Get 2 months of free community web site hosting from Community123.com!
Tuesday, June 18, 2019
Get 2 months of free community web site hosting from Community123.com!
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: Do GA nonprofit rules trump HOA bylaws?
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
FernandoH
(Georgia)

Posts:5


04/14/2019 5:52 PM  
My understanding is that Homeowner Associations (HOA) are also non-profit corporations. As such, HOA's are also subject to GA State code governing non-profit corporations. I have 3 questions:
1) Our HOA bylaws have a provision for special meetings. Georgia non profit rules have the same stipulation for a special meeting (25% of members request meeting). Homeowners submitted a petition with required number of signatures requesting a special meeting to remove existing HOA Board (Declarant selected). Neither our HOA bylaws nor GA non profit code gives Board of Directors authority to reject request for a special meeting. Is the BOD legally able to refuse a special meeting request?

2) Can homeowners during Declarant control, vote to remove the existing HOA Board? GA non profit code gives members the right to remove Directors for any reason. Our HOA bylaws say only the Board of Directors can remove a Director. Which takes precedence - Georgia non profit code or the HOA bylaws? If homeowners have the votes, can they remove Declarant' HOA Board?

3) Most HOA bylaws say that the Declarant must approve a Board member. Isn't that a civil rights violation? What if the Declarant refuses to sit someone due to their race, religion or sexual preference? I would think the Declarant would have to show a substantive reason why they are refusing to sit someone on the Board. In other words, Declarant can't refuse to sit someone because they wear a red tie.
MelissaP1
(Alabama)

Posts:8184


04/14/2019 7:10 PM  
If your still Declarant controlled, then you have no authority to remove/change the board. That's your developer's job till it's turned over to the owners. Then your membership can vote for a new board.

Keep in mind you may be a non-profit corporation but your NOT one that is a charitable one. You can't write checks and claim "charity". They aren't that kind of non-profit.

Your CC&R's, Articles of Incorporation, and by-laws can't superceded federal, state, or local laws. They may be a bit more restrictive but can't exceed them. It's most likely written in those documents to be so.

Former HOA President
RoyalP
(South Carolina)

Posts:770


04/15/2019 6:18 AM  
Posted By FernandoH on 04/14/2019 5:52 PM
My understanding is that Homeowner Associations (HOA) are also non-profit corporations. As such, HOA's are also subject to GA State code governing non-profit corporations. I have 3 questions:
1) Our HOA bylaws have a provision for special meetings. Georgia non profit rules have the same stipulation for a special meeting (25% of members request meeting). Homeowners submitted a petition with required number of signatures requesting a special meeting to remove existing HOA Board (Declarant selected). Neither our HOA bylaws nor GA non profit code gives Board of Directors authority to reject request for a special meeting. Is the BOD legally able to refuse a special meeting request?

NO


2) Can homeowners during Declarant control, vote to remove the existing HOA Board? GA non profit code gives members the right to remove Directors for any reason. Our HOA bylaws say only the Board of Directors can remove a Director. Which takes precedence - Georgia non profit code or the HOA bylaws? If homeowners have the votes, can they remove Declarant' HOA Board?

yes, BUT, the declarant most probably has the majority of voting power


3) Most HOA bylaws say that the Declarant must approve a Board member. Isn't that a civil rights violation? What if the Declarant refuses to sit someone due to their race, religion or sexual preference? I would think the Declarant would have to show a substantive reason why they are refusing to sit someone on the Board. In other words, Declarant can't refuse to sit someone because they wear a red tie.

NO, the declarant has the majority of voting power



FernandoH
(Georgia)

Posts:5


04/15/2019 6:33 AM  
Thanks for responses.
I did additional research on these questions. there were two landmark cases in GA that answer my question
1) Hall v. Town Creek Neighborhood Ass'n, 320 Ga. App. 897, 740 S.E.2d 816 (2013)
2) McGee v. Patterson, 323 Ga. App. 103, 746 S.E.2d 719 (2013)

I think there is a general misconception of what Declarant means. Folks confuse "Declarant" with "Dictator". HOA's are non profit corporations and as such are governed by GA non profit code. The above cases show that the Declarant must abide by the Declaration and HOA Bylaws. Where the Declaration and HOA bylaws conflict with the GA non profit code, the courts have determined that the GA non profit code takes precedence.

Once the members in anon profit organization have the majority, they can oust the Board of Directors. This applies to HOA's while under Declarant control. That is why most Declarants turn HOA over to homeowners when the subdivision is 75% to 90% occupied.

MelissaP1
(Alabama)

Posts:8184


04/15/2019 6:45 AM  
Another one who thinks they know and understand the law... Hate to tell you but if you look, the declarant/Developer has 2 times the voting power until they turn over the HOA to the owners. There is a 2 class voting system usually involved with class A and Class B votes. Class A has 2 times the voting powers.

No. Developers/Declarants don't typically turn over the HOA to owners for those reasons. That's the reason your assigning it. At around 90% it's no longer profitable endeavor. Plus it's usually written in that is the % of turn over to owners. A developer makes their money during development not long term maintenance. Long term maintenance is on the owners. Hence why the HOA is a non-profit. It's to collect as much as it's spends on operational costs.

So it sounds like your just unhappy with your HOA/Developer overall and looking for straws to grasp onto. My recommendation? Go back to your documents, read them, understand them, and form a committee for turn over. That way when the developer turns over, you and your neighbors are ready for the transition.

Former HOA President
FernandoH
(Georgia)

Posts:5


04/15/2019 6:53 AM  
I was under the impression that this forum was designed to promote professional discussions about HOA's. Not sure the issue with the previous poster. Why make derogatory comments. I once read, "never argue with an idiot. They will drag you down to their level and beat you with their experience".
MelissaP1
(Alabama)

Posts:8184


04/15/2019 6:57 AM  
That's not a professional conversation. That's some legal mumbojumbo you want repeated to you to make you sound like the you got the answers. A "professional" conversation doesn't provide their own answers with the own questions just to hear themselves speak... If you want a DEBATE the issue, then present as a DEBATE.

Former HOA President
KerryL1
(California)

Posts:6350


04/15/2019 7:26 AM  
You will get some replies that are more helpful from others, Fernando,. I know little about declarant control, so will stop typing. Good luck.
GeorgeS21
(Florida)

Posts:1227


04/15/2019 8:25 AM  
Fernando,

HOAs are "not for profit," not, "non-profit." (language may vary?)

Does Georgia have specific HOA statutes - as differentiated from corporate not-for-profit statutes?

Your declarant controls the development while it is being developed - so, that said declarant can maintain the standards, approve variances to sell properties - in general, to maintain control to make more money.

Declarants don't usually want to be in the business of running HOAs.

The voting rights are called out clearly in governing docs ... as are the percentages (usually) for declarant turnover. In most cases the declarant can do as they wish because their voting rights are so much greater per property.

When you start talking about civil rights violations, you are going a bit off topic for HOA discussions.

If there are enough votes, given your specific docs, it is likely the membership can remove an entire board, specific board members, etc - of course, the declarant may be able to block this by having enough votes.
FernandoH
(Georgia)

Posts:5


04/15/2019 8:30 AM  
I appreciate the informative posts.

THANKS!!!!!!
DouglasK1
(Florida)

Posts:1406


04/15/2019 9:20 AM  
Posted By FernandoH on 04/15/2019 6:53 AM
I was under the impression that this forum was designed to promote professional discussions about HOA's. Not sure the issue with the previous poster. Why make derogatory comments.


Melissa is apparently exempt from this and from facts in general.

Typically during the period of developer control, the developer has more than one vote per lot. This is what gives them control even when over 50% of lots are sold. Generally turnover occurs at the point where the rest of the owners have more than 50% of the vote. If the developer only has one vote per lot, then you do have the possibility removing the developer appointed board. What do your CCRs and/or bylaws say about developer votes, and turnover in general?

As far as the title question, state laws would override HOA governing documents. The problem is that most states do not have any agency or department to enforce corporate or association laws, the primary recourse is via the courts (suing).

Posted By FernandoH on 04/15/2019 6:53 AM
2) Can homeowners during Declarant control, vote to remove the existing HOA Board? GA non profit code gives members the right to remove Directors for any reason. Our HOA bylaws say only the Board of Directors can remove a Director. Which takes precedence - Georgia non profit code or the HOA bylaws? If homeowners have the votes, can they remove Declarant' HOA Board?



It would be unusual for bylaws to allow directors to be able to remove a director, typically they can just remove an officer title, but the person would still be a director. Many governing docs provide a provision to allow members to recall a director, and since GA law apparently allows it, you should be able to go through that process.

Posted By FernandoH on 04/15/2019 6:53 AM
3) Most HOA bylaws say that the Declarant must approve a Board member. Isn't that a civil rights violation? What if the Declarant refuses to sit someone due to their race, religion or sexual preference? I would think the Declarant would have to show a substantive reason why they are refusing to sit someone on the Board. In other words, Declarant can't refuse to sit someone because they wear a red tie.



It would also be unusual for governing docs to say the declarant must approve directors after declarant control is over. During declarant control, they have enough voting power to essentially just assign directors, using any criteria they want to use.

Escaped former treasurer and director of a self managed association.
JohnC46
(South Carolina)

Posts:8347


04/15/2019 10:03 AM  
Our docs called for turnover on 01/01/xx when during the prior year, the Declarant had sold 85% of the homes. This took 7 years to happen.
AugustinD


Posts:1632


05/03/2019 5:59 AM  
FernandoH, can you post a copy of your HOA's Bylaws and Declaration? I agree with others that, when the Declarant is still in control, and as a matter of law, change is particularly hard. After all, the business that established the HOA and is still lawfully in control has legal rights, too. Else barring further information, here are my impressions:

The hierarchy of relevant documents is generally going to be as follows:
Georgia Property Owners' Association Act, O.C.G.A. 44-3-220, et seq. See https://www.hoa-usa.com/files/documents/GeorgiaPropertyOwnersAssociationAct_082410.pdf

Georgia Non-Profit Corporation Statute

HOA's Declaration

HOA's Bylaws


To respond to your questions.

1) No. See Georgia State 44-3-230.

2) I want to see what your Declaration and Bylaws say.

3) Federal and state civil rights violations occur only if it can be proven that the reason the Declarant refuses to seat a person as a director is on account of the person's race, sex, religion and a number of other protected categories. Suspicions of unlawful discrimination like the latter are not enough. One needs cold hard evidence that the Declarant is being either, racist, sexist, et cetera when it refuses to seat, say, African Americans or, say, women. If no discrimination based on membership in a protected class is present, then it is unlikely anything provably unlawful is going on when it comes to seating board members. The Declarant does not have to show anything. It's the person or group that complains of unlawful discrimination that will have to demonstrate (at least initially) that the alleged discrimination is unlawful. If you elaborate a bit on what the Declarant is doing, this would probably help people here give more substantive suggestions.
FernandoH
(Georgia)

Posts:5


06/12/2019 11:05 AM  
I apologize for the delay in responding. Below is time frame of what has transpired.

• 3/20 – A demand for a special meeting signed by 36 homeowners is sent to Property Mgmt Company, Declarant, HOA Board. Property Mgmt Company is run by Builder's wife. 36 homeowners is greater than the number required to call a Special meeting.
• 4/21 – A Special Meeting is not called within allotted 30 days. Lawyer for homeowners calls special meeting for 4/30.
• 4/30 – A Special Meeting is held at clubhouse. The Declarant doesn't show up. Homeowners vote 80-0 to replace Board of Directors with three homeowners. Homeowners now have control of HOA.
• 5/1 – The Builder refuses to acknowledge results of Special Meeting. In effect there are two dueling HOA's.
• 5/28 – The homeowner's HOA files a 300 page lawsuit against Declarant and alleged Co-Declarant.

The "owner" has two companies in subdivision - 1) builder 2) rental. The Builder Company is Declarant as of filing of plan in the County. The owner files papers to have the rental company recognized as Co Declarant. On the surface setting up rental company as Co Declarant appears to be a scheme to evade paying of capital contribution at closing and yearly association dues.

This is going to be an interesting case.
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > Do GA nonprofit rules trump HOA bylaws?



Get 2 months of free community web site hosting from Community123.com!



News Articles Provided by: Community Associations Network
News, articles and blogs about condos/HOA's

Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
HindmanSanchez Legal Notice:  (For messages posted by HindmanSanchez) This message has been prepared by HindmanSanchez for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Members of HOATalk.com should not act on this information without seeking professional counsel. Please do not send us confidential information unless you speak with one of our attorneys and get authorization to send that information to us. If you wish to initiate possible representation, please contact an attorney in our firm. Our attorneys are licensed to practice law in the state of Colorado only.

Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement