Disbanned HOA Board

Let's see...where to start? Our development is perhaps half done. The developer has been at it for 6 years now. When finished, we'll have a total of 41 homes. He plans on dragging the building in here out for an additional 5 years. Never-the-less, A year ago, homeowners voted for a board (which I'm on) and we began putting the board together. According to the covenants, the developer retains declarant rights until two thirds of the homes are built and sold. So, whenever we (the board) do or do not do something the developer dictates us to do--he threatens to disban the board. We are all so sick and tired of the threats he dishes out--we made a unanimous decision to ignore the harrassing tactics he wanted us to use to "make" one of the neighbors landscape his yard. The neighbor would like to wait until the lots next to him have been built on because he fears any landscaping would be destroyed by trucks and excavating equipment needed to dig foundations. We (the board) feel his request to wait on landscaping is justifyed. So---the developer decided to "fire" us all and has appointed himself and two other people to run rough-shod over the development. (He wrote a disbanning letter to the boar).In fact, he has now added two new rules to our already huge (52 pages) covenants. OK. My question is this--do we have any recourse for these seemingly ridiculous covenant "rules" and tyranical developer in this neighborhood? People are not buying lots to build on in this development because of all the "rules" and the developer.

CjH,

How many homeowner's are on your board?
How many board positions are there?
What proof do you have why people are not buying?

CjH,

As others have said, while the declarant is in control he is the boss. Check out your docs to see when transition must occur. Until then the declarant is really the BOD. The BOD the members have formed is meaningless and has no power. It would be in your best interests to try to get along with the declarant instead of attacking his every move. Sugar buys a lot more than vinegar! I hope you understand what I'm saying. You may not agree with his actions but he is the boss at this point in time. Once the members take over changes can be made to the gov. docs. Until then, as Glen said, it's "his ball; his ballgame".

Gerald,

You may have a point. But, it would be determined on what the bylaws say about member meetings -- who can call a meeting, who has authority to preside over meetings. Remember the declarant is actually the BOD, until he turns over control to the members he has the upper hand on everything. Even if they rebel against his authority they may not be able to run the assn if he doesn't turn over the records, including deeding the common areas to the HOA. I find this to be a situation where the members really don't understand how an HOA operates. All they know is that they don't like the way the declarant is running things so they've decided to take over.

Mary - CjH still needs to provide more detail. So to me it is a leap in thought that the owners are a bunch of rebels. The Board should consist of some owners and the Developer because the development is 1/2 constructed. It's possible (possible) the Developer let the horse out of the gate and permitted more owner control then the procedure of transition election dictates. You could very well be right, that there is a learning curve the owners need to appreciate. However, until CjH provides more detail, I don't think any meaningful conclusions or guidance can be provided. : )

CjH, if your HOA is incorporated it must have a Board of Directors. When the Developer is in control, and depending on the Declaration and/or Bylaws, they usually select the Board members. However, since your Board members seem to have been elected at a duly called members meeting, with the developer present and voting, the Board makes the decisions not reserved for the Developer by the controlling documents. The neighborhood can not arbitrarily decide not to have a Board in a manditory HOA. However, Board members can usually chose to resign at any time. In which case the remaining Board members can make appointments to complete the remainder of their term on the Board.

CjH & Everyone - The governing documents should dictate how a board can be recalled. The Developer can't typically dis ban the Board at whim. Nor is it necessary if the governing documents were created properly, where the Developer has right of veto for any action the owners take that would adversely affect it so long as there are homes that are not sold.

CjH - How many owners are on the Board, how many Board positions are there?

Here is the real (raw) deal:

If there is anything that can be done (and that is an if) then it will require hiring an attorney and probably filing a lawsuit. But that is not to say that you would have a case.

The only thing I could think of is if you were somehow mislead in the purchase of your home. For instance if you were given a statement that the developer would be done in a couple years and he had already said he wouldn't be. Or if he took away some right to the use of your property that you previously had. But the bar is going to be high.

Your best bet is to sell to someone who doesn't bother to read through the covenants or otherwise investigate that HOA in advance.

John,

The reason I say the developer is the board is because in most instances the developer appoints all the board members and appoints himself the Pres. The other board members are generally officers in his corp, so he really is running the show. If it's a large project that will take a number of years to complete, as time goes by he may appoint 1 or more members to the board but he always has the majority vote on the board. Actually any members appointed to the board are really only figureheads -- to give the appearance that there is member input on the board. The fact that he may have to, as you put it, "go through whatever logistical processes the CCRs and/or By-Laws stipulate to accomplish his "appointing"" is no big deal. Most bylaws state the board can make an appointment to fill a vacancy on the board. When the developer decides to put a member on the board, one of the original board members steps down and he makes the appointment. Believe me, until the assn is transitioned to the members, the developer IS the BOD and IS in control!

CjH - How did the 7 homeowners that WERE on the board get elected? S

This is how the 7 homeowners that WERE on the board got elected. In August 2007, at a neighborhood meeting, the developer asked those who were interested in serving on the board to let him know and an election would be held the second week in September. That took place. So, in Sept 07 the neighborhood got together for an election and 12 people were voted on. The 7 with the most votes won.

Gerald - As usual, the answer will come from a careful review of the governing documents.

Even with a duly held election, if the declarant still retains the ability to unilaterally name the Board, he can exercise that right at any time - even if he has to jump through a few "process hoops" to get there.

Don't really know unless we see the actual governing docs verbage.

Baffles me what part of CjH's post is not being understood.

CjH wrote, This is how the 7 homeowners that WERE on the board got elected. In August 2007, at a neighborhood meeting, the developer asked those who were interested in serving on the board to let him know and an election would be held the second week in September. That took place. So, in Sept 07 the neighborhood got together for an election and 12 people were voted on. The 7 with the most votes won.

Anyone miss CjH's statement "homeowners", HOMEOWNERS. Yes, the governing documents would be helpful. But, the hypotheticals such as member class A & B, while interesting and maybe applicable, are a bit premature.

If the Declarant possesses as much power to disband, it also possesses the same power to hold an election as it sees fit. Regardless if the association was completely constructed. Which the Declarant did. As the OP wrote, 7 "homeowners" were elected. So please refrain from hypotheticals that don't mean anything yet.

Mary - 7 board positions, and 7 HOMEOWNERS that got elected negates any relevance to class A & B because......the board consisted of homeowners, not the declarant.

It's very possible he was just limiting his "votes" for that one election.

Yes, a very careful review of the governing documents is necessary all the time. However, at this point, quite frankly it's after the fact. What is CjH going to do, say, "you didn't have the right to hold an election to fill all 7 seats, you didn't have a right to disband the board that was elected"...so.....do what??? Reinstate the board that was elected by the owners and live with the decisions you feel are adversely affecting YOU Mr. Declarant???? As we all know, the voice of one only makes sense when others chime in and agree with that reason.

CjH,

Class A and Class B membership should be mentioned under an article entitled "membership and voting rights". In the voting rights section Class A and Class B membership should be explained. Then under Class B (declarant membership) it should be explained when the Class B membership ceases. This may be when a certain % of the lots have been sold, or when the Class A membership votes equal or exceed the Class B membership votes, or when a certain date arrives or it may be whenever the declarant designates it in writing. I would be very surprised that this article is not in your CCRs!

The fact that the declarant only turned in one vote at the meeting held to elect the 7 directors has no bearing on his actions after the meeting. My thought is that if he has the majority number of votes he could effectively remove all those elected members from the board. But regardless of whether or not he has the power to do what he did, it's a moot point if the members aren't willing to seek legal action against him. Has anyone thought to contact an attorney to see if the members do, in fact, have a valid reason to bring suit against him?

I don't think our comments on this board are "legal documents." Denotation and connotation are little more fluid in these types of discussions. Granted, we each have filters through which we interpret what we read or hear. So I think this is just a connotative difference as opposed to a strict denotative construct.

For example, I, for one, did not take Mary's use of the would "should" to mean that if it's NOT there then there's necessarily something WRONG with it.

I took it to mean exactly as you interpret the word MAY to mean.

I interpret her use of the word "should" in the first sentence as interchangeable with the word "would" or "may."

"Class A and Class B membership WOULD (MAY, SHOULD) be mentioned under an article entitled "membership and voting rights". In the voting rights section Class A and Class B membership WOULD (MAY, SHOULD) be explained. Then under Class B (declarant membership) it WOULD (MAY, SHOULD) be explained when the Class B membership ceases. "

And, I agree with her on this, too: IF it's not in there, I would be surprised as well.

I don't think it's in EVERY set of governing docs, but I would be very surprised if it's not in MOST.

And my "being surprised" doesn't mean either that I'm right and someone else is wrong, or that the documents are somehow "faulty," it's only an expression of my understanding of governing documents and is therefore limited by my reality only and makes no value judgment on anyone else's.

My, my somebody got up on the wrong side of the bed today.

While it's under developer control he can most likely appoint anyone he chooses, not necessarily a homeowner.

Michele,

So sorry you had to get into a tiff with Gerald over something I said. :-( However, I couldn't have responded any better than you did! Glad you agree that you would be surprised if Class A & B are not in his docs. Of course I know there may be some docs that don't have that wording, but I would be surprised to learn it -- and I won't apologize for making that statement!!!

So are you saying that the developer has the right to disband a duly elected board at will? Does he also have the right to put any Joe Blow on the board he chooses? What about the reasonable rights we have as homeowners? Can he also just violate those rights at will also?

CjH, look at your Bylaws. They should define whether the Board members were elected in a valid manner. From your comments it appears they may have been. If they were then the Bylaws should tell you how they can be removed; the Developer can not remove them at will, unless the members allow the Developer to get away with an illegal act. The Developer has the right to appoint Board members when he controls the Board but not after turnover of control of the HOA Board to the homeowners.

From a practical standpoint the key question is who controls the HOA's money? If it is the homeowner's Board then they have access to the funds and can hire an attorney to help enforce improper actions by the Developer.

Mary, I did answer the question "how many votes does the developer have?" in a previous post. Again, the answer is-he has one vote for each unsold lot. There are 21 lots sold and 20 lots unsold. The bylaws say when 2/3 of the lots have been sold-the developer is no longer declarant.

You say "I don't think CjH really understands what is going on as he refers to a 3 member board." I'm referring to the 3 member board for 2 reasons. 1. To differentiate between the past 7 member board and the present 3 member board. 2. I'm emphasizing 3 members because I thought since the past board had 7 members, the new board should also have 7 members. Actually, one of the HO's questioned this and so to bypass yet another question---I keep emphasizing the 3 members thinking if that turns a red light on--someone will address it. I'm sorry, I guess I should have just come out and asked the question.

And, you're right, I don't understand what's going on--that's why I'm a member of this HOATalk so I can ask questions and learn from you all who do know what's going on. And believe me, I do appreciate so much everyone's expertise. And I thank you for your patience as I struggle to convey my questions properly.

One more thing, you say "the developer only has one vote on the board and does NOT have control of the board so I don't know how he could have disbanded them!" OK. The past board did not include the developer. So, let me get this straight--are you saying once the declarant/developer is on the board, he reduces his votes to only one? Please forgive me if I'm not understanding your answers fully. This is my first HOA board "Rodeo" and quite frankly, I will never again move to a covenanted/HOA board controlled neighborhood. I'd rather have the "weird Harold" next door who paints his house bright purple and parks his wrecked car on his front lawn than the "proper Polly" who tattles to a board everytime someone's garage door is open a little too long without them "ingressing & egressing." In my unfounded opinion--HOA's, boards and covenants do not make a friendly neighborhood. Quite the opposite--it makes everyone point a finger at each other-and makes everyone worry whether they're following the "rules" or not. I've seen how people don't open their garage-and invite the neighborhood over for an ice-cream get together. Simply, because "the rules" say they can't do that. In essence--because of the whole HOA thing which legalizes tyranny, I now live in an uptight neighborhood----have no rights as a homeowner---and have to ask an architectural committee if I want to plant a flower?