"Ethics Committee"

Hi Nancy,

I was researching” a related question and came across the following article written by an Illinois attorney with the law office, Kovitz Shifrin Nesbit. I’ve linked it here, FYI.

Certain Conduct Expected of Board (Board Member Oath)
January 2000

There are numerous authorities in books, treatises and articles on board of director liability. Many seminars are available and professionals in the multi-housing industry spend a great deal of time educating board members on their risks and potential for liability. Nowhere, however, is it written as to how board members should conduct themselves, either in their day-to-day dealings with association members or at meetings. As we know, board members come and go and the process starts all over again with no continuity. I have taken into consideration a number of problems which I see that can be summarized in a hypothetical board member’s oath of office.
The following should be required of every director of an association:…………..

The full article is located at:

http://www.ksnlaw.com/?t=11&la=1148&format=xml&p=1672

Hope this is useful,
Bonnie

Susan, and others

Their seems to be a lot of shady dealings that have been questioned by owners... Such as "stacking the deck" at the last election. using the box on the proxy (vote at proxy holders discretion) if left blank.. was used to vote all three votes, to re-elect the current Pres. He is not that popular, but got re-elected. And will certainly block anything the new members want to do. I guess the best course of action would be to educate ourselves with protocal .. and go from their.

Thanks Guys

NancyM2

Nancy, the unfortunate reality is that regardless of what "oath" one takes for any office or position, if that person is unethical to begin with, it will mean little, if anything at all.

It certainly won't work as a deterrent to bad behavior.

I think that what may work best in your HOA's case is to begin a long, baby-step strategic campaign to slowly (and I really mean that, since any "sudden" action will likely trigger an immediate and not-so-pretty response on the president and ombudsman's side) create a change in culture in your organization.

You guys are on the right course, but I cannot stress enough the importance of sitting down with some concerned (and active) members to go through an analysis of where you stand now (as an organization), and where you want to go, and what that looks like when you get there (how you will know you've made it).

You must must must put your arms around this and you can frame it as a social marketing campaign of sorts.

And you do that first by working through an honest and concrete SWOT analysis.

What are your group's STRENGTHS, what are its WEAKNESSES, what are the OPPORTUNITIES, and what are the THREATS.

Then do the same analysis with the group from which you are experiencing so many issues.

And be HONEST. You CANNOT ignore the elephant in the room on any segment of the analysis. But neither can you only focus on one or two things and let yourself be blinded (and possibly blindsided) from the bigger picture.

From there you can begin to draft concrete objectives and measurable goals.

At that point you can develop an action plan to move toward your objectives and goals.

Maybe instituting an "ethics oath" is part of that. But I'm guessing it won't be.

You have to first win more "hearts and minds" of the membership.

Your plan should focus on that strategy.

I know it sounds like hard work, but it's not really. Once you do the SWOT, you will see. The hardest part will be coordinating the brainstorming team to work through it.

Don writes:

>>>Often, boards try to speak with one voice, which only creates conflict.<<<

I'll disagree. Our BOD (we're self-managed) makes a point of attempting to arrive at unanimity (which we always have - both attempting and accomplishing). We believe this helps Membership attain the feeling that our decisions, having been agreed upon by the entire BOD, are in their best interests.

But that's just us. Though thus far, we have a very smoothly running HOA. No delinquencies, no complaints, stable finances.

"Always agreeing," and "building consensus" are two different things.

The latter should be the goal, as opposed to the former.

When building consensus, all voices are heard, even dissenting ones, and the group tries to arrive at a decision that all can accept, taking their differing perspectives and positions into account.

I am distrustful of groups that "always agree."

It may signal they are not evaluating all viable options or giving decisions rich enough discussion or consideration. They may be, but it's more likely that they are not.

When every vote is unanimous I start to wonder which people are not thinking or lack the ability to vote what they believe.

What a Board needs is the ability to abide by the decision. When I have voted the opposite direction that the Board did, I agreed to abide by the decision. I didn't pretend to agree with the decision. That meant I was not going to go out and stir up discontent. But we record dissenting votes.

A particular place where this whole "one voice" thing bugs me is my City Council. I just have a hard time believing that there are not more people who disagree with some of the decisions. And I want desperately to vote out those who go with the crowd. I would prefer to elect someone with a very different vision then my own and spoke one's mind. I see no place for "yes men" in governance. Sometimes you win, sometimes you lose. If you can't stand to be on the losing side of the vote leave the BOD. (Or, "If you can't stand the heat, get out of the kitchen.")

Very well said, Kirk! I've always been one to speak my piece whether I was in the majority or the minority. It's gotten me in hot water at times, but it's just something I can't help but do. An old friend of mine would always say, "you've got to have the courage of your convictions" and I've always tried to live by that adage.

Allow me to expand on our BOD uninamity tact. Sometimes, when we first examine an issue, we are not all on the same page.

As an example, last year one of our HOs proposed what I'll call The Path To Nowhere, meant to connect us to a larger HOA east of us by about 80 yards. My colleagues liked it, I didn't. The issue was whether we should approve monies to have a preliminary study done. But instead of a 2-1 vote in favor, I volunteered to investigate myself and report back my findings (along with opinions given here at HOATalk). When I did report on costs, liabilities, complications, etc., we quickly voted 3-0 to not pursue the Path further, and informed Membership of our reasoning and the tally.

But again, I stress that's just what works for us.

That is correct. Along with glasses and ice. Though while Scotch remains a required option, beer or wine have been chosen at our last two meetings by the participants.

We lined up a Homeowner's Special Meeting to remove 3 of the board members. I still disagree that the President should get to 'run' the meeting- or was it only "start" the meeting? - when she is one of the one's being voted upon to remove.

There's been lots of questionable ethics here- all supported and defended by KSN.
Board members meeting to compile 20 pages of Rules and Regulations (when, where?), even as a draft – should have begun in a committee of interested homeowners discussing pros/cons and contributing. A committee formed after the fact is as ethical as when they ratify votes after the services (of thousands of dollars) have been paid and delivered. We rarely get to see or hear of any "3 bid" options, by the way - I'm the VP, and don't get included in what the "3" lock up and decide. We contested whether we - as homeowners - would allow the board to shanghai our homeowners meeting-- so the threatened to bring their lawyers- KSN.

This board never bothered to explain that the attorneys were not just ‘attending’ as witnessing on behalf of the board, nor as by-standers of a HOMEOWNER’s meeting—but commandeered the meeting with blackmail to invalidate it if they didn't run it, including all the repetitive forms and ballots, materials, processes and preparations etc. They acted as judge in the room, and think they are above reproach? “Oh- this is great—you’re going to question ME- the lawyer!” says Shifrin the Jr. –This firm may tout that they are the governing authority of ALL affairs, but even they are not above the laws. Many saw the video Nesbit basically admits that his answer to questions on Open meeting is different than this board was taught... because now I’m being taped. Ya gotta love it ! NOT ! Mutable ethics have been seen across the board including the interpretations of the by-laws on that night on several fronts, but particularly the "any member of the board may be removed by the affirmative vote 66 2/3% of all members of the association AT a special meeting for such purpose."

Upon reflection—we felt we were arm-wrestled at every part of the whole thing - they basically were saying: You do it our way, our forms, our rules or we'll invalidate the entire election! Perhaps we should I have taken him up on that gamble? I would have put it to the whole room for a vote (show of hands). If we pulled it off the way we read and were told (Bylaw:Article IV; section10) we could hijack BACK our association AWAY from PSI and these attorneys. They represent 5 angles of our whole world (the assoc, the mgr, the master, the board, the baker and the candlestick maker) WTF ! I HATE that I allowed them to take all the forms..with the promise of sharing.. OR ELSE-- you guessed it - "They'll invalidate it." I still try giving the benefit of the doubt that honor can exist, and await receipt of EVERYTHING. Know that ‘who would walk away with all those materials’ was yet another mini-battle, conceded to the attorneys, not to PSI or the board.

We wanted to offer fair and impartial processing, and thank the several board members from the Villas (whom we’ve never even met) that were willing and volunteered to help tally, but they were turned away – because their presence – according to their lawyer… you guessed it again-- would invalidate the whole event. Really? We couldn't video tape either, because they claimed that the clause that allows it is in the sections that pertain only to board meetings, and open meeting rules don't apply. The offered portion of the Condo Law handbook - did not even address their claim, but whatever. It was the "open meeting" segment that lists items, but "did not specify" taping.

There’s another homeowner (who we’ve only met once, btw) questioning their “interpretation” per his attorney – he claims that he didn’t even vote to remove them all, but is equally perturbed that is was not rightfully conducted —and yet another resident who works with a commercial property management company asked their office attorney (who specializes in this area) and now that’s 3 lawyers that strongly disagree with what they pulled. Actually four out of five lawyers surveyed … isn’t four of a kind a winning hand? LOL

There's a lot of angry people right now, who were present and felt we had that room. Several of “us” walked in with over half a dozen proxies a piece. One of the ladies told me that the guy next to her helped tally and commented that almost 90% of all the ones he handled- wanted them off, nearly that same many in the ones H.Olsen tallied- which I kept over her shoulder and cross tallied. She must have re-counted and rechecked her own math 3 times (as I watched)… because of the 8 she handled – 6 all voted them off. We will be reviewing everything in detail... however we're still awaiting our materials return. NOW more people are paying attention.

As a related note: In the By Laws Article on Members and Section on "Voting rights" can someone explain if this would be relevant?

The total number of votes of all 'voting'(?) members shall be 100, and each owner shall be entitled to the number of votes equal to the total percentage of ownership..etc.
(b) Any specified percentage of members, majority or otherwise, for purposes of voting or any purpose-- shall mean such percentage of the total number of votes hereinabove set forth. Such percentage shall be computed in the same manner as a specified percentage of owners, as provided in the declaration... (meaning: of those present AT the meeting, quorum + - that % become 100 ?)... provided however, that after the initial board election by voting members, if 30% or fewer of units, by number, possess over 50% in the aggregate of the botes as provided herin, any percentage vote of members ....shall require the specified NUMBER of units rather than by percentage of interest allocated that would otherwise be applicable.

Clarification?

I think the lawyers have caused this whole MEETING to be invalid.. BY The non-profit corp law ! Note- I've cited by only included sections that seem the most relevant...

(805 ILCS 105/107.05) (from Ch. 32, par. 107.05)
Sec. 107.05. Meeting of members.
(e) For meetings of a not‑for‑profit corporation organized for the purpose of residential cooperative housing, consisting of 50 or more single family dwellings with individual unit legal descriptions, ""any member may record by tape, film, or other means the proceedings at the meetings"".
(Source: P.A. 91‑465, eff. 8‑6‑99; 92‑771, eff. 8‑6‑02.)

(805 ILCS 105/107.60) (from Ch. 32, par. 107.60)
Sec. 107.60. Quorum of members entitled to vote...If a quorum is present, the ""affirmative vote of a majority of the votes present and voted, either in person or by proxy, shall be the act of the members,"" unless the vote of a greater number (ours states 66 2/3%)...
(Source: P.A. 84 1423.)

(805 ILCS 105/108.35) (from Ch. 32, par. 108.35)
Sec. 108.35. Removal of directors. (c) In the case of a corporation with members entitled to vote for directors, no director may be removed, except as follows:
(1) A director may be removed by the affirmative vote
of "two-thirds of the votes present and voted", either in person or by proxy.

They claimed (at the end of the tallying) that it had to be 2/3 of ALL voting members!

Probably some problem that this will surely face is that ethics, is subjective and what other might see fit, might not go in accordance to how my point of view on the matter is, as an example.

It is good that there is some approach concerning this but they would rather be run after by questions surrounding their formation than going after issues at hand.