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Subject: Should I run for my HOA board?
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PaulJ6
(New York)

Posts:273


06/08/2019 7:08 AM  
Looking for advice about what you would do in this situation: would you (1) run for the board, (2) not run for the board but raise issues to HOA owners generally or (3) just be silent?

OVERVIEW OF HOA

I live in a HOA that has a 7 member board. 2 members of the board are not residents; they are business partners, one of whom owns about 15% of the condominiums in the HOA and rents them out. Those 2 members of the board also own the HOA's management company. Those 2 members of the board somehow control the election process each year and thus have say-so over who's on the board.

Result: the HOA has used their management company for over 30 years. Some neighbors and I have caught the HOA doing things that were blatantly favorable to the management company, such as using our HOA property as collateral for some of the 2 non-resident directors' business dealings. Our HOA dues are also about 15%-20% higher than other HOAs nearby, and owners don't have much visibility over the HOA's finances or the total payments that go to the 2 non-resident directors' management company. Board meetings are pretty secretive.

SPECIFIC AREAS OF CONCERN

I just now learned that local law requires that HOAs disclose "related party transactions" between the HOA and any company in which a director has an interest. So if that law applies to our HOA, the HOA should be disclosing details to us, as owners, about its dealings with the 2 non-resident directors' management company.

In addition, the board has failed to keep records that local law requires be kept, such as basic owner and financial records.

Finally, last year the board agreed that this year's election would be handled using transparent procedures that were requested by owners and were clearly described in a community-wide communication that some disgruntled owners sent out (with the approval of the management company). However, that agreement was ignored.

RECENT ACTIONS

I let a few other owners know of these specific areas of concern. I also teamed up with a friend to get proxies for this year's annual meeting. I need about (as an example only) 100 votes to be elected to the board, and I have proxies for 50. I've gotten verbal support from people with about 25 votes. So I'm a few votes short, although I haven't contacted most owners. If I send out a community-wide email and speak at this year's annual meeting, I think I can get 25 more votes, although I know that the 2 non-resident directors and the management company will get mad, and victory isn't assured.

QUESTION

In this case, would you run for the board?

If so, would you make the specific areas of concern known to other owners when you announce your candidacy (in a soft, non-confrontational way)?

Or would you just let other owners know of the specific areas of concern (in a soft, non-confrontational way) and tell that owners generally need to raise them if they want change?

Or would you stay silent?

POSSIBLE CONSEQUENCES

If I win, then I'm just 1 vote out of 7 on the board, although I could press the board to "behave".

If I lose, I'll have a livid management company that would surely retaliate. All I'm doing, though, is pointing out my legal rights.

Thanks.
PaulJ6
(New York)

Posts:273


06/08/2019 7:16 AM  
To add:

MY GOAL

I'd like the board to simply comply with all legal obligations to disclose "related-party transactions" to owners and to keep required records, such as board minutes.

I'd also like the board to hold elections in a transparent way.

That's it.

If owners see what's going on and are OK with it, then that's fine. If owners see what's going on and aren't OK with it, then they can act to change things.

I'd like owners to see what's going on and change things (such as requiring that all directors not be affiliated with the management company), and maybe fix up the HOA's common areas, but that's for another day, and that's not my goal for now.
CathyA3
(Ohio)

Posts:400


06/08/2019 10:28 AM  
In your place, I would thoroughly evaluate all of the pros and cons of the situation, and come up with a realistic idea of how likely it is that you would be able to affect the status quo, assuming you'd be elected in the first place.

It can be very frustrating to be the lone voice of reason on a board that isn't functioning as it should. Deliberate misbehavior or cluelessness - it doesn't matter why the current board isn't doing a good job, the result is the same. The clueless folks may be open to some gentle education, but maybe not. Directors are often skeptical of the new guy coming in and trying to tell them what to do. Aside from personality issues, a new board member has A LOT to learn. It looks very easy to be a director until you find yourself on the board and confronted with all of issues and competing priorities that boards have to sort through. If you're not overwhelmed during your first year, then you're probably missing the point.

If you truly do want to right the ship, then I recommend finding a number of like-minded neighbors and get enough of you elected so that you form a majority and can vote to do things properly. Be prepared for a lot of work during the election seasons, and then even more work when you're actually on the board. And be prepared from blow back on all sides. You will receive little, if any, gratitude from those you are serving by volunteering your time and brain power. And - most frustrating - is the speed at which things fall apart the minute you leave the board. Makes ya wonder why you bothered...

And walking away from the mess is a perfectly reasonable thing to do.
LetA
(Nevada)

Posts:772


06/08/2019 10:29 AM  
I ran for a board member and won. I am 1 of 3. I need one more like minded board member to affect real change.
JoeB20
(Kansas)

Posts:35


06/08/2019 10:45 AM  
Posted By PaulJ6 on 06/08/2019 7:08 AM
such as using our HOA property as collateral for some of the 2 non-resident directors' business dealings.





I'm not a lawyer, but unless there is a lot more to that situation that somehow makes it ok, I have a hard time seeing how that would be legal.

If you have evidence of that, I would suggest contacting your state attorney general, or state bureau of investigation.

You should assume you only know about a fraction of what's going on. If you have evidence of criminal misconduct, I would simply inform the appropriate authorities and let the situation run its course.
JohnS111
(New York)

Posts:165


06/08/2019 11:26 AM  
Posted By JoeB20 on 06/08/2019 10:45 AM
Posted By PaulJ6 on 06/08/2019 7:08 AM
such as using our HOA property as collateral for some of the 2 non-resident directors' business dealings.





I'm not a lawyer, but unless there is a lot more to that situation that somehow makes it ok, I have a hard time seeing how that would be legal.

If you have evidence of that, I would suggest contacting your state attorney general, or state bureau of investigation.

You should assume you only know about a fraction of what's going on. If you have evidence of criminal misconduct, I would simply inform the appropriate authorities and let the situation run its course.




Thanks. One owner threatened litigation about that collateral issue and the board changed its ways about it. Not interested in litigation or fighting.
GenoS
(Florida)

Posts:3177


06/08/2019 11:59 AM  
Posted By PaulJ6 on 06/08/2019 7:08 AM
Looking for advice about what you would do in this situation: would you (1) run for the board, (2) not run for the board but raise issues to HOA owners generally or (3) just be silent?

Go for it if you're serious. Talking is fine but if push comes to shove they will clam up and if you're not on the board you'll have to guess what they're doing. It's harder to paint the windows black when there's someone on the board clamoring for more transparency.
JeffT2
(Iowa)

Posts:486


06/08/2019 12:13 PM  
Posted By JohnS111 on 06/08/2019 11:26 AM
Posted By JoeB20 on 06/08/2019 10:45 AM
Posted By PaulJ6 on 06/08/2019 7:08 AM
such as using our HOA property as collateral for some of the 2 non-resident directors' business dealings.





I'm not a lawyer, but unless there is a lot more to that situation that somehow makes it ok, I have a hard time seeing how that would be legal.

If you have evidence of that, I would suggest contacting your state attorney general, or state bureau of investigation.

You should assume you only know about a fraction of what's going on. If you have evidence of criminal misconduct, I would simply inform the appropriate authorities and let the situation run its course.




Thanks. One owner threatened litigation about that collateral issue and the board changed its ways about it. Not interested in litigation or fighting.



So you are PaulJ6 ? Or it's the same community that you have been posting about?
JohnC46
(South Carolina)

Posts:8650


06/08/2019 12:18 PM  
Paul

I stay on my BOD so as to be sure we do not get any "weirdos" running our association. Guess you could say I do it for self protection. I always preferred to be on the inside looking out.
JimB37
(Florida)

Posts:54


06/08/2019 1:14 PM  
Paul,
It sounds like you're up against people that know what they're doing, so you need to start by knowing the rules and the statutes. If you don't have the time to learn these, don't make the effort. These people DO know the rules and they are already getting advice from the HOA attorney. Of course, whether or not they are informing the attorney of everything they are doing is another question. You mentioned that they've used intimidation in the past, be prepared for more of it.

Being a minority member on the Board means you won't win votes, but you will gain insight as to the activities along with mandatory access. Additionally, as a sitting member, you will have the right to make your concerns noted right there at the meetings and you can demand to have these concerns noted in the record. Just remember that before you speak, you must know the facts and the statutes and be clear as to your argument. Your opponents will bury you if you don't. (I carry a laptop containing every declaration, statute, as well as previous minutes and internet access. If someone cites some statute or rule, they had better get it right. I also use it to back up my own arguments.)

If you don't get on the Board, (and this is not a bad thing necessarily as it is indeed work), you still have options. As before, get with like-minded members to sit down and decide upon your collective goals and a strategy). Remind everyone that the effort is meant to call attention to the activities of the Board and not to destroy individual members. Once you have all of your facts together and a clear and concise goal in mind, take this to your attorney. Then wait...(Periodically contact your attorney for updates)

Best of luck with your decision.


NpS
(Pennsylvania)

Posts:3658


06/08/2019 2:51 PM  
Posted By PaulJ6 on 06/08/2019 7:08 AM
If I win, then I'm just 1 vote out of 7 on the board, although I could press the board to "behave".



When you first get on board, it's not about the number of votes, it's about visibility on what's going on from the inside. Maybe your presumptions are correct, maybe not. See for yourself. Every board member has the right to see every document and to participate in every decision. The 2 in control have no right to say you can't see this or that. You have a right to see it all. You should stand your ground on this issue before all others.


Posted By PaulJ6 on 06/08/2019 7:08 AM
If I lose, I'll have a livid management company that would surely retaliate. All I'm doing, though, is pointing out my legal rights.Thanks.



If they retaliate against you personally, then they are providing justification for getting rid of them somewhere down the line when you have more board members who think like you. Do you prefer hiding things from you to being angry at you? I wouldn't.

Choose your battles carefully. Your stated goals seem realistic and demonstrate a willingness to play for the long term. I like that.


Sikubali jukumu. Read all posts at your own risk.
MarkM19
(Texas)

Posts:403


06/08/2019 4:23 PM  
Paul,
This site is such a wonderful resource. The advice you have received could not be any better. My question is how many seats are up for this election? You should try to get as many like minded people in this election year. When you are talking to the community and you should as much as possible talk to them about how change can happen. It takes a majority to make major corrections. Hopefully it is not as bad as you think and other board members see the issues and just are waiting for someone with the backbone to lead the charge. You seem to be a capable leader and might be the right guy in the Bull Pen.

I will just say what some have already stated. Don't expect or promise instant change or success. After being on boards for 9 years nothing happens as fast as I have wanted it. I think with the proxies you already have in hand you should be able to get elected. If you have time and a few dollars ask the PMC to give you the homeowners list. I believe they have to provide it upon request to candidates. I was able to get it in Ca. I would then create a well crafted 1 page letter to all of the other HOs and bring up the issues that are concerning you. Don't accuse anyone of anything you can't prove. It will cost you about a dollar a home to make this happen. It works especially well with absentee owners who usually only look for the rent check to arrive in the mail. For them to hear that the dues are 15 to 20% than other similar properties in your area will get their attention.

I have not seen anyone yet who thinks you are out of line. Sounds to me like you have Team HOA talk pulling for you. Please keep us posted.
MelissaP1
(Alabama)

Posts:8503


06/08/2019 4:59 PM  
Run for the board and see if you win. Once you win, make sure you know the rules inside and out. Bring a copy to each meeting. If someone asks a question, say that need to refer to the rules first to provide an answer. Which may not be immediate. It will take conferring or referring.

I think you being on the board will be a bit of an eye opener. You will be one of "Them/They" now. Remember the HOA's money is NOT your money but ALL the member' money. Those people who got you elected is whom you represent. So listen to them as well. Otherwise, you will be on their list of removal...

Former HOA President
PaulJ6
(New York)

Posts:273


06/08/2019 5:34 PM  
Thanks, everyone.

My view: a board owes fiduciary duties to stockholders (owners). Large stockholders (owners) also may owe duties to smaller ones. So the board needs to be making every decision with the perspective of, “is this decision what’s best for owners?”

Re: knowledge of HOA rules: I am not sure if some board members are that knowledgeable. I’ve read up in detail on all of the HOA’s documentation and am moderately familiar with local law.

Not sending legally-required disclosures to owners? Approving use of the HOA’s property as collateral for two non-resident directors’ businesses? Not complying with agreed-upon election procedures? Really? Either they don’t know the basic requirements of local law (maybe; two are graphic designers and one is a flight attendant, so their expertise may be in other fields) and the HOA’s governing documents or they brazenly don’t care. I am on multiple nonprofit boards and have not seen any of them do things like that.

But my goals will be limited: just trying to get the board to improve recordkeeping and disclosures and be a bit more compliant with governing documents. Even if it moves from 50% compliant to 55% compliant, I’ll consider it a victory and won’t expect more.
MelissaP1
(Alabama)

Posts:8503


06/08/2019 5:56 PM  
Local laws isn't your HOA laws. It's best to start studying your CC&R's, by-laws, and Articles of Incorporation. Plus any ACC rules if you have them. Your HOA tends to go by their rules not local. Although they should be compliant with. With you deciding to follow and reference the rules is the way of CHANGE. You lead by example and that example is by referencing the rules.

You want "transparency". That's not necessarily an "utopia" idea. I give this analogy. Imagine your checkbook/bank statement left on your dining room table wide open. (Full transparency). Your wife and kids can see it. They also contribute but depend on you to disperse the funds. (Your the board and they are members). How do you comfortably feel about transparency when your kids want a new x-box, the wife a new purse, but the driveway has a crack in it? (Individual wants vs HOA common area). The account only has enough to maintain/fix the crack. (Non-profit set up to meet expenses). The kids still need a new x-box and the wife really needs a new purse... (The squeeky wheels whom elected you).

It's hard to be open with your income and bank statements is it not? It's a change of mentality to ask not only yourself but of others to think this way. We are taught NOT to be open about income/spending. So it's a hard concept to employ "transparency" across the board. You will find that out as well.

Not that I am saying anything is bad about this. It's just a different way of thinking that not easily adjusted to. Can't really blame anyone for not acting or being "transparent" because it's not taught or accepted in our culture readily.

My HOA when I took over ran as transparent as one can get. We reviewed collections/expending reports. I answered questions and referred to the rules. Was up front with everyone and would let anyone view records upon request. If you wanted something, you had to put it in writing or present it to the board. If you wrote it, then I read it aloud at the board meeting. You had to accept the decision of the members not just the board.

Did this work? Yes and no. Still got accused of all sort of things. People are people and going to think what they want. No amount of "transparency" is going to fix things. What does fix things? Following and understanding the rules. Stick with them and the people who got you on the board.

Former HOA President
CathyA3
(Ohio)

Posts:400


06/09/2019 10:40 AM  
Posted By MelissaP1 on 06/08/2019 4:59 PM
Run for the board and see if you win. Once you win, make sure you know the rules inside and out. Bring a copy to each meeting. If someone asks a question, say that need to refer to the rules first to provide an answer. Which may not be immediate. It will take conferring or referring.

I think you being on the board will be a bit of an eye opener. You will be one of "Them/They" now. Remember the HOA's money is NOT your money but ALL the member' money. Those people who got you elected is whom you represent. So listen to them as well. Otherwise, you will be on their list of removal...




I agree with Melissa. One of the more disheartening experiences for a new board member is seeing how their formerly "good buddies" turn on them. I've seen homeowners become OUTRAGED at the board when they think the board isn't acting properly (and in every case they were upset because the board was doing things by the book). Being able to cite chapter and verse from your governing docs will give you confidence in your decisions, but some owners will regard that as cheating because they want what they want and you're an obstacle in their path.

The sad fact is that as a board member, you are no longer the homeowners' "good buddy" because of the power differential, which becomes very obvious when dealing with violations. The board's fiduciary duty is to the association, not to individual owners. Usually the interests of the association align with those of the owners, but not always, and there will be times that the board needs to act in ways that will not benefit some owners. It's the nature of the beast.

If you don't have a thick skin when you first start to serve on the board, you definitely will have one by the end of your term.
RichardP13


Posts:0


06/09/2019 10:55 AM  
Think you need to know the rules, the CCRs and all the governing docs BEFORE you run. Generally, we require this of people running for political office,although 2016 was not your typical year.
PaulJ6
(New York)

Posts:273


06/09/2019 2:31 PM  
Posted By RichardP13 on 06/09/2019 10:55 AM
Think you need to know the rules, the CCRs and all the governing docs BEFORE you run. Generally, we require this of people running for political office,although 2016 was not your typical year.




Thanks. I've read every single sentence of all of them. I'm pretty familiar with them.
RichardP13


Posts:0


06/09/2019 3:36 PM  
Posted By PaulJ6 on 06/09/2019 2:31 PM
Posted By RichardP13 on 06/09/2019 10:55 AM
Think you need to know the rules, the CCRs and all the governing docs BEFORE you run. Generally, we require this of people running for political office,although 2016 was not your typical year.




Thanks. I've read every single sentence of all of them. I'm pretty familiar with them.



That was meant for someone else.
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