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Subject: Board violated information agreement about elections and did not disclose conflicts of interest
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JohnS111
(New York)

Posts:165


05/23/2019 7:16 AM  
Curious as to people's thoughts about the situation below:

Background

Last year, owners in my HOA were mad at the board due to (I think) a lack of transparency. After last year's annual meeting, at which owners showed up in force and yelled at the board about a lack of transparency, the board agreed to hold elections this year in a more transparent manner. The board specifically agreed on a timeline of soliciting candidates for board elections this year and promised that proxies this year would include directors' and candidates' names and bios and would allow owners to vote for specific persons. This agreement was circulated to all owners in the HOA by email. It wasn't a signed agreement, but it was a list of specific points that the board had agreed, and a lawyer who lives in the HOA wrote the email.

Issue #1: Agreement Not Followed

Despite the agreement, this year the board did the same thing as it did in years past: it simply sent out a notice of the annual meeting, including a proxy saying, "The undersigned appoints ___ to vote for all matters as he or she may desire at the annual meeting, including the election of directors." That's pretty much it. Directors' names weren't given, and there was no solicitation of candidates. The cover letter instructed owners to return that proxy to the property manager.

The board did comply with one other part of the agreement, so the board clearly remembered the agreement.

Issue #2: No Disclosure of Conflicts of Interest

Further, in my state (NY), a recent law requires the board to include in an annual report disclosures of "related party transactions", which are deals between board members and related parties, or a statement that there are no "related party transactions". This disclosure was not included in the annual report. At least one board member doesn't live in the HOA and works for the property manager, so there might have been a "related party transaction" there; I don't know.

Questions

1 Why would a board violate an agreement that had been circulated to all owners? Is the board just testing owners to see if they respond?

2. As an owner, would you be mad about this?

3. Would you make an issue of this if you were an owner?

I'm NOT looking for legal advice; I'm just seeking views about what you'd think of this situation if you were an owner.)

Thanks.
JaredC
(Texas)

Posts:214


05/23/2019 7:20 AM  
1) They are corrupt and they don't care about anything but themselves and their power. They do not have your communities best interests in mind.
2) Yes. I would be FURIOUS.
3) Yes. I fight.
SheliaH
(Indiana)

Posts:2667


05/23/2019 9:02 AM  
What Jared said. Rally your neighbors together and this time VOTE THEM OUT - no more promises and excuses.
Of course, you will need to have people willing and able to step up and take over, because I suspect they will have a lot to unpack and start turning around.

And since you've been asking some good questions, I suggest YOU consider volunteering. It may be nothing will change until you get involved to make it happen.
NpS
(Pennsylvania)

Posts:3658


05/23/2019 12:25 PM  
1. Possibly because they agreed to something, never told the MC about the change, and after MC sent something out, they were too embarrassed to acknowledge that they screwed up.
2. I'm always looking for things to be mad about. Sure sure, one more thing won't be that much of a burden.
3. Which owner do you want me to be? The one who's just glad that someone else is taking care of it? The one who's got a flame-thrower ready? The one who has the skills, the time, and the inclination to get things straightened out and take the heat when people don't like the changes?

Sikubali jukumu. Read all posts at your own risk.
JohnS111
(New York)

Posts:165


05/23/2019 1:24 PM  
Thanks. The management company was copied on all emails to the board re: the agreement, and the management company handled negotiations between the board and owners. Both the boar and the management company know of the agreement. The board complied with one part of it, so clearly they haven't forgotten it (and it's all in writing, too).
AugustinD


Posts:1905


05/23/2019 3:16 PM  
1.
Why would a board do this? I am not being flip when I wrote that they are dim bulbs who do not know how to conduct themselves as professionals. This is not a test of the members. It is real incompetence. They'd never get away with this if they were, say, City Councilors.

2.
The extent of my anger would depend on how long this Mickey Mouse board had been at it; how actively vindictive said Mouseketeers are; and how much I did not care to be on the board. Also, I am not sure laws were broken.

3. Whether I would make this an issue would depend on the same factors as in 2. above.

My view in general would probably be that I do not want to live at such a condo.
MelissaP1
(Alabama)

Posts:8503


05/23/2019 3:50 PM  
Are the board members not members of the HOA? Like fellow homeowners? Or are you still under developer control?

Not sure it's a conflict of interest if one is working for the MC and on the board as long as they don't own the MC. The MC is a paid contractor to the HOA. They can be fired but the employee/board member will still work for the MC. Our Treasurer owned our accounting firm we used. She was a homeowner and owned an accounting firm. Licensed/insured company with a good reputation. Why would we not want to hire her company?

If it's that bad, then get enough people to step up and run for the board. Follow the rules to do that. Want to make a difference then put the work in NOT a call into a lawyer...

Former HOA President
BobD4
(up north)

Posts:916


05/25/2019 11:50 AM  
Posted By JohnS111 Questions

1 Why would a board violate an agreement that had been circulated to all owners? Is the board just testing owners to see if they respond ?

2. As an owner, would you be mad about this ?

3. Would you make an issue of this if you were an owner ?

I'm NOT looking for legal advice; I'm just seeking views about what you'd think of this situation if you were an owner.)




Lots of good comments above. Respectfully I will comment only on several aspects.

1- What is an “agreement “ instead of – say - a formal bylaw change ? There may be innocent explanations that could arguably range from dishonesty , sloppy incompetence, to RIGIDLY PRECISE election packages imbedded within the existing by-laws . .

Despite the one promise observed, without competent input ( from prior Board/new Board if different/ property manager etc ? ), was it left to a PMC clerk to prepare & send out the pre-election packages ?

Its arguably not hard under pressure to simply pull the old text out of computer . . .

2 - If it was unintended, what Remedials ?

IF - IF – election meeting has not yet been held, do solutions include pre-emptive injunction derived from whatever the weight of the ‘agreement’ whatever ? Would that possibility persuade current Board to fund a cancellation /send out a revised election package complying with whatever the ‘ agreement’ ? Or under threat of judicial application to nullify the upcoming election on similar legal basis ?

3 - General proxies issue : “ Aren’t proxies great : No eyes and no ears !” ( wish i had written that )

4 Subjective response scales : With whom should one get angry ? How angry ? Is a particular vexation worth “pulling out the flame thrower “ ?

Picking & choosing one's battles ( I observe my own HOA's owner meetings / keep my mouth shut )

How about : Texas Court of Appeal catches Texas HOA bizarrely using grasscutting by-law to demolish a home and liening $ 80 K demo bill against victim’s unit ( That’s instead of seeking lawful judicial compliance order or municipal property standards enforcement ). Evans v Casey Davis & Happy Hide-A-way Civic Club Inc. Decision of 14th District Texas Court of Appeals # 14-12-01053-CV Nov 19/13
http://statecasefiles.justia.com/documents/texas/fourteenth-court-of-appeals/14-12-01053-cv.pdf?ts=1384858347

Or : Challenging a nuisance condo Lien against her unit, the challenger owner-lawyer is actually ordered to undergo mental exam , later declared vexatious litigant, and arguably deprived of due process .

Merits of her beef are never heard.

A career catastrophe for lawyer seeking licence . . .

https://ontario.cafcor.org/index.php?option=com_fireboard&Itemid=46&func=view&catid=9&id=18881#18881

Good luck with whatever decided, neighbour. But life's short . . .
RoyalP


Posts:0


05/25/2019 2:05 PM  
? my thoughts ?

! W/T/F/C !

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Who The F#ck Cares

JohnS111
(New York)

Posts:165


05/26/2019 9:21 AM  
Thanks. Royal, I care because:

1. The board has refused to provide financial records that state law requires be provided to owners.
2. The board hasn’t followed state law requirements that require disclosures of related-party transactions. For example, an employee of the management company is on the board but doesn’t even live in the community. I think that we should know about contracts with the management company that are approved.
3. Our HOA dues are significantly higher than similar nearby communities but we are not given financial information about that.
4. The board won’t tell us when it meets or who’s on it.
5. Now the board broke an agreement that would have resulted in a more transparent and democratic election process if followed.
NpS
(Pennsylvania)

Posts:3658


05/26/2019 9:53 AM  
Posted By JohnS111 on 05/26/2019 9:21 AM
Thanks. Royal, I care because:

1. The board has refused to provide financial records that state law requires be provided to owners.
2. The board hasn’t followed state law requirements that require disclosures of related-party transactions. For example, an employee of the management company is on the board but doesn’t even live in the community. I think that we should know about contracts with the management company that are approved.
3. Our HOA dues are significantly higher than similar nearby communities but we are not given financial information about that.
4. The board won’t tell us when it meets or who’s on it.
5. Now the board broke an agreement that would have resulted in a more transparent and democratic election process if followed.




Some advice from the NY State Attorney General (abbreviated):
HOW TO HANDLE PROBLEMS WITH YOUR
HOMEOWNERS ASSOCIATION
Members of homeowners associations who are unhappy with how their association
is acting (or not acting) often do not know what they can do. This paper is designed to tell such
homeowners about some of their rights.

In most cases there is no government agency that can help unhappy owners who are
having problems with their homeowners association (HOA).

Look at the Not-for-Profit Corporation Law, the New York State law which
governs the establishment of most homeowners associations. The decisions made by courts in
cases involving the law are the case law which interprets the statute.
The Not-for-Profit Corporation Law (NPCL) is published as volume 37 of
McKinney's Consolidated Laws of New York Annotated ("McKinney's") which can be found in
law libraries, many lawyers' offices, and in certain public librarie
Important provisions of the NPCL and the sections, in which they are found,
include the following:
An HOA may have different classes of members. NPCL §601.
By-laws may be adopted, amended or repealed by the members with the
appropriate vote, as provided in the by-laws. NPCL §602.
A meeting of the members is to be held annually. NPCL §603.
Members may call special meetings, as authorized in the certificate of
incorporation or by-laws, or if at least 10 percent of the members wish to do so.
NPCL §603.
Directors may be elected at a special meeting. NPCL §604.
Proxies (authorizing another member to vote for you) are permitted subject to
provision in the bylaws or certificate of incorporation. NPCL §609.
Members may request that elections be supervised by an inspector. NPCL §610.
The right to vote may be limited by the certificate of incorporation or by-laws.
(For example, there may be no right to vote until the developer gives up control.)
NPCL §612.
Action may be taken on written consent of members without a meeting. NPCL
§614.
Members may demand to see the corporate books and records of accounts, minutes
of meetings, and a list of members. NPCL §621.
A derivative action may be brought by five percent or more of the members of the
corporation. NPCL §623.
Directors may be removed with or without cause, as determined by the certificate
of incorporation and by-laws. NPCL §706.
Unless restricted by the certificate of incorporation or by-laws the board of
directors may take action without holding a meeting if all members of the board
consent in writing to the action. NPCL §708.
Certain actions by a director or officer constitute a conflict of interest, and may be
void or voidable if no disclosure was made. NPCL §715.
Directors and officers must act in good faith and with reasonable diligence, care
and skill. NPCL §717.
Directors and officers may be sued for misconduct. NPCL §720.

Resolving the Problem: First Approach
If the board of directors is not complying with its own certificate of incorporation,
declaration or by-laws, you should point this out, in a tactful way, expressing the expectation that
the matter will be corrected. Sometimes this is all that is needed to solve a problem. If a simple
oral request to an officer of the board fails, you can write a letter. It should be factual, brief and
not hostile. Keep copies of any letters that you send, and notes of telephone conversations (the
date, time, who called whom, and the gist of the discussion) in case the matter is not quickly
resolved.
An attempt to influence the board is always more persuasive if it is presented by a
significant number of members. If your problem is one that others are affected by, it is worth
organizing the other members. If you do, and the attempt to change the situation is not successful,
the organized group can always seek to elect new directors at the next annual meeting.

Retaining a Lawyer
If your efforts to resolve your problems with the board fail, you may want to retain
a private lawyer. The Attorney General's office cannot recommend private lawyers. However, a
few points may be helpful.
. It is a good idea to select someone with experience in
handling HOA problems. You could begin looking
for an attorney by talking with members in your or
other HOAs and with attorneys in other specialty
areas. If this fails, you may wish to contact a local
Bar Association for referrals.
. Some lawyers will not charge for a single initial
consultation or will charge only a minimal fee.
. Most lawyers will attempt to resolve any matter
through negotiation before considering litigation, as
litigation is costly and usually lengthy. Litigating
against the board of an HOA, people
with whom one lives, can also be very unpleasant.

In Conclusion
If serious problems arise, which the board is not addressing, such as a bank's
threatening to foreclose on a mortgage on the Association’s common property or a developer's
failing to pay common charges on unsold houses or lots, it is important to act swiftly. Often such
problems can be resolved, relatively simply, if members organize and act right away.
Remember that members of HOA boards are usually other owners who are serving
without pay. They generally want to resolve problems and keep peace in the community.

Good luck!
Attorney General of the
State of New York

Sikubali jukumu. Read all posts at your own risk.
SheliaH
(Indiana)

Posts:2667


05/26/2019 10:55 AM  
It's good that you care, but then what? You've pointed out what's wrong with all this, but for some reason, you're hesitating as to what to do next -and you know what your options are:

(1) do nothing
(2) move
(3) speak truth to power and risk getting laughed at, ignored, and/or become the subject of selective rule enforcement (because people in power don't like to be questioned) or
(4) rally your neighbors together and start asserting yourselves. It won't be easy, but it's a little harder to blow off a bunch of people

Many people on this site have gone through exactly what you're going through or they're going through it now. It's ok to come here and vent, and bounce off ideas - I'm no longer on my board, but I continue to come here because it's fun to learn, I can bring ideas to the current board and maybe someone will learn from my experience, warts and all. But at the end of the day, it doesn't matter what we think about what's going on in your community because we don't live there.

As I've said and continue to say, 3, 5 or 7 people cannot dominate a large community unless everyone else allows it. Whether you want to face this or not, getting rid of this board and replacing with people who will act in a transparent manner and do what they promise will require action from you and your neighbors, so are you going do anything or sit and fume? Are you willing to go to this board, remind them of their promise and demand they keep it? Will you bring like minded neighbors with you so everyone can demand answers? No? Well, you'd better find someone in your community who's willing to stand up to do it. You should also get behind him/her/them if you're not willing to take the lead because they can't do everything without other folks like you who do care.

One more thing - just because your community's dues are higher than another doesn't always mean there's a problem. It really comes down to is the budget being managed in a responsible way and is the association providing services as required by the documents. You say you don't have any financial information on that, which is reason enough to start asking questions, even if you're the only one. You're legally responsible for paying them, so you do have a right to this information.

So the next move is yours - good luck whatever you choose to do.
JohnC46
(South Carolina)

Posts:8650


05/26/2019 12:28 PM  
Posted By JohnS111 on 05/26/2019 9:21 AM
Thanks. Royal, I care because:

1. The board has refused to provide financial records that state law requires be provided to owners.
2. The board hasn’t followed state law requirements that require disclosures of related-party transactions. For example, an employee of the management company is on the board but doesn’t even live in the community. I think that we should know about contracts with the management company that are approved.
3. Our HOA dues are significantly higher than similar nearby communities but we are not given financial information about that.
4. The board won’t tell us when it meets or who’s on it.
5. Now the board broke an agreement that would have resulted in a more transparent and democratic election process if followed.




How did #2 (non-resident on the BOD) happen? Some Bylaws do allow non-residents to be an Officer, but rarely.
JohnS111
(New York)

Posts:165


05/26/2019 1:25 PM  
Thanks. The non-resident used to live in the building. He works for the management company. There hasn’t been a true election at an annual meeting in years so he stays on.
JohnC46
(South Carolina)

Posts:8650


05/26/2019 1:48 PM  
Posted By JohnS111 on 05/26/2019 1:25 PM
Thanks. The non-resident used to live in the building. He works for the management company. There hasn’t been a true election at an annual meeting in years so he stays on.




You say no true election. What makes you say that? Only reason I can think of is no Quorum established thus no election allowed and existing BOD stays in place.
JohnS111
(New York)

Posts:165


05/26/2019 3:21 PM  
Each year the property manager sends around a notice stating that the annual meeting is in a small office many miles away, and no information is given out about the annual meeting. Only a few people go, and if people ask questions, they are threatened by the property manager. There’s a quorum each year, but nobody has been given evidence of that or who wins the board elections. People have asked and have been refused that information.
JimB37
(Florida)

Posts:54


06/01/2019 6:49 AM  
John,
From someone who is doing battle now, some lessons I've learned:
Determine whether you are alone or if you have company.
KNOW your objective and be able to clearly articulate that in front of counsel.
Know your own level of commitment and be ready for abuse.
KNOW your documents
Get all of the provable FACTS together and be able to present them. (Be ready for defamation threats)
If part of a group, KNOW your group. Are they in for the fight or do they turn at the first hint of intimidation?
Are they even on your side? (Be ready for surprises)
If considering counsel, do your homework and speak with more than one.
Be ready for the long haul. The "wheels of justice" move exceedingly slow.

For what it's worth.

Best of luck.
NpS
(Pennsylvania)

Posts:3658


06/01/2019 7:51 AM  
Great advice Jim.

Sikubali jukumu. Read all posts at your own risk.
BobD4
(up north)

Posts:916


06/01/2019 10:56 AM  
Very good advice.

Being able to keep looking for "the biggest picture", respectfully should include asking oneself : are the possible outcomes really where I want to go at this point of my /our life ( lives ) ?

Looking back at particular scenarios most annoying 30 years ago, many of us hopefully might say : "I could NOT care less about it now". But that ain't the case for all of us.

The bigger picture, respectfully, may turn out to be sometimes that yes we're being wronged. But the price of getting justice or due process ( or whatever ) is far greater than sucking up aggravation or moving. Or just letting stuff slide until the universe resolves it . .

Whether so or not, the Bigger Picture needs constant checking . . .
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