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Subject: Violation Of Governing Documents
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HectorR
(Florida)

Posts:34


04/18/2019 9:24 AM  
Good day everyone, I wanted to thank everyone for supporting me a month and a half ago when I was having a battle with my HOA and the HOA attorney.
I have a question to ask and I was wondering if the following is a clear violation of the governing documents and if so what can be done about it.

-Our HOA here in Miami FL.states that the president of our HOA shall be a director of the Association
-The president is receiving compensation as an employee of the Association
-The Property management contract states that all employees whom perform duties at our development are employess of the Association and not employees of the management company.
-The employees of the association are managed by the HOA board of directors and can only be terminated by the board of directors.
I had a questioned this situation to the board of directors and the attorney and the attorney states that there is no wrong doing because the president does not have any ownership with the property management company.
I told the attorney that it does not matter if he does not own part of the company, he is getting paid as an association employee and its unethical and that it clearly looks like it is a violation of our governing documents.

This has been going on for over 7 years, can we as home owners file a law suit and sue the Board of directors for violation of the governing documents?

Florida statues 720:303 12(12) COMPENSATION PROHIBITED.—A director, officer, or committee member of the association may not directly receive any salary or compensation from the association for the performance of duties as a director, officer, or committee member and may not in any other way benefit financially from service to the association. This subsection does not preclude:
(a) Participation by such person in a financial benefit accruing to all or a significant number of members as a result of actions lawfully taken by the board or a committee of which he or she is a member, including, but not limited to, routine maintenance, repair, or replacement of community assets.
(b) Reimbursement for out-of-pocket expenses incurred by such person on behalf of the association, subject to approval in accordance with procedures established by the association’s governing documents or, in the absence of such procedures, in accordance with an approval process established by the board.
(c) Any recovery of insurance proceeds derived from a policy of insurance maintained by the association for the benefit of its members.
(d) Any fee or compensation authorized in the governing documents.
(e) Any fee or compensation authorized in advance by a vote of a majority of the voting interests voting in person or by proxy at a meeting of the members.
(f) A developer or its representative from serving as a director, officer, or committee member of the association and benefiting financially from service to the association.
RoyalP
(South Carolina)

Posts:707


04/18/2019 9:28 AM  
..... Florida statues 720:303 12(12) COMPENSATION PROHIBITED.—A director, officer, or committee member of the association may not directly receive any salary or compensation from the association .....


if the mgmt co. 'cuts' his check then:

oops ... loophole FOUND

HectorR
(Florida)

Posts:34


04/18/2019 10:46 AM  
Yes, the management company cuts the chexks to the president and all other employees.
Is the loop hole in our favor? Or is it in his favor?
What can we do as home owners if its in our favor?
BillH10
(Texas)

Posts:359


04/18/2019 11:25 AM  
Hector

The citation you provided does not seem to prohibit the employment by the Association of an officer or director of the Association. Your document, like every other one I have ever seen, does not permit the officer or director to be compensated for serving as an officer or director--although I have heard there are some out there.

Is the President compensated for work he performs under a defined position/job description as an employee and the income reported by the Association on a W-2 or 1099? Is he cleaning the pools, mowing the lawns, or whatever--work you would otherwise have to hire someone to do?

Don't get tripped up over the words about 'benefitting financially from service to the Association'. Those words are in the context of being compensated for performance of volunteer duties as an officer or director, not as a W-2 or 1099 employee.

Again, it goes back to the question of whether or not he/she is an employee, with a defined set of performance expectations and a compensation plan.

BobB31
(Florida)

Posts:69


04/18/2019 11:34 AM  
Posted By HectorR on 04/18/2019 10:46 AM
Yes, the management company cuts the chexks to the president and all other employees.
Is the loop hole in our favor? Or is it in his favor?


The loophole is in his favor.

Posted By HectorR on 04/18/2019 9:24 AM
This subsection does not preclude:
(d) Any fee or compensation authorized in the governing documents.
(e) Any fee or compensation authorized in advance by a vote of a majority of the voting interests voting in person or by proxy at a meeting of the members.



But, you have failed to disclose whether your bylaws allow the compensation of officers and employees. For example, our bylaws have this paragraph:

The compensation of all officers and employees shall be fixed by the Directors.This section shall not preclude the BoD from employing a Director as an employee of the Association; neither shall it preclude the contracting with the Director, or a person, firm or entity with which a Director is associated, for services to or management of the Association.


If your governing documents include such language then my advice is to drop this issue: nothing unethical or contrary to your governing docs is occurring.
KerryL1
(California)

Posts:6350


04/18/2019 11:40 AM  
Agree with Bill.

Hector wrote: "The Property management contract states that all employees whom perform duties at our development are employess of the Association and not employees of the management company. "

Why does the Board even have a contact with an MC if the PM works directly for the HOA and not for the MC?

Hector seems to say the contract is between the PM and the HOA, i.e., as a director he can hire and fire himself.

That could be a conflict of interest and anything to do with his job should not include him in board discussions or votes. He should recuse himself at board meetings whenever his duties or his contract are discussed or voted on. And, I believe, the Board can ask him to leave the room so that they can have a full and frank discussion and vote.

But his behavior is not illegal. If enough of your neighbors are unhappy with this suspicious arrangement, they should vote out directors at the next election or start a recall effort.
HectorR
(Florida)

Posts:34


04/18/2019 1:59 PM  
Yes, he is an association employee with duties but he can also give himself a raise and do as he pleases because he can not get fired. His wife also serves on the board because she owns two homes in our community and he is on one if the deeds. If its not illegal how can it make it right? Something is clearly wrong here, we tried at the annual meeting but did not get enough votes. A recall is out of the question, the majority of the homes are rented and it will take lots of leg work and time and attorney fees.
On a side note, the HOA attorney whom represents the board of directors is also a registered agent for the management company.
How can the attorney protect the board of directors or our association from the property management company...i dont get it. It all smells funny to me, I dont get it..something has to be wrong with this situation.
If I'm wrong, please correct me.
BillH10
(Texas)

Posts:359


04/18/2019 2:30 PM  
Hector

The way to make it right is, as Kerry suggested, to demand both he and his wife recuse themselves when employee personnel discussions regarding him, his performance, and his compensation take place. If proper procedures are followed, he cannot unilaterally award himself a raise, there should be a motion, second, discussion, and vote to do so. They both should not be in the room when any such discussions take place.

The registered agent matter is probably not really important. The registered agent is the entity registered with the Secretary of State or similar agency designated to receive official documents--subpoenas, lawsuits, etc.

Why does the attorney have to protect the Association from the property management company?

I agree with you, this situation does not pass the smell test based on what you are posting. Such situations can work with no hint of impropriety but it takes effort on the part of everyone to do so.
BobB31
(Florida)

Posts:69


04/18/2019 2:37 PM  
Posted By HectorR on 04/18/2019 1:59 PM
Yes, he is an association employee with duties but he can also give himself a raise and do as he pleases because he can not get fired. His wife also serves on the board because she owns two homes in our community and he is on one if the deeds. If its not illegal how can it make it right? Something is clearly wrong here, we tried at the annual meeting but did not get enough votes. A recall is out of the question, the majority of the homes are rented and it will take lots of leg work and time and attorney fees.
On a side note, the HOA attorney whom represents the board of directors is also a registered agent for the management company.
How can the attorney protect the board of directors or our association from the property management company...i dont get it. It all smells funny to me, I dont get it..something has to be wrong with this situation.
If I'm wrong, please correct me.



Your bylaws are still a mystery to us. We're doing a bunch of guessing. One answer assumed he was the property manager, which I'm not sure is true.

A recall will be a whole lot easier for you if the bill amending 720.303 passes and becomes effective on July 1. Instead of requiring a majority of all voting interests, requiring the voting interests of a homeowner association to physically reside in the community in order to recall a board . Absentee owners who simply rent their units out wil l not be eligible to vote in recall elections.
SB 1382
BobB31
(Florida)

Posts:69


04/18/2019 2:38 PM  
Posted By HectorR on 04/18/2019 1:59 PM
Yes, he is an association employee with duties but he can also give himself a raise and do as he pleases because he can not get fired. His wife also serves on the board because she owns two homes in our community and he is on one if the deeds. If its not illegal how can it make it right? Something is clearly wrong here, we tried at the annual meeting but did not get enough votes. A recall is out of the question, the majority of the homes are rented and it will take lots of leg work and time and attorney fees.
On a side note, the HOA attorney whom represents the board of directors is also a registered agent for the management company.
How can the attorney protect the board of directors or our association from the property management company...i dont get it. It all smells funny to me, I dont get it..something has to be wrong with this situation.
If I'm wrong, please correct me.



Your bylaws are still a mystery to us. We're doing a bunch of guessing. One answer assumed he was the property manager, which I'm not sure is true.

A recall will be a whole lot easier for you if the bill amending 720.303 passes and becomes effective on July 1. Instead of requiring a majority of all voting interests, requiring the voting interests of a homeowner association to physically reside in the community in order to recall a board . Absentee owners who simply rent their units out wil l not be eligible to vote in recall elections.
SB 1442

If the bill defining new quorum minimums passes, you will also find it easier to call a membership meeting, because a quorum will be defined as 30% of voting interests who physically reside in the community. Non-residents will still be able to vote in annual board elections, but the membership meeting can be started with much fewer people present.
SB 1382
BobB31
(Florida)

Posts:69


04/18/2019 3:03 PM  
One more try - I screwed up the element attributes.
Posted By HectorR on 04/18/2019 1:59 PM
Yes, he is an association employee with duties but he can also give himself a raise and do as he pleases because he can not get fired. His wife also serves on the board because she owns two homes in our community and he is on one if the deeds. If its not illegal how can it make it right? Something is clearly wrong here, we tried at the annual meeting but did not get enough votes. A recall is out of the question, the majority of the homes are rented and it will take lots of leg work and time and attorney fees.
On a side note, the HOA attorney whom represents the board of directors is also a registered agent for the management company.
How can the attorney protect the board of directors or our association from the property management company...i dont get it. It all smells funny to me, I dont get it..something has to be wrong with this situation.
If I'm wrong, please correct me.
[/div]


Your bylaws are still a mystery to us. We're doing a bunch of guessing. One answer assumed he was the property manager, which I'm not sure is true.

A recall will be a whole lot easier for you if the bill amending 720.303 passes and becomes effective on July 1. Instead of requiring a majority of all voting interests, requiring the voting interests of a homeowner association to physically reside in the community in order to recall a board . Absentee owners who simply rent their units out wil l not be eligible to vote in recall elections.
SB 1442

If the bill defining new quorum minimums passes, you will also find it easier to call a membership meeting, because a quorum will be defined as 30% of voting interests who physically reside in the community. Non-residents will still be able to vote in annual board elections, but the membership meeting can be started with much fewer people present.
SB 1382
JohnC46
(South Carolina)

Posts:8268


04/18/2019 3:54 PM  
Hector

You have the legal answer that the President/employee is not doing anything illegal so stop beating that dead horse. You will not win.

The answer, and one you have been told but you argue against, is either recall him or get others (yourself included) to run for the BOD in enough numbers to be sure he does not get elected President by the BOD.

Yyes, yes, yes, you have told us all the reason it cannot be done, now find out how to do it.

MelissaP1
(Alabama)

Posts:8082


04/18/2019 5:46 PM  
So we are to be upset over a person who gets money for work they do just because they have "President" as their title? A typical volunteer position yes, but not one that if your qualified to do the work not to get paid for if agreed upon. If the board agrees that one should get paid to fix a light bulb, then that person gets paid to do it. It just happens you have someone who cares enough about their HOA to not only volunteer to be President, but do work for it to. A rare combo...

Former HOA President
GenoS
(Florida)

Posts:2897


04/19/2019 7:22 PM  
Posted By BobB31 on 04/18/2019 2:38 PM
A recall will be a whole lot easier for you if the bill amending 720.303 passes and becomes effective on July 1. Instead of requiring a majority of all voting interests, requiring the voting interests of a homeowner association to physically reside in the community in order to recall a board . Absentee owners who simply rent their units out wil l not be eligible to vote in recall elections. SB 1442

It's just my speculation, but I don't think that bill is going anywhere. It was drafted and introduced for the benefit of the largest HOA in the state of Florida. The state legislator who wrote that bill did so to appease his constituents. Over 50,000 of them. I don't think the measure enjoys widespread support. The last thing the legislature wants to do is deprive off-site and out-of-state unit/home owners of their rights. If an out-of-state owner wants to buy 51% of the units in a condo or HOA and thus control the board, that's something the state of Florida has always encouraged in one way or another: foreign investment whether the "foreigners" are from outside the United States or from outside the State of Florida.

I will eat my hat if that measure becomes law.
BobB31
(Florida)

Posts:69


04/20/2019 5:19 AM  
Posted By GenoS on 04/19/2019 7:22 PM
Posted By BobB31 on 04/18/2019 2:38 PM
A recall will be a whole lot easier for you if the bill amending 720.303 passes and becomes effective on July 1. Instead of requiring a majority of all voting interests, requiring the voting interests of a homeowner association to physically reside in the community in order to recall a board . Absentee owners who simply rent their units out wil l not be eligible to vote in recall elections. SB 1442

It's just my speculation, but I don't think that bill is going anywhere. It was drafted and introduced for the benefit of the largest HOA in the state of Florida. The state legislator who wrote that bill did so to appease his constituents. Over 50,000 of them. I don't think the measure enjoys widespread support. The last thing the legislature wants to do is deprive off-site and out-of-state unit/home owners of their rights. If an out-of-state owner wants to buy 51% of the units in a condo or HOA and thus control the board, that's something the state of Florida has always encouraged in one way or another: foreign investment whether the "foreigners" are from outside the United States or from outside the State of Florida.

I will eat my hat if that measure becomes law.



You're probably right - there's been no activity on it since it was filed.
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