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GeorgerwilliamsW
(Indiana)
Posts:768
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| 07/30/2008 7:49 AM |
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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.
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GeraldT4
Posts:934
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| 07/30/2008 8:00 AM |
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| JohnM3 - So far I'm the only one from Albert's state posting to his subject. As well I suspect I know the association Albert is from circumstances sound very familiar if you know what I mean. I could be wrong but if correct, we aren't getting the entire picture and the association is a mess, more in shambles than anyone is willing to accept. I believe the info everyone has posted so far is pretty generic, we aren't getting much from Albert in what his by-laws state, rather the sightings of RRNR and legal interpretation of who has authority over the Board. Reality is that in any association, the owners are the ultimate authority. So long as they follow due procedure to amend, or create their own due procedure through the majority that participate to govern and oversee. |
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BruceF1
(Connecticut)
Posts:696
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| 07/30/2008 9:19 AM |
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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.
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RobertR1
(South Carolina)
Posts:2513
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| 07/30/2008 9:22 AM |
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Gerald,
I like your reasoning and suspect you are right on the money, and the same thing can be said of most of the posters that we hear from. They want to be right, we want to find the reason and understand. I also would add that we are not supplying action. We are just talking. The hard work is on the other side of this board, in the trenches, so to speak. But in the end, I am satisfied we help, and I am impressed with the caliber of folks that post regularly, I have learned a lot from them. |
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RobertR1
(South Carolina)
Posts:2513
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| 07/30/2008 9:31 AM |
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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.
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KirkW1
(Texas)
Posts:1190
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| 07/30/2008 3:53 PM |
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... 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? ...
I see no reason for the declarant to concern themselves with this at all. Ours gave themselves the right to veto anything that the board or membership decides as long as they own a single lot in the neighborhood. This extends to the ability to not approve a duly elected member of the board.
To allow the membership to tie the hands of the board while not being bound themselves is child's play to the developer and his/her lawyers.
But if your board will not entertain a motion from the floor, then they need voted out. That is the way to show them that you do in fact have control. Recall every one of them if need be.
Listen to the fire brewing. You have a very bad situation in that you have the board vs the membership. This is not in the best interest of the association. You can pay now, or later. But the fire is already started. |
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RobertR1
(South Carolina)
Posts:2513
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| 07/30/2008 4:16 PM |
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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. |
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AlbertC
(New Jersey)
Posts:10
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| 07/30/2008 10:39 PM |
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| I'd like to thank everyone that posted to my questions. I have gained a lot from all the diferent perspectives. I'll go back and review my CCR's and Bylaws to see how these post's might apply. Thank's again. |
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BruceF1
(Connecticut)
Posts:696
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| 07/31/2008 5:06 AM |
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Posted By KirkW1 on 07/30/2008 3:53 PM
I see no reason for the declarant to concern themselves with this at all. Ours gave themselves the right to veto anything that the board or membership decides as long as they own a single lot in the neighborhood. This extends to the ability to not approve a duly elected member of the board.
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.
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RobertR1
(South Carolina)
Posts:2513
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| 07/31/2008 5:24 AM |
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| Good logic here, too bad we can't micro-chip all owners with an understanding of what the hell they are signign, or should that be signing away. I also belive, since there are no real control of the documents a developers draws up, a lot of it would not pass a court test. Right now might be a good time for a show-down, sit down with developer and get rid of some of this trash. Developers are not the high rollers as in recent past and may not be so ready to face a court case with all the local bad publicity..............who knows, might be worth a bluff anyway. |
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GeraldT4
Posts:934
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| 07/31/2008 5:26 AM |
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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? |
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RobertR1
(South Carolina)
Posts:2513
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| 07/31/2008 5:41 AM |
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Gerald,
Does it matter? If the meeting was legally called and conducted and any motions made that did not conform for the purpose of the special meeting as written, would be outside the scope of the meeting. If the meeting has a legal purpose as described in your documents, such as recall, then, that would be a legally binding meeting and the Board would have to abide.
I think. |
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GeraldT4
Posts:934
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| 07/31/2008 5:46 AM |
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| 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. |
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DonN
(Michigan)
Posts:242
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| 07/31/2008 7:08 AM |
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In his initial post, AlbertC 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." If the board ever got such an opinion from the attorney, each board member is obligated to make reasonable inquiry as to the basis of the opinion. What law? What case law?
The answer to the question is grounded in law. As I stated in an earlier post, most nonprofit or POA laws grant members the power to call a special members' meeting and do not contain restrictions as to the subject matter. Accordingly, the members can overrule the board on any action or direct the board on any new action. A motion approved by members is binding upon the association including the board.
While the law may vary from state to state, the answer is nonetheless based on the law in each state. To avoid the endless arguments, I suggest that any state law that limits the power of members to call a special members' meeting be identified. |
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Don Nordeen
Governance of Property Owners Associations
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GeraldT4
Posts:934
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| 07/31/2008 7:58 AM |
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| 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. |
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KirkW1
(Texas)
Posts:1190
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| 07/31/2008 9:00 AM |
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... 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? ...
This is in fact true. At this point the declarant has three lots in the community. We have a very cordial relationship with the declarant, but I do want to see those lots sell. As it happens last week they offered one of them to a builder and were waiting to hear back.
As it happens we went from nothing to control very quickly. The declarant sold the additional phases and passed declarant control. But the new developer decided he didn't want to continue with the HOA that was in place and put phase 2 (and later 3) into a different HOA. Our declarant requested control to return and then turned us over. It is a family business and they had considered paying to eliminate the HOA altogether. Part of me is glad, while part of me wishes they had killed the association. But as we deal with a owner that put up a monstrosity porch cover I am glad to think that I won't have to get several neighbors together to enforce the covenants in court. |
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