Membership vs. BOD

I would appreciate some opinions on this question because of conflicting answers that have been presented by our attorney. My question is: who is the ultimate authority in a membership nonprofit corporation, like our HOA. Is the BOD or the membership?
Information that I have researched from “non profit corp. law” states that in a corporation with members that the Board is subordinate to the membership, that the membership can overturn any action of the board (except contracts that are already completed) but the board cannot overturn an action taken by the membership.
Also, I interpret, from Robert’s Rules, basically the same meaning pertaining to a deliberative body of the society.
The bylaws say that the BOD is a governing body elected by the membership to administer the policies and will act for the association.
Our President and attorney say that if any motions are passed at a legally convened meeting of the members the BOD is not bound to act to those motions. My question would then be, what is the purpose of having a membership meeting? (We have four quarterly membership meetings a year, and twelve open Board meetings a year)

Albert, the Board has the powers and duties vested by your Bylaws. If your Bylaws do not provide the authority for the members to make decisions which must be carried out by the Board then an easy solution to your problem is to amend the Bylaws to make that clear. Having said that I think the Board should listen to and follow directives made by motions passed by the members. If certain Board members don't then the members can remove them from the Board. Those are two of the purposes for having members meetings.

The Board is responsible to implement any motion passed by the membership at the Annual Meeting IF it is not in conflict with the Articles, CCRs, any other bylaws,or state or local laws and is not illegal. AND if it is within the Members "power" - and not a conflicting power of the Board. Also, the motion MAY have required notice to members, and that would also be a consideration.

At our last Annual Meeting, there was discussion on canal dredging. There was a motion from a member to establish a committee and hire a consultant to conduct a feasibility study of the project. That was a directive to the Board to do that.

Go thru your bylaws and see what the powers of the Board are. The membership cannot have the same power.

Can you share with us the motions that were passed by the membership at your meeting?

Roger and John.

I agree with both of you and disagree with neither.

Albert,
I personally don't see any problem with your motions. I would strongly tend to believe that the Board would have to explain in writing why they would not entertain the motion. Did you say this was a regular meeting or an Annual meeting? Annual meeting have to have a quorum and then they can vote the membership. Board meetings do not require a membership Quorum and I suppose a motion of the kind you made would require a full membership vote at an annual meeting. Check with your Parlimentarian. The motion to form a committe, to me is a Presidents authority, certainly without a quroum vote by membdership.

And Albert, this is the real world, and if you would consider it, you will find that most government issues and disagreements are usually settled by discusion and compromises.

Something I have learned and I don't profess to be a mover or shaker; take baby steps and gnaw at your disagreements a little piece at a time.

While discussion on this issue may be interesting, please keep in mind that opinions (except those of a court) don't count.

The law in each state is different, and, indeed, in some cases and in some states, the board of directors is not obligated to act by direction of a majority vote of the members.

In forming a corporation under state law, rather than operating as an unincorporated association that chooses to be governed by "Robert's Rules of Order," members delegate without recourse certain powers to an elected board--and they obligate themselves to operate under state statues and case law.

Further complicating the issue is the "grayness" and expansiveness of not for profit corporate statues. Some not for profits are organized to serve community, charitable interests beyond simply membership, while others are organized to benefit only their members. How laws apply in each case can be different.

Just as some states enable voters to enact laws by referendum and others do not, some states enable members to overturn action by the board of directors and some do not.

In addition to researching the statutes, one also needs to look at case law to determine how courts may have interpreted those statutes, particularly in situations where laws conflict.

There is one informal legal opinion on the table that the board in New Jersey is not bound by a membership vote. It may be intentionally designed to deflect your efforts to enact a change, or it may be an accurate statement of the law.

It may be an example in which the board of directors is acting correctly under law, but not acting in the best interests of owners.

Aside from engaging an attorney to represent you and potentially file suit, that may not be much you can do until the current board membership changes.

Whether this is an abuse of power is something only members can decide.

They would have had to give a reason for "disallowing" the motions. That whole procedure should have been documented in the minutes, for example: "Joe Smith moved that XXX. The chair disallowed the motion, stating that the motion conflicted with the CCRS. Motion was withdrawn."

You said: "One motion was to have the four Membership meetings at night to accommodate more members to attend because many are still working."

IF the bylaws say that the Board sets the meetings, then this could be disallowed. (out of order)

You said: "The next was to form a committee from the floor to review and make recommendations back to the membership on provisions of our governing documents that are coming up for revision. (This is to allow input back to the bylaws committee from the membership)"

What is your procedure for amending the bylaws? Usually there is a Standing Bylaws Committee that is constantly reviewing the bylaws. The membership of this committee involves many residents and a liaison from the Board who may or may not chair the committee. The committee reports to the Board. You need to go over the procedure for how amendments are done to your documents.

You said: "third was to adopt as a standing rule, RRNR, as our parliamentary authority."

You may be able to do this for the Annual Meeting, but you can't choose a parlimentary procedure for ALL meetings. What is the Board using at the momment? Why was the motion needed?

This is an interesting discussion. At first, I would be inclined to agree that the members of the association have the final say over the board. In many societies, that's exactly how it works; the board is subordinate to the membership. However, after carefully reading some of the comments posted here, our own state laws, our governing documents, and Robert's Rules, I'm now inclined to agree with what RogerB stated. Whether it is the members, or the board, that has the final say, really depends on how the laws and the governing documents are worded. It could be different for everybody. There is no one universal answer saying it's always this way.

In reviewing our state laws on homeowners associations and on corporations, the laws are silent on the issue of who (members vs board) has the final say. Instead, CT law leaves those issues up to the certificate of incorporation, the declaration (CCRs), and the bylaws.

Recalling what Robert's Rules has to say about bylaws, and from having seen the bylaws of many different organizations that I have been a member of, many bylaws include articles such as "Membership", "Executive Board", "Officers", and so forth. These articles generally define the qualifications, the duties, and obligations of each, and most importantly for this discussion, the powers or authority of each. Thus, it would seem to me that the bylaws should clearly state that the final authority rests with the members. Instead, the bylaws may confer final authority on the executive board. If that is the case, then it would appear to me that the board would not be obligated to follow any motions passed by the general membership at any meeting, whether ot not such motions conflict with the governing documents or state law.

Reviewing our own documents, both our CCRs and our bylaws contain the same wording, stating that the executive board may "in all instances" act on behalf of the association. There are a few, enumerated, exceptions, and those rights and powers are conferred upon the membership. No others are identified, nor is the right to overrule the board granted. The only right granted to the membership (clearly stated) is the right to "review and comment" on certain actions of the board. There is no obligation for the board to adhere to any of the comments. Even the right to amend the bylaws is conferred "only" on the board (so stated, which is why "only" appears in quotes). The authority to amend the CCRs, however, rests with the membership (so stated). The members have the "final say" over the board only in that they can recall the members of the board if they don't agree with the actions of the board. There is no right granted to the members to override the actions of the board nor to require specific actions of the board.

Everyone's documents and bylaws may say something different, so the rights of the membership vs the board may be different. In the final analysis, I believe what Roger has said is correct: who has the final authority will be determined by the wording in the bylaws (or CCRs). I would say, read them carefully to make sure they say what you think they say.

Bruce,
A little scenario music if you please.
How do you evaluate the clause in the CC&R's regarding dissolving or liquidating the entire assessts of the associations. Ours seem to say noting can be done until 100% of the membership is in agreement and votes to vilodate the Boards Recomendations.

Does this mean final authority rests with the membership?

Did you reply to my BBQ question? I am gaithering opinions.

"Does this mean final authority rests with the membership?"

It seems to me the statement is very specific as to the action being taken and who has the authority to do it. Thus, to dissolve the association and liquidate the assets requires a unanimous vote of the homeowners. I see no other way to do it. An interesting observation here is what if the CCRs can be amended by fewer homeowners, let's say 75%? Can 75% of the homeowners amend the CCRs to change the dissolution requirement to a number less than 100%? The answer is no. Parliamentary procedure holds that to change a requirement in the bylaws, or whatever, requires a vote of 1) as many members as is necessary to amend the document, or 2) as many members as required to perform the action being amended, whichever is greater. Thus, to change any such clause to a lower requirement would require approval of 100% of the membership. The clause you quoted says nothing about conferring final authority upon the membership for anything else.

I haven't formed an opinion yet about your BBQ question. Thank you for asking for my opinion. I have to go out, but I will try to look at it again later.

Gerald -

The Annual Meeting is the MEMBER's Meeting - not a Board meeting.

Motions can be made and passed (like approving the minutes of the meeting, for example) within the guidelines of the bylaws (for example, not motions that would have required a Notice) It would be the job of the president to contol the meeting a declare any motion out of order or non-applicable or illegal or conflicting.

See my post above on the motions.

GeraldT,
Sometimes it seems from Albert's posts, Albert is not sure what he wants to say.

I think if you had four annual meeting you would have to have four different associations. I may be wrong, but, annual means once a year.

I appreciate all your input but you have to read a little more clearly. I did not say four annual meetings. We have four quarterly MEMBERSHIP meetings with one being the Annual meeting and twelve BOARD OF DIRECTORS meetings. The membership meetings with a legal quorum is what I am referring to as having the authority to overturn decisions by the BOD. All the motions that were presented were non-governing motions and did not have to be put on the meeting agenda.

i.e. RRNR on deliberative bodies and

i.e Non-Profit Corp. Law
Membership Organizations. In the case of membership organizations, ultimate authority rests
with the “membership” of the organization. How the membership exercises this authority can vary
significantly. For organizations with large numbers of members, for example, representative
assemblies of members may exercise authority. In such cases, bylaws would have to spell out how
the representatives are to be selected, what the attendance must be in order to constitute a “quorum”
able to act on behalf of the organization, and whether a simple majority or some type of super
majority is required to act on particular types of resolutions (e.g., a requirement for a three-fifths
majority to change the organization’s bylaws). Alternatively, meetings of the entire membership
may be required in order for the organization to take action. In such cases as well, bylaws must
specify what proportion of the membership must be in attendance to make the meeting official and
what the voting procedures are.
Because of the cumbersomeness of convening members, even membership organizations
often specify a smaller body that is empowered to act on behalf of the members between membership
meetings. Such governing boards, or boards of directors, can either be elected or appointed, but they
exercise their authority at the pleasure of the membership, and the members often retain for
themselves the power over the most important decisions affecting the organization, such as the
election of directors and officers and the approval or amendment of the basic organizing documents,
or budgets.

Sounds like there are 4 Membership meetings (of the resident Members, not Board led) ONE Annual Meeting, and 12 Board meetings.

The members (that are meeting) are empowered to set the time of their own meetings - so the Members can set their time, and the Board members can set their time for Board meetings. No biggie, there.

This is an interesting post. I read the attachment to AlbertC's initial post and am in general agreement with his research and the reasons stated. I add several thoughts.

Membership nonprofits are sometimes called mutual-benefit organizations which may be more descriptive. That term is also used in the laws in some states. Directorship nonprofits are sometimes called public-benefit organizations. Because there are no members to provide oversight, the attorney general often has the oversight obligation.

In my reading of the Michigan Nonprofit Corporation Act and the Model Act published by the American Bar Association, the powers granted to the board are not exclusive. Further, there are no restrictions on the subject matter for members to call a special members' meeting. Accordingly, the members have the authority to overrule any action of the board.

Unless the bylaws of your association grant exclusive powers to the board of directors, the members can overrule the board by calling a special members' meeting and approving the motion to rescind as defined in the bylaws.

This is as it should be. All powers to the board are derived with the consent of the members (governed).

I suggest a careful reading of the nonprofit act in your state and the bylaws for your organization. Some of the powers of the association and the board may be defined in the CC&Rs. Members surrender the ultimate authority only if the board's powers are exclusive, or if the law and/or bylaws limit the authority of the members.

Thanks, John, for saying something that needs to be said very badly here.

Let me chime in as well to say that Indiana statutes and case law regarding condos and homeowners associations are considerably different than other states.

It’s reasonable to assume that members of the association have the final say over the board. In many societies, that's exactly how it works; the board is subordinate to the membership. That’s customary in many societies and that’s what is often stated in parliamentary procedure, and it’s implied in Robert’s Rules. But, parliamentary procedure also holds that the final authority is the governing documents. That is, it’s the constitution, statutes, CCRs, bylaws, and so forth that govern the society and have been accepted by the members of the society. Now, the governing documents may have been accepted by the members of the society, but that does not mean they were drafted or written by the members of the society. So, the governing documents may not say what we think they should say or what we, as individuals, would like them to say. They may not grant "power to the people" at all. At least, not in the way we think they do.

Do the people have the right to enact legislation? Is that right granted in the U.S. or any state constitution? Absolutely not. That right is conferred upon legislative bodies. The people have the right to elect the legislators, but for the most part, that’s it. In some jurisdictions, legislators can be recalled, and in some, certain laws can be overturned by referendum, or placed on a ballot by petition. But, that’s not true in all jurisdictions.

But, the most important point to consider, for this discussion, is this. Think, now. Where did the CCRs and bylaws come from? Did the homeowners create these documents themselves? Did they write them? No. These documents were most likely drafted and put into place by the developer (declarant) before the first homeowner ever closed on his/her home. Most were probably prepared by the developer’s lawyer. Do you truly believe the developer or the lawyer was so naïve as to allow homeowners to have the final say over the board? Do you really believe that the documents were written to allow homeowners to overrule any decision of the board or to require that the board take any action simply because a majority of the homeowners want that action done? If declarant or lawyer made that mistake, there would be no way for the developer to remain in control before transition of the association to the homeowners. Even the developer is legally bound to abide by the governing documents once they are filed, so if the homeowners were granted the final say over the board, the developer would have no way to remain in control. For example, what do your documents say about removal of board members? They probably say you can’t remove a board member appointed by the declarant. Do your documents actually say anything about homeowners having final say over the board after transition? Probably not.

So, the final say is (most likely) vested in the board. Since the developer controls the board before transition, that is how the developer remains in control. Unless your documents have been amended since transition to grant final authority to the homeowners, then the final authority still rests with the board. It hasn’t been changed. It doesn’t change automatically upon homeowner control unless it says somewhere that it does.

You might be tempted to say that before homeowner control the developer owns most of the lots, so he holds most of the votes. But, is that always true? Do your documents allocate votes to undeveloped lots or to completed units? Lots are not completed units. In our association (and by state law), votes are allocated only to declared (completed) units. There are no votes allocated to undeveloped lots. And, all declared units must pay the same assessment. The developer has no votes in the association unless he also happens to own completed, declared units, which he doesn’t. The units are declared at closing. If the developer owned declared units, he would have one vote for each unit he owned, but he would also be required to pay assessments for each unit. So read your documents carefully. You will probably discover that the developer remained in control, not because he had the most votes in the association, but because he controlled the board. And unless that was changed after transition, or unless your state law or your documents provide for that to change automatically, then it is still true. The board is still in control and has the final say, except for some specific rights which have been granted to the members, and those rights are most likely spelled out in your state laws or in your governing documents.

Theoretically, there is one other way for homeowners to have the final say over the board other than by recalling the board members, and that is to amend the CCRs. Many governing documents allow a certain percentage of the homeowners to call a special meeting of the homeowners, so such a meeting could be called to amend the CCRs. The proposed amendment could grant the power to the homeowners to require the board to comply with motions made by the homeowners at meetings. While this is theoretically possible, the requirements for doing this make it very impractical. Furthermore, the danger of micromanaging the board is not likely to sit well with many homeowners and it’s unlikely such an amendment to the CCRs would ever gather enough votes to pass.

Bruce,
Another great analysis.

This sticks out.
Copy and pasted:
But, the most important point to consider, for this discussion, is this. Think, now. Where did the CCRs and bylaws come from? Did the homeowners create these documents themselves? Did they write them? No. These documents were most likely drafted and put into place by the developer (declarant) before the first homeowner ever closed on his/her home. Most were probably prepared by the developer’s lawyer. Do you truly believe the developer or the lawyer was so naïve as to allow homeowners to have the final say over the board? Do you really believe that the documents were written to allow homeowners to overrule any decision of the board or to require that the board take any action simply because a majority of the homeowners want that action done? If declarant or lawyer made that mistake, there would be no way for the developer to remain in control before transition of the association to the homeowners. Even the developer is legally bound to abide by the governing documents once they are filed, so if the homeowners were granted the final say over the board, the developer would have no way to remain in control. For example, what do your documents say about removal of board members? They probably say you can’t remove a board member appointed by the declarant. Do your documents actually say anything about homeowners having final say over the board after transition? Probably not.

Kirk,
An ominous picture you paint. All too often true. Wish I had a solution to circumvent the fire, but I don't. But, we live through it, and sometimes we even make things better. But in spite of the drab picture, we all have to try, or, more correctly there is always some folks that are willing to try. A stew is usually better when it has a brew of different ingredients. And it comes to mind, that I have never lived or worked where everyone liked everyone else.

Youmay not see any reason for the declarant to concern themselves with this, but that doesn't mean that it isn't the case. Your declarant (or the lawyer) chose one way to handle it (remain in control). The declarant for my association chose another, So, now we know there are at least two ways for the declarant to remain in control. There may be many others.

The point of my post is simply this: Somehow, the declarant was able to control the association during its early stages. The way this was done, in many cases, may have been for the declarant to control the board (by choosing its members), and for the board to control the association (as in our case). Unless the documents have been changed since transition, or unless there is a provision in the documents that change the relationship of the board to the members upon transition, then, in those cases, the board is the final authority since nothing has happened to change that. Since it is the documents that govern the association, I suggested that people should review their documents carefully to see exactly who has the final say - the membership or the board. The answer should be there.

I'm curious. You said in your case that the declarant can veto any decision the board or the membership makes as long as the declarant owns a single lot in the community. Is this true? Exactly as you stated? That sounds scary to me. Does that really mean if the declarant holds on to at least one lot forever he has veto power over the association, even after transition when the homeowners are in control of the board? Is there a provision that puts a time limit on that right? What if the board decides to sue the developer for some reason? Can he veto that decision? I know, ethically, he shouldn't, but is there anything, legally, that prevents that from happening?

Our documents give the declarant certain "development rights" which remain in effect even after transition, but veto power isn't one of them.

AlbertC - You wrote, "Our President and attorney say that if any motions are passed at a legally convened meeting of the members the BOD is not bound to act to those motions."

What is the matter exactly that the members will convene and motion upon?

RobertR1 - Yes, the circumstances surrounding the belief of the attorney and President that the members motion does not have to be adhered to by the BOD matters.

I've posed the question to Albert. Rather than challenge if the question "matters" let the question remain, probably unanswered but remain nonetheless. Albert has posted something to the effect that the motions did not pertain to anything governing. That has me curious and perhaps Albert's answer can provide further input as to the BOD honoring the motions of the membership.