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Subject: Delinquent Board member, No Hearing Committee Available, Never a Quorum, Illegal operations: Recall and or Removal questions.

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RyanB4
(Florida)

Posts:1

07/27/2010 1:15 PM
I have a few questions and looking for help. I am a member of a residential HOA in Florida (not a condo) with 137 members but only about 20 attend the annual meetings and then a lot of them are told they are not entitled to vote due to being 90 days delinquent, or they have more than one owner and failed to register a designated voter for the lot. A large number of members live overseas, probably about 50% or more of our lots are rentals where the owners do not live on the property. Except for the very first annual meeting of the members we have never meet the quorum of 1/3 of “members entitled to vote” in attendance and so the board remains the same for the past 5 years except that the board has increased its number from 3 to 5 a few years ago and one or two members have resigned and vacancies were replaced by the board. Currently we have one board member which is facing foreclosure, has not cut his lawn for 2 months and large dead sod areas, has a strange large area of black mold on the front of his home and is delinquent in his assessments over 210 days possibly longer he does not live on property anymore while his house is up for a bank approved short sale and for some reason wants to continue on the board and attends all the board meetings but leaves early. Two board members and at least 15 members who live on property who I have had the opportunity to speak with have either asked me or given me their support to act as representative for a recall since we cannot get sufficient members to attend the annual meeting, alternatively it has been suggested I personally mail the overseas members at my own expense and beg them for their proxy at the next annual member meeting. The desired outcome is to recall the delinquent board member mentioned above and the current President which lives an hour away but owns a lot which he rents out, it seems most of the members current board and past board dislike him as he his difficult to work with , short tempered and there is not time here to get into detail, one of my main issues is since he is the president and the only board member that actually has read chapter 720 or our CCR’s he seems to reference those only when it serves his purpose but seems to knowingly operate illegally in other instances. Since doing a recall or gathering proxies is a lot of work for me, the only other option seems to be if this delinquent board member sells his house or resigns, a vacancy would be created, 2 of the 4 remaining board members could possibly vote to have me fill the vacancy. We would like him to resign that would be the most immediate satisfying, Me and the two other board members could remove the current president from office and put me in his place. The current board members do not want to be president so he will hold office until a replacement can be put on the board. Question 1: is if our CCR’s reference to suspending the voting rights of a member 90 days delinquent included board members? In our Bi Laws Section VII: Powers and Duties of the Board of Directors: 7.1: Powers: The Board of directors shall have the power to: ......B: suspend the voting rights of a member during any period in which such member is delinquent in excess of ninety (90) days in the payment of any assessment levied by the association or take such other action or actions against any member as may be provided in the Declaration for any violation of any of the terms thereof, the articles of Incorporation or these By-laws; I personally don’t read this as specifically addressing “non board members” or “members” an “annual members meeting”, “annual board meeting”, “special meeting of the board”, “special meeting of the members” , “board meeting”, It seems to be referring to all class members and all meeting and all voting rights as no exemptions were made otherwise. Which would mean that including board members 90 days delinquent could have their voting right removed which would exclude them voting at any meeting. But I am also not a lawyer and there may already be legal precedence already established on how to interpret the language in question. My opinion is also biased. So others opinions are welcome. I was reading on this forum in another post and it does not look good for my cause, but would love an expert opinion here based on my HOA’s bylaws. Our bylaws give the terms for removing a director, but do not give specific instructions or allowance for removal based on being delinquent, but I am not looking to remove him based on delinquency, I would like his voting right suspended, my logic is that if he can’t vote at the board meetings maybe he will not bother to show up, he doesn’t seem to want to be there and leaves early already, so if can’t vote and stops showing up at the board meetings after 3 meetings it would create a vacancy which is the desired outcome or he would pay his dues and restore his right to vote which is also a desirable outcome. Question 2: Or is it possible for the board to add to our bi-laws a new rule such as the following: "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." Or do we need 1/3 or ¼ of members entitled to vote present? Question 3: At the annual meeting for the past few years members are told they cannot vote and not counted towards the quorum if they are 90 days delinquent, although to the contrary our CCR’s say the board “has the power” to suspend but does not say anywhere automatically suspend. The board never voted to suspend any members voting rights at any board meeting. giving the above does this mean that the board operated illegally in prior annual elections but may at any time choose to operate legally? For example If I represent the community in a recall election for 2 or more board members that anyone over 90 days delinquent would not be eligible and I will need less votes. Or can the board simply decide that for my recall election that the reverse is true and demand that unless they have specifically passed a motion and officially suspended a members voting rights that I would need the full 2/3rds members vote? Question 4: our bylaws say I need 2/3rds vote of the members of the association to recall a board member. In that sentence it did not specify members entitled to vote it just says 2/3rd vote of the members although in other sections it has clearly defined who is entitled to vote. Which is it 2/3rds of 137 homes = 92 votes or 2/3s of members entitled to vote which may be as little as 20. Question 5: at past annual elections any proxy’s or members in attendance who have more than one owner on record for the lot and who have not registered a designated voter were not allowed to vote and were not counted towards the quorum as they were not entitled to vote. This seems correct to me, does that mean that when I represent the members in a recall of 2 or more board members that I need less votes? The recall does not mentioned members entitled to vote it just says 2/3rds vote of the members although in other sections it has clearly defined who is entitled to vote. Question 6: in past annual elections the board did not disclose to the members how many members were actually entitled to vote. But our CCRs say we need 1/3rd of the members entitled to vote. The board confuses the members because in the annual newsletter inaccurately said we need 46 members or 137 divided by 3, but they did not disclosed to members that its only members entitled to vote divided by 3 For example for such a small association I believe we have quite a large percentage of members past 90 days and possibly up 75 to 90% of members have not registered, so even if we ignore the fact that members 90 days delinquent should not be considered automatically suspended most people in our HOA are not involved, don’t vote, don’t show up at the meeting, don’t turn in a proxy, and are multi owner lots who did not ever register. I believe it is quite possible at the last election if the board did not exclude many of the present members as automatically suspended and only counted registered voters and single owner lots as eligible we may have in fact had 1/3rd of eligible voters present, since they don’t disclose this figures or even how many proxies were received members really have no way to know if a quorum is reached, our board members don’t even know because the president and the management company are not informing them of either proxy count or rules of counting eligible voters and calculating quorum. Is there a way to question an election 4 months later or possibly have a way for members to remove board members in this kind of circumstance. Question 7: in addition to some of the “mistakes” the board may have made above concerning elections there are other things that our board has neglected which might be considered negligent. Our CCR’s mention that prior to imposing a fine or suspension that shall provide the owner with fourteen days notice and an opportunity for a hearing before a committee of 3 members appointed by the board who are not officers, directors, or employees of the association or the spouse, parent ect. BUT we have never had such a hearing committee, if someone has dead sod or bad paint or other violation the member will get a 15-30 day notice to fix it or get fined up to $1000, most people fix it within the 15-30 days some don’t they get fined $100 or more and if they don’t pay the lawyer starts charging $35 per letter eventually one neighbors dead sod turned into $500 worth of fines and $2500 worth of legal fees. Members here do not know that they have the right to a hearing before a separate committee. I told the President director about this a year ago and asked him if we must have a committee and are we operating illegally now or is it optional and if we do have a committee then do we have to tell members about their right to it , because in our CCR’s it says 14 days notice and an “opportunity” for a hearing before a committee but it does not say we must “inform them of this opportunity”? He seemed to know about the rule of hearing committee but said the problem is getting volunteers and the logistics of doing this since our violation letters go out twice a month but we only have board meetings once a month or every other month, and regarding whether or not members need to informed of this right said that is a good question for the lawyer but until today we do not have a hearing committee and members are not told of their right to one when receiving a fine or suspension. So my question is must we have a hearing committee? Must we inform members of their right to a hearing or simply make it available on request? What legal consequence can happen to our Association if we don’t create a hearing committee? Can the president be removed by some higher authority due to negligence because of this? There are many other problems with our HOA and possible other negligence on the part of the board but I will stop here, I’m looking for a way to get myself on the board and help to make sure we operate legally, fairly, and respectfully. I have posted below relevant sections of our CCR’s not the entire clauses or surrounding text, if require any more information to answer my questions I will happily provide. Reference below relevant sections from our CCR’s: In our Bi Laws Section I: Definitions: 1.6 Entitled to vote: means and refers to that lot owner who shall cast a vote for a lot at an association meeting. If more than one person or legal entity shall own any lot, the owners thereof shall determine among themselves who shall be the member entitled to vote. Said determination shall be manifested upon a voting certificate, signed by all owners of said lot, and given to the association Secretary for the placement in the Association records. Notwithstanding anything contained herein to the contrary , all Lot owners whether entitled to vote or not are" ...... In our Bi Laws Section I: 1.6: "In no event shall any mortgagee or other party holding any type of security interest in a Lot or the Residence constructed thereon be Entitled to Vote for purposes hereof, unless and until any of said parties obtain or receive fee simple title to such lot. In our Bylaws Section III: Meeting of Members 3.1: The first annual meeting of the members shall be held approximately one year after the date of the articles of incorporation of the association are filed with the secretary of state, State of Florida, at the hour of 7:30 p.m. If the day for the annual meeting of the Members is a Saturday, Sunday or legal holiday the meeting will be held at the same hour on the first day following which is not a legal holiday. In our Bylaws Section III: 3.2 Special meetings: Special meetings of the members may be called at any time by the president or the Board of Directors, or upon written request of the members entitled to vote at least one-forth ¼ of all votes of the class A membership IN our Bylaws Section III: 3.4: Quorum . The presence physically or by proxy, at the meeting of one-third (1/3) of the members entitled to vote shall constitute a quorum for any action except as otherwise provided (1) in the articles of incorporation or (2) in the declaration. If however such quorum shall not be present or represented at any meeting, the members entitled to vote shall have the power to adjourn the meeting from time to time, without notice, other than announcement at the meeting until a quorum as aforesaid shall be present or be represented. In our Bylaws section VII Powers and Duties of the Board of Directors: D: declare the office of a member of the Board of Directors to be vacant in the event such member shall be absent from 3 consecutive meetings of the board of Directors. In our Bylaws section XIII: Amendments and Administrative Provisions: 13.1: Amendment of the Bylaws. These Bylaws may be amended at a regular or special meeting of the members by a vote of a majority of a quorum of members who are present in person or by proxy provided however the Federal Housing Administration or the Veterans Administration shall have the right to veto amendments while there is a Class B Membership. 3.2: Special Meetings: special meetings of the members may be called at any time by the president or the board of directors, or upon the written request of the members entitled to vote at least one-forth (1/4) of all votes of the Class A membership. 3.3 Notice of Meetings . Written notice of each meeting of the members shall be given by the secretary by mailing a copy of such notice postage prepaid at least 15 days before such a meeting to each member entitled to vote at the last address appearing on the book of the association, or supplied by such member to the association for the purpose of notice, such notice shall specify the place day and hour of the meeting and in the case of a special meeting the purpose of the meeting. 3.4 quorum. The presence, physically or by proxy , at the meeting of one-third (1/3) of the members entitled to vote shall constitute a quorum for any action except as otherwise provided (1) In the Articles of Incorporation or (2) in the Declaration. If , however such quorum shall not be present or represented at any meeting the members entitled to vote shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum as aforesaid shall be present or be represented. 3.5 Proxies. At all meetings of members each member may vote in person or by proxy. All proxies must be in writing and field with the secretary, Every proxy shall be revocable and shall automatically cease upon conveyance by the Member of his lot. In our Bi Laws Section IV: Board of Directors; Selection; Term of Office / 4.2: Removal. Any director may be removed from the Board with or without cause, by a two-thirds (2/3) vote of the Members of the Association. In the event of death, resignation, incapacity, or removal of a director, his successor shall be selected by the remaining members of the board and shall serve for the unexpired term of his predecessor. In our Bi Laws Section VII: Powers and Duties of the Board of Directors: 7.1: Powers: The Board of directors shall have the power to: ......B: suspend the voting rights of a member during any period in which such member is delinquent in excess of ninety (90) days in the payment of any assessment levied by the association or take such other action or actions against any member as may be provided in the Declaration for any violation of any of the terms thereof, the articles of Incorporation or these By-laws; In our Articles/ Article V: Membership : "In no event shall any mortgagee or other party holding any type of security interest in a lot or the Residence constructed thereon be a Member of the Association unless and until any of said parties obtain or receive fee simple title to such lot." In our Articles / Article VI: Voting Rights: Class A. : "class A members shall be entitled to one vote for each lot".. "in no event shall more than one vote be cast with respect to any such lot" In our Articles Article VIII: Board of Directors: "however the board shall consist of an odd number of Directors" In our Declaration Article I : Definitions: 1.12: "Entitled to Vote" means and refers to that lot owner who shall cast a vote for a lot an association meeting. If more than one person or legal entity shall own any Lot, the Owners thereof shall determine among themselves who shall be the member entitled to vote. Said determination shall be manifested upon a voting certificate, signed by all owners of said lot , and given to the associatio9n secretary for placement in the association records, notwithstanding anything contained herein to the contrary all Lot Owners, whether or not Entitled to Vote, are assumed of all other privileges, rights, and obligations of Association membership and shall be members of the Association. In no event shall any mortgagee or other party holding any type of security interest in a Lot or the Residence constructed thereon be Entitled to Vote for the purposes hereof, unless and until any of said parties obtain or receive fee simple title to such lot. In our Declaration Article IV: Property Rights in the Common Areas: Other Easements: 4.1: B: The right of the Association to suspend the owners voting right for the nonpayment of assessments against the Owners Lot, which Assessments are delinquent in excess of ninety (90) days. In our Declaration: Article V: Association Covenant for Assessments: 5.12 Effect of Nonpayment of the Assessment: the personal obligation: the lien: remedies of the association. If the Assessments or installments, weather general or special, are not paid on the dates when due, then such assessments or installments shall become delinquent..."and shall together with late charges interest and the cost of collection thereof as hereinafter provided thereupon become a continuing lien on the lot which shall bind such property" "If any installment of an Assessment is not paid within fifteen (15) days after the due date, at the option of the Association, a late charge not greater than TWENTY-FIVE AND NO/100 DOLLARS ($25.00) in each calendar month may be imposed and all such sums shall bear interest from the dates when due until paid at the highest lawful rate and the Association my bring an action a law against the Owners personally obligated to pay the same or may record a claim of lien against the lot on which the Assessments and the late charges are unpaid and may foreclose the lien against the lot on which the Assessments and late charges are unpaid or...." "In addition to the rights of the collection of the Assessments , late charges, and fines stated in this section, the association has the right to suspend an owners Voting rights for any assessment against the owners lot when payment of the assessment is delinquent in excess of sixty (60) days. " In our Declaration : Article VII: Enforcement: 7.1: Compliance by Owners: "Prior to imposing a fine or suspension on an Owner for the violation of the terms, provisions, restrictions, and covenants set forth herein and or the rules and regulations of the Association the association shall provide the Owner with fourteen (14) days notice and an opportunity for a hearing before a committee of three (3 ) members appointed by the Board who are not officers, directors or employees of the Association, or the spouse , parent, child , brother, or sister of an officer, director or employee." In our Declaration : Article VII: Enforcement: 7.2 " The Declarant, the association , the association Board of Directors, the Architectural Review Board, each Owner , or any other party as provided herein shall have the right to enforce this Declaration and the covenants, restrictions and provisions hereof, including without limitation bringing the actions and filing and foreclosing the liens described in Article V hereto". ............................................."Enforcement of this Declaration and the Covenants, restrictions and provisions hereof may be accomplished by any proceeding at law or in equity including without limitation, an action for the damages and injunctive relief. The Association shall have the right to suspend the voting rights and use of the common area of any defaulting owner"

DanielH1
(California)

Posts:481

07/27/2010 2:44 PM
I admit it: I didn't finish reading your post. It is just too long. So: #1: I'd say that the Board Member could still serve and vote as a Board Member. First, it says that the BOD has the power to suspend voting rights, not that it is required to suspend voting rights. So, it isn't automatic: the Board has to vote on it for each member or has to have a vote saying they will apply it to all members who meet certain requirements. Second, since it says "member", I'd assume that it is his voting rights as a HOA member. Since Board Members vote in different capacities than HOA members, he could still vote on Board issues. It's odd to be sure. Third, since the Bylaws don't address delinquent Board Members explicitly, it would not make sense to allow a delinquent homeowner to be elected to the Board but then prevent him from voting in that capacity. Either he's on the Board or he's not and, since the Bylaws don't directly address delinquent Board Members, he is allowed to be a Board Member and, since he is allowed, he's allowed to vote as a Board Member. #2: Yes, you can add a new Bylaw. Yes, you will need to go through the Bylaw amendment process in your Bylaws. This will always always include a vote by a sizable portion of the HOA. Having the BOD vote to add a rule probably won't be good enough; it is really a Bylaws amendment that requires voting by the HOA membership. #3: Like above, I would agree that suspension is not automatic, unless the BOD has made a rule that makes it automatic. But, be that as it may, it seems to be a technicality that you'll have a difficult time taking advantage of. The Board could meet and suspend you specifically which would make the point moot. If you took it to court, you'd have a tough time because, even though you are technically correct, courts would not want to unroll all your past elections, especially given that the outcome would be the same if Board simply took of their power to suspend a member. Courts do recognize that errors are made and perfection is not the norm. #4: If it doesn't specify "members entitled to vote", then it means all members, even those not entitled to vote. Suspended and delinquent members are still members. #5: It is hard to say but, if it doesn't specify "entitled to vote", then it means "all members, regardless of standing". If your Bylaws are imprecise, you can very well get into situations where there are enough members for a quorum but not enough to have a valid vote. #6: I'm doubtful about invalidating the election. However, there should be Bylaws that you can use to vote to remove a Director after the fact. Your Bylaws should also spell out under what circumstances (if any) a homeowner or outside can monitor the election and what info they can request from the HOA. #7: If Bylaws or state laws say that you must have a hearing, then you must have a hearing. Not informing them about the opportunity for a hearing seems wrong; this is a needlessly technical interpretation to avoid a hearing. Yes, HOAs can get into a situation where it is impossible to follow the Bylaws but they just have to do the best that they can. If they need volunteers for a Hearing Committee and can't get them, then they just have to struggle along and hope that any court agrees with them that it couldn't be done. It would be prudent to inform members that they have the right to a hearing but only state law or a court could make a final determination, if the Board refuses to play it safe. If the Board doesn't have a hearing committee then, at best, I'd think that a court would invalidate fines and demand that the money be returned or the debt invalidated. I don't think that a court would do anything to the Board or the HOA itself. I doubt that the president would be removed by the court or any other authority. How would they know who to replace him with? In an extreme case, the court might force the HOA into receivership or compel the HOA to hold a new election. But, since Bylaws provide a way to do these same actions, the court would ask itself: "If the HOA is being harmed, why don't the members use the rights in their Bylaws to police their own representatives?" After all, it's your HOA and, if the majority of your membership doesn't care enough to clean up its own mess, then why should the court? The whole reason that HOAs have all these elections and Bylaws and such is so that HOAs can run themselves in a democratic and sensible fashion and not need ongoing outside governance.

MaryA1

Posts:0

07/27/2010 4:30 PM
Ryan, Your post is definitely toooo long. Many people just won't bother responding because it just takes too much time to read through and digest. In the future I would suggest you limit your post to just one issue. Following are my my answers to your questions: Question #1: Voting rights, as outlined in the gov docs, refer to members voting at the annual meeting or a special meeting of the members. They do not refer to BOD voting at board meetings. Per the bylaws section VII Powers and Duties of the Board of Directors: D a board member can only be removed if he misses so many consecutive board meetings. Nothing is said about being delinquent; therefore, this board member may stay on the board unless he starts missing meetings. Question #2: Yes the bylaws can be amended to add that statement. In order to amend the bylaws you will need to obtain a quorum of 1/3 of the members entitled to vote (this means those who are delinquent cannot be counted in the quorum) then a majority vote of those entitled to vote to pass the amendment. For example: Membership = 137 but 37 are delinquent so only 100 are entitled to vote. Quorum = 34 and 40 attended the meeting. Majority vote = 21. Question #3 & 4: I don't recall reading in any of the sections of the bylaws or CCRs that you posted that the BOD must vote to suspend a member's right to vote. The bylaws explicitly state a recall requires a 2/3 vote of the members -- not 2/3 of the members present or 2/3 of the members entitled to vote, but 2/3 of the membership. Per your bylaws a quorum of 1/3 is required to hold a special meeting. Membership = 137. Quorum = 46. Required vote to amend bylaws = 91 This is an unusual circumstance when the % of the required number of votes exceeds the % of the required quorum. Question #5: First of all, you representing the members in a recall does not mean you will run the special meeting. The meeting shall be run by the BOD and presided over by the Pres and they will determine who can cast the vote for a particular lot. If someone fails to provide the required voting certificate then they will not be able to vote and their vote will also not count toward the quorum. Question #6: The quorum for a meeting is 1/3 which is 46 members. However only those entitled to vote may do so, so if the BOD announces how many votes are required they should take into account the delinquencies and also any members who have failed to provide the required voting certificate. Frankly, IMO, this voting certificate should only be required to be provided one time and only again if there is a change. Frankly I think it a bit cumbersome if members must provide this certificate each time they cast a vote. Although it's a good idea for the BOD to announce the required number of votes, if that requirement is not stated in the gov docs then you cannot find fault if they fail to do so. Depending upon what your documents require regarding retaining election documents, you may not be able to question an election that took place 4 months ago. My BOD calls for a motion to destroy the ballots at the annual meeting so our election cannot be questioned the next day! There is nothing in our gov docs to prevent this. Question #7: The procedure you mention as outlined in your CCRs is the same as state law (Chapt 720). If the BOD does not follow this procedure then they are not only inviolation of the gov docs but also state law. And, yes, legal action can be brought against them for failing to uphold their fiduciary resp. to the assn. Also, this would definitely be a cause for removal from the board. And, the board members should be aware that the assn's D&O insurance will not cover their legal expenses if it can be proven that they knew they were breaking the law and violating the gov docs. Now, there is one thing to keep in mind. Not all members who are told they have a right to be heard b/4 a fine can be imposed will exercise that right. Therefore, if it's not possible to get enough individuals to form this committee, IMO, the BOD could handle this resp. The important thing is to make the members aware of this right.

SusanW1
(Michigan)

Posts:5035

07/28/2010 3:02 PM
Ryan - SOME HOAs hold annual meetings and need higher thresholds for motions ONLY when funds are being spent or for raising assessments, bylaw changes. Otherwise, as long as a quorum is met, all other business can be conducted. We still hold election and conduct business at the annual meetings - and majority rules.

SusanW1
(Michigan)

Posts:5035

07/28/2010 3:03 PM
PS - I can't believe that your documents don't define a "member in good standing." Only members can be board members, right?

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