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Subject: Do GA nonprofit rules trump HOA bylaws?
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FernandoH
(Georgia)

Posts:4


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:7990


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Your CC&R's, Articles of Incorporation, and by-laws can't superceded federal, state, or local laws.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:578


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:4


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:7990


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:4


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:7990


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:6308


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:1179


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:4


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

THANKS!!!!!!
DouglasK1
(Florida)

Posts:1374


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:8195


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.
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