls over the general provision.” (Starlight Ridge South Homeowners Assn. v. Hunter-Bloor (2009) 177 Cal.App.4th 440, 447; Code Civ. Proc. § 1859.)"

I think that definitely applies here since one section is stating the maximum is 5 and the other doesn't specify a number. Thank you again Augustin for providing the language I should be looking for with statutory interpretation!

AugustinD


Posts:1785


03/13/2019 6:04 PM  
-- Stephanie, thank you for answering my questions.

-- You say non-members may serve as directors, so I do not think spouses serving together on this board is unlawful. Many might not support this. On the other hand, when apathy is the rule, a HOA is lucky to have a well-qualified married couple serving.

-- If two of the three current directors want to appoint two more directors to bring the total to five, then do so.

-- Next, if three of the five directors want discussion of the board increasing the number of directors to six or more to happen at a board meeting, then I would put it on the agenda.

-- Else I would do as Kerry says but consider also an explanation to the board. Maybe have an open forum after a board meeting and let the members talk. For the open forum, you should have prepared a handout explaining your reasoning, starting with what was in your first post and maybe a bit on statutory interpretation and whatever you want to say is in the case law. Be strong.
SueW6
(Michigan)

Posts:503


03/14/2019 8:25 PM  
Create an ad hoc bylaws committe and let them come up with a recommendation to the board to straighten out these bylaws. The president should appoint this committee - one board liaison, the president, three other general members or other ( like a parliamentarian or consultant) )

If bylaws are silent on an issue, then default to state’s non profit incorporation laws.

IMO, it’s very odd to have a decrease or increase in the number of board members in the CCRs, or that a board can set its own number of members.

IMO, 5 members is adequate for an HOA your size.
SueW6
(Michigan)

Posts:503


03/14/2019 8:40 PM  
Stephanie,

How old are these bylaws?

Really, they read like they were taken fron the developer’s bylaws and just rolled into the new HOA’s bylaws. Very oddly worded.
StephanieD7
(Texas)

Posts:10


03/15/2019 5:21 AM  
Augustin - I absolutely want to appoint two more members to bring it to 5, and the other board members do as well, so I don't think that's going to be a problem. We'll see what happens with the addition of two more, if they want to increase to 7. I did at least find out that if we were to increase to 7 it would require an election, not a board member appointment, so that was good news.

Sue - the problem with our bylaws is that an amendment requires so many votes I don't think we could ever get enough participants to meet a quorum, even if those voting were in favor. The bylaws are 25 years old, and yes, I believe these are just what the developer originally had.
SueW6
(Michigan)

Posts:503


03/15/2019 6:10 AM  
Yup - you need an overhaul of these bylaws - which now sound like developer’s turnover bylaws giving the new board the right to set its number at the beginning of the turnover.


As president you can monitor any motion brought before the board. The entire board can object to the consideration of a motion if it is improper, illegal, conflicts with current bylaws or is without merit.

So anyone who puts forth this motion needs to qualify the need. The proof is on them.


If your bylaws permit proxies to act as part of a meeting quorum, you can call for a vote at any soecial meeting. But you are far from that point right now.
StephanieD7
(Texas)

Posts:10


03/15/2019 6:23 AM  
We're way beyond the developer turnover, and unfortunately there's nothing in the bylaws that state they can be redone after that point, either. I thought that was normal but I didn't see anything like it with ours.

Yes, I've been arguing that it conflicts with the bylaws and can't actually be brought as a motion, they just argue that I'm wrong seemingly no matter what I say. I hope the language on using the more restrictive language in a document when two sections are in conflict will help. They think the proof they need is in the section stating it can be increased, that even if it's a typo in 4.04 it doesn't matter, that means they can increase it to an infinite amount.

We do have proxies, and we even do proxy just for quorum, but even then it's practically impossible. Our last vote we were trying to pass an increase so I went door to door over and over and still only got about 49%. The language about amending the bylaws is pretty vague, so I'm not sure if we could reduce the quorum needed to amend the bylaws or not. It states: 10.06. Amendment of Bylaws. These Bylaws may be amended, altered, or repealed at a regular or special meeting of the Members, only by the affirmative vote in person or by proxy of a majority of each class of Members. Notwithstanding the above, the percentage of voting power necessary to amend a specific clause or provisions shall not be less than the prescribed percentage of affirmative votes required for action to be taken under that clause.

It seems like that might mean that because there's no percentage named in section 4.04 it could be as simple as a majority? Still not sure we could actually get participation over the 50% mark.
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