Special Non Emergency Assessment

Started by NeelyW • 12 replies • 1457 views

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NeelyW (North Carolina)
Posts: 5

Posted:

Hi, I'm new and looking for some adise and feedback.

Our neighborhood bylaws state that the board can implement assessments at anytime and do not require a vote from the neighborhood. This became very obvious to us when we all got a bill for $500 each due in 30-60 days for a new brick fence that no one knew anything about. It put our neighborhood in an uproar.(I wasn't on the board at the time). We live in modest, first time buyer homes and our wood fence is only 4 years old. The board didn't discuss the idea in any open meetings, it was rather secretive actually. Myself and another neighbor took a petition around and after we got over 50% of the neighborhood to sign it we thought that was enough to prove they didn't have the neighborhood support. We believed they were reasonable people and thought they would then at least put it out for an official vote or squash the deal. They took the opposite approach and stormed forward, we had special meetings where homeowners showed up and not one person was in favor of the new fence. Then some people took it to the next level and held a special meeting to revoke the board. Right before the meeting the board signed a contract with an unlicensed, uninsured contractor and gave them a non-refundable deposit of $2000, in the hopes that would make sure their idea was implemented before the neighborhood ousted them. Well they got ousted and we had a huge turn out for the annual meeting. I was one of the people elected to the board. We have canceled the project and are attempting to get our money back with no such luck. Can the old board members be liable for such a disrespect of the neighborhoods funds? Can an unlicensed contractor write legally binding contracts? Do we have any hopes of getting our $2000 back or should be just get over it? We are really small and need that money for other responsible things so we really don't want to just roll over and show our bellies.......

SusanW1 (Michigan)
Posts: 5,202

Posted:

The old Board entered into a contract agreement with a company (you say unlicensed, etc.) so there may be a stand-off here: he could sue the association for not fulfilling the contract agreement, however, because you say he isn't even a company (and could get into trouble for doing construction without a license) he may not pursue this.

The BIG question is how that Board even got that far? Those Board members could be held liable for entering into a contract without due process. Go thru the minutes and find motions, etc. that back up the process they went thru.

NeelyW (North Carolina)
Posts: 5

Posted:

Yes he was a contractor in MI, but not in NC where we live. He may be licensed now, but who knows. He won't return our calls and he has no valid address. Our certified letter was sent back. The old board won't help.

We are all scratching our heads on how our mgt company didn't advise them against it or that the bylaws didn't state that we couldn't enter into a contract with an unlicensed contractor. It just doesn't seem like the neighborhood should lay down and let this happen. We feel that we need to fight to get our money back, but not sure if we have a leg to stand on. It all just seems so illegal to me. They purposely gave him that money knowing we were going to stop the project just to spite everyone. Its wrong on so many levels......it's like they were feeling sorry for themselves because the community doesn't get involved enough and the board is such hard work and they are just going to do it regardless of what the community thinks or feels about it.

I'll try to find the minutes of the old meetings. Their documentation is very poor so I'll be surprised if I find anything.

Thanks for the reply......anything else you can advise on is greatly appreciated.

GeraldT4
Posts: 1,022

Posted:

NeelyW - I sympathize with your situation, but your second sentence tells it all. Your neighborhood bylaws state that the board can implement assessments at anytime and do not require a vote from the neighborhood. Therefore, the Board has extremely broad powers that negate any claim they are doing anything secretive, etc. Is it the right thing to do when the community isn't happy about it? Absolutely not. And for that reason you and the community should ban together, write a letter to the Board certified mail return receipt requested advising them of your wishes, get willing volunteers, seek their removal if the Board doesn't take heed. At the very least the community should change the by-laws so there is a percentage cap on Board capital improvements without the vote of the community.

GlenL (Ohio)
Posts: 5,491

Posted:

While the BOD may have the power for special assessments (ours did until Ohio changed the law) is there a cap on what the Board can spend on capital improvements without a majority HO vote? Now if the wooden fence is in good repair and not in need of replacement at this time then this could arguably be seen as a capital improvement.

Also while under Ohio law the contract negotiations between the BOD and the vendor could be done in executive session; the discussion as to whether or not the fence needed replacing and a vote on accepting bids for the project should be in the official documents. If this wasn't done I would go after the prior BOD for the money. But before you do that talk with an attorney knowledgeable in HOA matters to find out if it's feasible.

While everyone is so fired up make the changes to your documents to protect your community going forward.

Studies show that 5 out of 4 people have problems with fractions

GlenL (Ohio)
Posts: 5,491

Posted:

Oops - Official minutes not official documents.

Studies show that 5 out of 4 people have problems with fractions

SusanW1 (Michigan)
Posts: 5,202

Posted:

It sounds like even though the Board can pass special fees, the membership can overturn the motion. (She said they "revoked" the contract)

Again, the PROCESS is what has to be changed. You are set up to repeat this scenario if you don't amend your documents to prevent your board from assessing these large fees without pre-approval from the membership.

NeelyW (North Carolina)
Posts: 5

Posted:

Thanks everyone.

The neighborhood did revoke the board already. They knew it was coming when they were informed of a special meeting, even during the meeting they refused to stop the project, so they hurried up and signed a contract with a non-refundable deposit right before the meeting. One of the biggest problems we are facing is that the contractor won't contact us back and we don't have a valid mailing address to send the official letter cancelling the project. For all I know he might show up one day and start work. gosh I hope not. I just have this feeling he's still speaking with the old board.

Also we drafted a vote and sent it out this week to change the bylaws regarding "non-emergency assessments". Once that passes the bylaws will change, but you made a good point on setting dollar figure. As the vote is written today the board couldn't assess even $10 w/o the majority of the neighborhoods support. But maybe thats a good thing, who knows.

It just really irritates me that 4 people could take a neighborhoods money and just throw it away and not be liable. They had a 50% signed petition, they had special meetings and then the "special revoking" meeting and never had the support of one person and still went through with the project. We have people that simply just can't afford $500 especially when it was right before Christmas. They pleaded with them to stop, but they could care less because they are could afford and they've known they were going to implement this I guess for up to a year before they did. To this day I can't find anything proving that this was on agendas of meetings and it certainly wasn't a main topic of discussion during our annual meeting which is exactly where it should have been brought up. They kept it secretive and then sent everyone a bill. Homeowners don't have much of a choice to pay the bill when they could loose their house for not paying it. Very upsetting to me. It's just morally and ethically wrong and that's where I'd hope it could have some legal ramifications.

NeelyW (North Carolina)
Posts: 5

Posted:

Oh and one last thing.......we live in a very well-to-do area, but our homes in our neighborhood are at the very bottom of the price scale (first time buyers). If everyone else had brick fences than I would think we should step up and follow suit, but not even the million dollar homes have brick fences. Everyone has the same type of wooden fence with stack stone pillars like us. Our neighbors across the street painted theirs and it looks great. It's just ridiculous to put up a $50,000 brick fence in front of a track home community (Pulte homes with just three models) when these high end neighborhoods don't even have them. That's why we are all scratching our heads. Our community needs speed bumps by our play ground because other neighborhoods have been using it as an exit to a main road, and maybe better landscaping at our enterance, but they decided a brick fence made more sense......

GeraldT4
Posts: 1,022

Posted:

NeelyW - A $10 cap per owner on special assessments sounds IMHO unrealistic, too restrictive. Depends of course on the number of dwellings, I don't see where you specified that, please do.

There is something to be said for a Board having some degree of financial ability to protect the owners from themselves in order to protect the owner's investments.

My concern for your association is that the $10 cap may come back to bite you all in the future. Hypothetically speaking, suppose a new board supersedes a rouge board that never funded properly to the reserve (element replacement) account. Say the new board realizes this through due diligence and needs to implement a one-time special assessment of $500.00 per owner and then raise maintenance slightly to correct for the error going forward. Keep in mind this assessment isn't a matter of whim. It is a matter of the board's fiduciary responsibility to fund for the elements maintenance and replacement over time. Now this board has a $10 cap on assessments and has to go to the community to get their vote on something that is 100% necessary.

Question: Are you willing to leave it to an owner vote for the owners to realize it's in their best interests to pay the $500.00 assessment and an increase in maintenance so that the elements can be maintained and or replaced?

Keep in mind, you'll probably already have votes and followers against the assessment vote due to the old board that was ousted. By their voting yes to the assessment, they will (in a way) be admitting their error.

Things to ponder in your quest for change.

NeelyW (North Carolina)
Posts: 5

Posted:

Well what I had said was that at this point we couldn't even send out an assessment for $10 even. The way it is written is that the neighborhood must agree on EVERY single special non-emergency assessment before it can be implemented no matter how large the assessment. Now what is considered "non-emergency" could be where the loop hole is. The funny thing about this vote is that the previous board hired the lawyer to draw up the vote right before they got revoked. The same people who wouldn't allow the neighborhood to vote on their assessment drew up the documents to change the bylaws in the future. We are just following through with what they had already spent money towards doing. What kind of sense does that make? It's like they realized they wouldn't want someone to do what they were doing to us back to them when they are off the board and wouldn't have a say in the whole deal. They blew a whole bunch of our funds before they left the board so this year we have no extra money to make any positive changes to our entrance or park or anything really.

I'm interested on the rules of funding certain accounts. Like are we REQUIRED to put aside a certain amount per year for reserves and emergency use? I know we have a decent amount in there right now, but the previous board had reallocated half of it to go toward their brick fence project. So the unused portion will go back into our reserves. I'm going to ask some more questions of our mgt company. We just started the new board and I have a lot to learn.

GeraldT4
Posts: 1,022

Posted:

Hi NeelyW - If you have common elements the association is to maintain and replace, which I believe you do, than if a portion of association funds are not set aside from the collection of maintenance fees, you'll all be in a bit of a spot when the time comes. I'm sure your bylaws state something to the effect that the association has this requirement. Best of luck with your situation, I'm sure you'll all prevail for the better.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

I have no idea if this was brought up somewhere, I don't think so.
For the contractor/non contractor business. From what I would guess you should go to the court house, file a Mechanics lein against the guy. This will force him to answer suit. Your history tells me the Judge would look favorably on your problems and tell the guy to give you your money back. If he is shaky business license=wise, he just may write you a check. You can always call him and tell him, you don't get your money back, you are going to court and do as I said above. Contract or no contract, you have special circumstances. When you discuss this among yourselve and take action, no he said, she said, just the facts and play up you are volunteering to help your community and just doing what you signed up to do, protect the association, that's all. And that is what we should all put first, much easier that way.

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