Board member delinquent in dues

Started by ErinM2 • 37 replies • 8488 views

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ErinM2 (Florida)
Posts: 12

Posted:

Can a unit owner that is delinquent to the tune of thousands of dollars be a member of an HOA board? I was told that they could not but this board member has been on the board for 7 years and has been delinquent for most of that time. Foreclosure proceedings have been started and this person just got elected again. What's the rule on this. Thanks.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Erin,
Same old story Erin, first determine what your documents say, what state law says, and see if you are under any other kind of restrictions like non-profit state requirements.

The "I was told" means nothing because if you are going to challenge his re-election on grounds it is illegal you will need the specific reference to charge him with. You have to assume he will contest this if for no other reason he has been allowed to do it for 7 years. If he is going to foreclosure, he may not be around long enough to challemge anyway.

Seems the bigger problem is the Board allowing him get be deliquent for so long, board member or not? Has this debt been turned over to a collection agency or some other method of collecting the debt? If not and others in your association have, all the board is responsible. He should have been participating as a board member to collect the arrears he owes.

I imagine someone will post the direct state law to be used as far as elgibility is concerned. What does your Board say when you question them. I suggest you go to a Board Meeting ask why this person is being allowed to continue to seek re-election when he is not paying his fees? Ask for a written answer or tape the Boards answer, ask that it be entered into the minutes and if you feel strongly enough, get a lawyer to write to the Board requesting an explanation. All this will stir the pot, of course, so, if you don't want some heat, approach a Board member privately and ask your questions. There may be explanations for this, I don't know, but it is suspect action by the Board, for allowing the debt to go uncollected.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Erin,

The answer to your question should be found in your bylaws. If it is not addressed there then there is no reason why this delinquent board member cannot continue to serve on the board. In looking over the state statutes, I cannot see where this is addressed in CH 718 (condos) or CH 720 (planned communities). I don't believe the Nonprofit Corp Act would apply in this matter.

LoriL1 (Florida)
Posts: 78

Posted:

This issue is definitely addressed in Chapter 718 (condos). I don't know about Chapter 720 however. I've copied the pertinent info from the Statute below. It's 718.112 (2)(n)for your reference.

(n) Director or officer delinquencies.--A director or officer more than 90 days delinquent in the payment of regular assessments shall be deemed to have abandoned the office, creating a vacancy in the office to be filled according to law.

JohnB26 (South Carolina)
Posts: 1,569

Posted:

Quote:

Posted By MaryA1 on 03/05/2010 7:19 AM
Erin,

The answer to your question should be found in your bylaws. If it is not addressed there then there is no reason why this delinquent board member cannot continue to serve on the board. In looking over the state statutes, I cannot see where this is addressed in CH 718 (condos) or CH 720 (planned communities). I don't believe the Nonprofit Corp Act would apply in this matter.

Mary: my opinion (please don't eat me):

Most not-for-profit corporate laws have a stipulation as follows:
'directors must be in good standing ..... etc'

ErinM2 (Florida)
Posts: 12

Posted:

Thanks for all your input. I will check our bylaws and see what it says.
Erin

JamesC (Maryland)
Posts: 282

Posted:

MaryA1

How in the world could a board member in errors to the tune of thousands of dollars sit in judgement against any other homeowner who is deliquent. Dare this board have any attorney send me deliquency letters, and threaten to foreclosure on my property when one of their own is so irresponsible. Is the HOA that desperate for volunteers to allow this member to get away with stealing the services paid for by the other homeowners.

Jim

CarolF (Florida)
Posts: 435

Posted:

Erin - would you please tell us if you are a condo assoc. (under 718) or an HOA (under 720). You mention the word "unit" so that makes me think condo. But, I don't want to guess on this.

RichardP13 (California)
Posts: 1,767

Posted:

Mary

I think all the good you might have brought to this forum here, just went right out the window.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Richard,
What IS your problem? You go along pretty good and provide creditable information for a while, and then you come up with a statement like this. If any one's credibility is in question it is yours for making such a statement. I have asked you once to please play nice if you want to play in this sandbox, you refuse. Do not expect me to post on any thread that you post on.
Why not just move on to someplace where you can be appreciated. Mary does not have to please you, she has earned her reputation as a solid source of information to people asking for help. I can tell you true, if you have an HOA issue, go to people like Mary. Richard, people read this site for information, not pronouncements of criticism of the other posters, it's tough enough to do this without you.

RichardP13 (California)
Posts: 1,767

Posted:

Robert

Oh really. It is alright for someone to post that a board member delinquent in dues can continue to serve. You really have to be kidding. That sends a great message to newcomers to this site looking for guidance. A Board Member is above any rules that their governing docs provides? Maybe advise them to resign.

RichardP13 (California)
Posts: 1,767

Posted:

Robert

Besides I'm sure Mary's a big girl can explain her comment.

JamesC (Maryland)
Posts: 282

Posted:

Richard:

I agree with you 100%.
Mary, may give good advice, and like everyone else, she possibly is capable of also
giving bad advice.
The hypocrisy of an active member of the board being allowed to continue to serve while being deliquent for seven years is unbelieveable.
I can't imagine a better definition of discrimination then for this member sitting at the board meeting judging "ANY" homeowner on issues of their community.
Don't understand the criticism you just received, because you expressed your opinion, but because you disagreed with Mary, on hers, you get slammed.
I think Mary, should rethink her comment. I have read some of her many posts, and having posted over 5,000 of them, she could be looked upon as someone having a lot of knowledge on HOA issues, but unfortunately on this one, she could not be "MORE WRONG"

Jim

RogerB (Colorado)
Posts: 5,067

Posted:

Quote:

I think Mary's post is right on and needs no further explanation. If it is not in the Bylaws and or the state statutes then they can serve. The Bylaws can be changed to correct this problem. Remember the restrictions on who can be a Board member are established by the Developer to protect their investment. They have their "friends", usually nonmembers, control the Board until the community is developed.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Roger,
Well, you got my vote, but I doubt there is any real desire to bring reason into the conversation. I also point out that Mary never said she was expressing a personal opinion, her post was on what was written in the documents.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Lori,

Thx for the correction. I looked through the statutes but didn't see it!

MaryA1 (Arizona)
Posts: 7,043

Posted:

First of all I want to thank Roger and Robert for coming to my defense.

Now to address James and Richard:

I'm sorry you think I didn't give good advice; however, my comment was based upon what the bylaws and state law say. It was not my personal opinion. If the bylaws and state law are silent on the topic then the delinquent board member can continue to serve. Sorry, but that's the way it is.

IMO, I don't believe board members should be allowed to continue to serve if they are delinquent and/or in violation of the gov docs. Board members should set a good example for the other members of the assn. If the bylaws and state law are silent then there is no legal reason to ask for the delinquent board member's resignation. The most they could do is to remove him/her from an officer position and have an "off-the-record" talk with him/her explaining their position. If the delinquent board member won't agree to resigning then there isn't much they can do except to continue to follow the collection policy as they would for any other delinquent member.

MaryA1 (Arizona)
Posts: 7,043

Posted:

John,

That is not addressed in the AZ nonprofit corp act. In fact I took a look at the SC Act and didn't see it addressed in their either! Remember the Act is for corporations, not HOAs. Corporations do not have dues to pay and a director being in good standing just doesn't apply. At least that's my opinion.

JamesC (Maryland)
Posts: 282

Posted:

Mary:

You certainly don't have to apologize for anything you believe in. I ususlly just read the posts in this forum, but when I see something that touches so close to home, I do respond.
Our bylaws--ARTICLE VII Powers and Duties of the Board of Directors, Section 1 Powers (B)States:
The board has the power to: "Suspend the voting rights" and right to use of the recreational facilities of a member during any period in which such member shall be indefault in the payment of any assessement levied by the Association.

With all due respect to you, Roger, and Robert how is it justifiable to allow a member of the board to serve in a position judging others for "twelve years" when the bylaws says "your own" voting rights are supposed to be suspended?
For twelve years this board member has been permitted to vote on ever issue presented to the board affecting their community, decisions possibly negative ones against other homeowners, yet "their" voting rights should have been suspended.

I don't know if you are serving on a board, but if you are, and another board member were this far deliquent in your community, would you honestly allow them to continue? And if your bylaws read anything at all like ours, would you legally be allowed to have them continue on the board?

Jim

LoriL1 (Florida)
Posts: 78

Posted:

You're welcome, Mary! Like I said, I can't speak to Fl. Statute 720, but I am very familiar with Fl. Statute 718 because I've been on our Condo Assn. Board for a while now. I had just looked at this particular section of the Law because we are having a similar situation on our Board right now.

Lori

RichardP13 (California)
Posts: 1,767

Posted:

James beat me to the punch. I put up a post asking others on advice in changing our Bylaws. This will be one of the areas that we will address. If it doesn't go into the bylaws it should be put into the Rules and Regulations. To just say a board members can continue to serve without giving advice on what steps an association needs to take to correct this wrong was, well wrong. No board member should be above the law or the rules that board members govern by.

RogerB (Colorado)
Posts: 5,067

Posted:

"how is it justifiable to allow a member of the board to serve in a position judging others for "twelve years" when the bylaws says "your own" voting rights are supposed to be suspended?"
I don't think members should ever allow this. But that is a question for those members who chose to elect a member to the Board who are not in good standing. IMO all Bylaws which do not state "all Board members shall be members in good standing" should be amended to include this requirement. Meanwhile, is it reasonable for a Developer to write Bylaws which protect their investment.

RichardP13 (California)
Posts: 1,767

Posted:

Roger

First, I wouldn't think the members know that board member was not paying his dues as it is confidential. I would blame the existing board for not saying something to the members in some form of communication.

Second, I realize that CCR's and Bylaws were written for the sole benefit of the developer. Our process will be to eliminate any and all mention of the developer and customize for the community. This is what should be done for most HOA, especially larger one. The docs that developers put out there are one size fits all and that create issues that came out here.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Richard,

As you say, delinquencies are confidential, how would the board let the members know of the delinquent board member w/o breaking this rule of confidentiality?

Can you tell us what some of the provisions in your gov docs are that are just for the developer?

MaryA1 (Arizona)
Posts: 7,043

Posted:

James,

I said I was sorry that you thought I didn't give good advice; I was not apologizing for my opinion -- personal or otherwise. In my first msg I stated my opinion was based upon what is in the bylaws. And, in my last msg I stated my personal opinion. I stand by both and don't feel like I have to apologize for either.

Suspending the voting rights and the right to use the rec facilities doesn't mean relieving the delinquent board member from his/her position on the board. I believe most CCRs have that provision. BTW, voting rights means the voting rights of members not board members. I also believe most bylaws state a board member may be removed if delinquent in payment of assessments; however the OP did not say that was stated in her bylaws. I commented on what would apply if it was not. If not in the bylaws or in state law, therein lies the justification for allowing a delinquent board member to remain in office. Your position seems to be that the board should just write their own rules when they come across a situation that is not addressed in the gov. docs. Sorry, James, but that just is NOT the way to run an HOA. Whereas most boards do have the authority to enact new rules, those rules can only address a topic that is already addressed in the gov docs. If the bylaws do not say anything about board members serving while being delinquent then the BOD cannot just write a rule governing that topic. And, they cannot legally remove a board member just because they think it's the right thing to do -- they must have legal justification. I agree a board member should not be serving if they are continually delinquent; but what I believe and what the bylaws say -- or don't say, may not always be the same.

In answer to your last question: The provision you posted from your bylaws does NOT prevent a delinquent board member from serving on the board. The provision you should be looking for may be under "term of office - removal, disqualification and resignation of directors". Here's the provision from my bylaws: "No member shall continue to serve as director if more than 30 days delinquent in the payment of any assessments, and such delinquency shall automatically constitute a resignation by such delinquent director on the 31st day of the delinquency." This is probably the only reason the board may remove a board member from office; in any other instance removal must be voted on by the members of the assn.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Sorry Richard, if there is nothing in the bylaws about board members serving while delinquent, then the BOD cannot just adopt a rule addressing that topic. The BOD may have the authority to adopt rules but that only applies to topics covered in the existing CCRs; otherwise they would be amending the CCRs and that can only be done by the members. From my assn's CCRs: "The Rules. By a majority vote of the board, the assn may, from time to time adopt, amend and repeal rules and regulations to be known as the "Rules," with respect to all aspects of the assn's rights, activities and duties under this declaration." The key phrase is "under this declaration", meaning pertaining to only what is in the declaration.

CarolF (Florida)
Posts: 435

Posted:

If Erin would just tell us if it is a condo association this whole thing could be dealt with very quickly.
The FL legislature has seen fit to deal with it in 718.

RichardP13 (California)
Posts: 1,767

Posted:

Quote:

Posted By MaryA1 on 03/06/2010 3:19 PM
Richard,

Can you tell us what some of the provisions in your gov docs are that are just for the developer?

There are a number of references to the delarant/developer in the bylaws. References would include Class B Members, when the HOA is turned over to the members, payments by delarant if still applicable, membership rights, meeting of members when declarant still controlled. Essentially I re-typed the whole thing, searched for all words referencing declarant/developer and will have them either modified or eliminated. Two of the committee members are meeting tomorrow for breakfast to edit.

RichardP13 (California)
Posts: 1,767

Posted:

Quote:

Posted By MaryA1 on 03/06/2010 3:53 PM
Sorry Richard, if there is nothing in the bylaws about board members serving while delinquent, then the BOD cannot just adopt a rule addressing that topic. The BOD may have the authority to adopt rules but that only applies to topics covered in the existing CCRs; otherwise they would be amending the CCRs and that can only be done by the members. From my assn's CCRs: "The Rules. By a majority vote of the board, the assn may, from time to time adopt, amend and repeal rules and regulations to be known as the "Rules," with respect to all aspects of the assn's rights, activities and duties under this declaration." The key phrase is "under this declaration", meaning pertaining to only what is in the declaration.

Under Section 4.1 of our Bylaws it states that membership rights and privileges together with voting right may be suspended by the board for unpaid assessments. If the Bylaws state that only members can serve on the board, then the board member that was deli

RichardP13 (California)
Posts: 1,767

Posted:

Quote:

Posted By RichardP13 on 03/06/2010 8:56 PM

Under Section 4.1 of our Bylaws it states that membership rights and privileges together with voting right may be suspended by the board for unpaid assessments, as that board member has now lost his status as a member of the association. If the Bylaws state that only members can serve on the board, then the board member that was delinquent should be removed from the board automatically.

TimB4 (Tennessee)
Posts: 21,047

Posted:

Quote:

Richard,

How did the individual lose his membership?

Did he fail to keep current on his assessments or sell his home?

Members are normally defined as owners of the lot. If behind in paying assessments, they might not be a member in good standing but they are still a member.

Therefore, if the bylaws don't specifically address this situation, perhaps by wording similar to what Mary suggested, they are allowed to serve. The rest of the Board could certainly remove them from being an officer and make them just a Director with no additional responsibilities or authority (and probably should).

I've said it before, what is legal is not always what appears as the right thing to do. What is legal usually depends on the specific wording of the law/rule/guideline. This is why there is so much gray area.

You stated that your bylaws say voting rights may be suspended (my HOA bylaws has this language also). This wording doesn't make voting privileges go away automatic. It only provides an option that could be taken. It doesn't even say that the action must be taken or if taken has to be taken for everyone that is behind in assessments. It can be on a case by case basis.

I've only been part of this forum for a short time. However, in that time I've seen many discussions get into a debate on what we would like or not like to happen vs. what the legal options are to address the issue. I feel fairly positive in stating that everyone here would agree that the person shouldn't still be on the Board. Irregardless of this agreement, legally it may be possible for the individual to still serve on the Board. Since the OP never replied if they were a condo complex or not, no-one can really say for sure.

Personally, I enjoy hearing the legal options. This way I can see if my HOA has potential problems in the future and work to address them before they become a problem. I also enjoy hearing the personal opinions on what posters believe is the right thing to do. I actually prefer those that disagree with mine because it can demonstrate to me weaknesses in my own argument or show me something I hadn't thought of before (thanks to all of you for that).

Again, something that is legal might be a scummy thing to do in our minds. However, that doesn't change the fact that it's legal.

Tim

MaryA1 (Arizona)
Posts: 7,043

Posted:

Richard,

You wrote: "If the Bylaws state that only members can serve on the board, then the board member that was delinquent should be removed from the board automatically." You are saying a delinquent board member can only be removed if so stated in the bylaws. So how can you take exception to what I posted which was explicitly prefaced with, "if not addressed in the bylaws" when you are saying the very same thing?

But, having said that, the bylaws provision you refer to has nothing to do with removal of a board member who is delinquent. All it has to do with is suspending voting rights and the right to use the amenities if a member is delinquent. I suggest you research your bylaws further under the section that deals with board members' removal/disqualification.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Tim,

You wrote: "I also enjoy hearing the personal opinions on what posters believe is the right thing to do. I actually prefer those that disagree with mine because it can demonstrate to me weaknesses in my own argument or show me something I hadn't thought of before (thanks to all of you for that)."

Hooray for you, you're my kind of person! I can't tell you how many times I've been personally attacked because I did not have the same opinion. You would be surprised to know how many people think only their opinion is worthy and anyone else with a differing view is plain stupid. Like you, I welcome a differnt point of view; it's amazing what you can learn. And sometimes, if you really think about that different point of view you may realize that it's more on the money than yours was; you just hadn't thought of that angle b/4!! I think that happened to me once in my lifetime and I'm no Spring chicken. LOL

PhilipL (Florida)
Posts: 16

Posted:

Florida ----------- Statute 720.305

3) If the governing documents so provide, an association may suspend the voting rights of a member for the nonpayment of regular annual assessments that are delinquent in excess of 90 days.

The answer would be in the Association's Covenants/Deed Restrictions or BY-Laws.
In my Florida community, a member may attend meetings but is denied voting rights.
A Director who is delinguent should be removed by the process outlined in the associations documents.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Philip,

Your FL statute has nothing to do with a board member serving if delinquent in payment of assessments. This statute only suspends the voting rights of a member of the ass meaning that member cannot vote on any issues that members are required to vote on. It has nothing to do with voting on board issues or even remaining on the board if delinquent.

JamesC (Maryland)
Posts: 282

Posted:

Mary: You said:::::

Philip,

Your FL statute has nothing to do with a board member serving if delinquent in payment of assessments. This statute only suspends the voting rights of a member of the ass meaning that member cannot vote on any issues that members are required to vote on. It has nothing to do with voting on board issues or even remaining on the board if delinquent.
"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""

I am becomming more confused every time I log on, and read these posts.

You say the FL statute only suspends the voting rights of a member of the Association, meaning that member cannot vote on any issue. Other then a member of the Association voting to select a member to the Board of Directors, our HOA does not allow homeowners to vote on "any" other issue. The homeowner is given the opportunity to express their comments on topics being addressed, but only the board members may vote.

However! Members of the Board of Directors "are also Members of the Association". Therefore, how can you say it has nothing to do with voting on board issues, or any issue involving the association, if they are deliquent of their monthly assessement fees?
I still do not see the legality of sitting in judgement of other deliquent share holders, if you yourself are in the same situation?????????????????

Jim

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Jim,
If you are confused this is the place to be, I doubt there is a more confusing issue than HOA's.

Since this conflict you refer to has been addressed here many times, I think I can safely say (and Mary has repeated this)that Mary is not giving her personal opinions on the rightness or wrongness of the topic, she is just saying that under the FL statute, which is the senior "court" in this matter, that this is what the laws says. She has said she feels it is wrong and should be amended. Mary has extensive history in writing and pushing legislation through judicial forums and if she is wrong, it is a rare occurrence. Consider there are two kinds of votes, homeowner votes for homeowners decisions and BOD votes for Board business. The homeowners get this right to vote on associations matters from the documents and the statutes. The BOD get their votes, separate from their homeowners votes by virtue of their position as a BOD member.

I personally think it is nonsense. know anyone that can take that to the bank.

MaryA1 (Arizona)
Posts: 7,043

Posted:

James,

First of all you must remember not to confuse what you think is right with what may be allowed in the gov docs.

The provision stating a member cannot vote if delinquent in paying assessments only applies to a member voting on issues that members are allowed to vote on, i.e. mainly board elections. That particular provision does not mention a board member being delinquent and whether they can continue to serve on the board. As I've stated several times b/4 the provision you are looking for would most likely be found in the bylaws under an article which talks about director disqualification or removal. The bylaws of my assn do NOT say anything about removing a director from office if delinquent in assessments, however, the bylaws of my former assn state: "No member shall continue to serve as Director if more than 30 days delinquent in the payment of any assessment, and such delinquency shall automatically constitute a resignation by such delinquent director on the 31st day of the delinquency." This is the only reason a director can be removed from office w/o a vote of the members, aside from ceasing to be an owner.

Most bylaws have a provision giving the board the authority to remove an "officer" from their position with or without cause. If the bylaws are silent on removal for being delinquent, the BOD could use this provision to remove the board member from their officer position, but they could not remove him from holding a board position as a director. A director is elected by the members and an officer is either elected or appointed by the board members.

You may personally think it's "illegal" to hold a board position if you are delinquent in assessments, but if your gov docs or state law do not say this cannot happen, then it is NOT illegal. The best you could do is mount a campaign to have this board member recalled based on a moral principal -- that is if you even know about the delinquency.

Note that I'm not giving my personal opinion on the topic, I'm only stating what can or cannot be done based upon the gov docs and/or state law.

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