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Subject: What does an Ethics Agreement change?
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NicoleS10
(California)

Posts:42


07/03/2019 6:57 AM  
The board I am on wants its members to sign an ethics agreement but at this time it is not mandatory, since it is not mentioned in the bylaws as a requirement for becoming a board member.
My question is if only a few members choose to sign it, does that mean that what’s true on the agreement is only true for them?
Meaning it doesn’t become “the way things are” for everyone?

The agreement seems to have language that is in conflict with CA civil code, and seeks to modify it, and impedes upon a right board members have as per their Parliamentary Authority, and I don’t think the board, with an “agreement” on paper or not, has the power/authority to do either.
CathyA3
(Ohio)

Posts:338


07/03/2019 7:30 AM  
Posted By NicoleS10 on 07/03/2019 6:57 AM
The board I am on wants its members to sign an ethics agreement but at this time it is not mandatory, since it is not mentioned in the bylaws as a requirement for becoming a board member.
My question is if only a few members choose to sign it, does that mean that what’s true on the agreement is only true for them?
Meaning it doesn’t become “the way things are” for everyone?

The agreement seems to have language that is in conflict with CA civil code, and seeks to modify it, and impedes upon a right board members have as per their Parliamentary Authority, and I don’t think the board, with an “agreement” on paper or not, has the power/authority to do either.




Codes of Conduct can be useful if they encourage proper behavior. However, as you noted, such agreements are not mandatory and are not enforceable. In addition, they should never be used to do an end run around laws and HOA governing docs, and I'm quite sure that your Code of Ethics would be invalid if it attempted to do such a thing.

So... in your situation I would not sign since you already have a fiduciary duty to your HOA that involves complying with the law - you can't in good conscience agree to do something that contradicts it. As for others who have signed it, since I believe that the Code is invalid they should not be bound by it (although reneging on something I have signed doesn't really sit too well with me).

I hope someone with more legal expertise chimes in.
SheilaJ1
(South Carolina)

Posts:110


07/03/2019 8:51 AM  
Posted By NicoleS10 on 07/03/2019 6:57 AM
The board I am on wants its members to sign an ethics agreement but at this time it is not mandatory, since it is not mentioned in the bylaws as a requirement for becoming a board member.
My question is if only a few members choose to sign it, does that mean that what’s true on the agreement is only true for them?
Meaning it doesn’t become “the way things are” for everyone?

The agreement seems to have language that is in conflict with CA civil code, and seeks to modify it, and impedes upon a right board members have as per their Parliamentary Authority, and I don’t think the board, with an “agreement” on paper or not, has the power/authority to do either.



There is no requirement to sign anything. Civil code already covers your duties and responsibilities.

If the other members sign it, it only shows how incompetent they are by signing things that are not required or written in the Bylaws.
NicoleS10
(California)

Posts:42


07/03/2019 9:58 AM  
Posted By CathyA3 on 07/03/2019 7:30 AM
Posted By NicoleS10 on 07/03/2019 6:57 AM
gs are” for everyone?

Codes of Conduct can be useful if they encourage proper behavior. However, as you noted, such agreements are not mandatory and are not enforceable. In addition, they should never be used to do an end run around laws and HOA governing docs, and I'm quite sure that your Code of Ethics would be invalid if it attempted to do such a thing.

So... in your situation I would not sign since you already have a fiduciary duty to your HOA that involves complying with the law - you can't in good conscience agree to do something that contradicts it. As for others who have signed it, since I believe that the Code is invalid they should not be bound by it (although reneging on something I have signed doesn't really sit too well with me).

I hope someone with more legal expertise chimes in.





So I’m curious... I’ve seen before, statements in various places that say that codes of conduct are not enforceable... does it matter if they’re called a code of conduct or an ethical agreement or a confidentiality agreement etc.?
CathyA3
(Ohio)

Posts:338


07/03/2019 10:54 AM  
Posted By NicoleS10 on 07/03/2019 9:58 AM
Posted By CathyA3 on 07/03/2019 7:30 AM
Posted By NicoleS10 on 07/03/2019 6:57 AM
gs are” for everyone?

Codes of Conduct can be useful if they encourage proper behavior. However, as you noted, such agreements are not mandatory and are not enforceable. In addition, they should never be used to do an end run around laws and HOA governing docs, and I'm quite sure that your Code of Ethics would be invalid if it attempted to do such a thing.

So... in your situation I would not sign since you already have a fiduciary duty to your HOA that involves complying with the law - you can't in good conscience agree to do something that contradicts it. As for others who have signed it, since I believe that the Code is invalid they should not be bound by it (although reneging on something I have signed doesn't really sit too well with me).

I hope someone with more legal expertise chimes in.



So I’m curious... I’ve seen before, statements in various places that say that codes of conduct are not enforceable... does it matter if they’re called a code of conduct or an ethical agreement or a confidentiality agreement etc.?




I don't think the name of the agreement matters so much as the nature of the agreement itself. There are confidentiality agreements that are likely legally enforceable - you may hear of corporations suing former employees when they jump ship to a competitor. But in an HOA setting, a voluntary agreement that applies to volunteers whose behavior is already governed by civil code is probably not worth the paper it's written on.

I understand the reasoning behind having such codes of conduct, but in my experience they're kind of useless. The folks who take their duties seriously are already complying for the most part. The "rogue" or willfully ignorant directors, whose behavior you're hoping to change, will not be constrained by a piece of paper that they've signed. Some claim that it's useful to know which board members will or will not sign such an agreement, but as with so many things in an HOA, surface appearance masks the complexity underneath. I think that not only does a director's signing a code of conduct really tell you anything meaningful by itself, it can actually be misleading.
CathyA3
(Ohio)

Posts:338


07/03/2019 10:59 AM  
Phooey, my last sentence is missing a word. Should be:

"I think that not only does a director's signing a code of conduct *not* really tell you anything meaningful by itself, it can actually be misleading."
GenoS
(Florida)

Posts:3123


07/03/2019 12:27 PM  
In my HOA it was designed to be misleading from the get-go. Our president a year-and-a-half ago wrote up an "Agreement to Serve" which she tried to bully the other directors into signing. She found a sample "code of ethics" or "code of conduct" online somewhere and tailored it to her liking. Her key change was to add a paragraph that said the signer, as a director, would uphold and abide by the governing documents (including the Rules & Regulations) or else they would have to resign. Her purpose was to use that clause to force two directors off the board by saying they had already "agreed to resign" when they signed the agreement, and therefore they had, in fact, resigned.

Luckily we had 2 board members point out that she had no right or authority to create such an Agreement and force anyone to sign it. They also pointed out that the proper course of action to enforce violations had nothing to do with anyone's status as a Director. If Bob's letting his dogs run around off-leash then there's a way to enforce that violation that has nothing to do with his eligibilty to serve on the Board of Directors. Our governing documents do not say that a signed "Agreement to Serve", or any other title one may wish to give it, is necessary. The state of Florida lays out the criteria for eligibility and even if something was in the documents it would likely be unenforceable.
RichardP13
(California)

Posts:3764


07/03/2019 4:55 PM  
An ethics agreement or code of conduct is NOT enforceable unless you let it, OR it is part of your governing docs, ie: Election Rules.

Been there, Done that
NicoleS10
(California)

Posts:42


07/03/2019 5:42 PM  
Posted By RichardP13 on 07/03/2019 4:55 PM
An ethics agreement or code of conduct is NOT enforceable unless you let it, OR it is part of your governing docs, ie: Election Rules.




That can’t be true if it’s nit mandatory to sign.
RichardP13
(California)

Posts:3764


07/03/2019 6:00 PM  
If it's not mandatory, then no harm no foul.

Been there, Done that
NicoleS10
(California)

Posts:42


07/03/2019 6:36 PM  
Posted By RichardP13 on 07/03/2019 6:00 PM
If it's not mandatory, then no harm no foul.




From what I understand, the only way to make it mandatory is to amend the bylaws to include signing such an agreement as a requirement for becoming a board member (not sure if the language of the doc would have to be included in the by laws or not)
RichardP13
(California)

Posts:3764


07/03/2019 7:36 PM  
I had Election Rules created where a candidate needed to sign a Pledge by Nominee for Election to Board of Directors in order to be included on the ballot. If they didn't sign, it didn't mean they couldn't run, only as a write in candidate.

Been there, Done that
NicoleS10
(California)

Posts:42


07/03/2019 7:38 PM  
Posted By RichardP13 on 07/03/2019 7:36 PM
I had Election Rules created where a candidate needed to sign a Pledge by Nominee for Election to Board of Directors in order to be included on the ballot. If they didn't sign, it didn't mean they couldn't run, only as a write in candidate.




Yes, I’ve heard of that as a way to get around a bylaw amendment.
AugustinD


Posts:1886


07/03/2019 8:43 PM  
Posted By NicoleS10 on 07/03/2019 7:38 PM
Posted By RichardP13 on 07/03/2019 7:36 PM
I had Election Rules created where a candidate needed to sign a Pledge by Nominee for Election to Board of Directors in order to be included on the ballot. If they didn't sign, it didn't mean they couldn't run, only as a write in candidate.


Yes, I’ve heard of that as a way to get around a bylaw amendment.


The only way such a pledge would be lawful is if a members' vote approved it as an amendment to the governing documents.


RichardP13
(California)

Posts:3764


07/03/2019 9:06 PM  
Posted By AugustinD on 07/03/2019 8:43 PM
Posted By NicoleS10 on 07/03/2019 7:38 PM
Posted By RichardP13 on 07/03/2019 7:36 PM
I had Election Rules created where a candidate needed to sign a Pledge by Nominee for Election to Board of Directors in order to be included on the ballot. If they didn't sign, it didn't mean they couldn't run, only as a write in candidate.


Yes, I’ve heard of that as a way to get around a bylaw amendment.


The only way such a pledge would be lawful is if a members' vote approved it as an amendment to the governing documents.





Then I would assume then that a rule created by a Board wouldn't be lawful?

Been there, Done that
AugustinD


Posts:1886


07/03/2019 9:13 PM  
Posted By RichardP13 on 07/03/2019 9:06 PM
Then I would assume then that a rule created by a Board wouldn't be lawful?


A Board-created rule cannot invent a restriction where one was never implied in the governing documents. Requiring a candidate to sign a pledge, or else she or he will not be listed on the ballot, never existed in the Bylaws or Declaration. Such a requirement disadvantages the candidate.
RichardP13
(California)

Posts:3764


07/03/2019 9:29 PM  
Posted By AugustinD on 07/03/2019 9:13 PM
Posted By RichardP13 on 07/03/2019 9:06 PM
Then I would assume then that a rule created by a Board wouldn't be lawful?


A Board-created rule cannot invent a restriction where one was never implied in the governing documents. Requiring a candidate to sign a pledge, or else she or he will not be listed on the ballot, never existed in the Bylaws or Declaration. Such a requirement disadvantages the candidate.



You're right, it does disadvantage a candidate, but it is legal. If candidate nomination forms are to be filled out and the candidate doesn't return theirs, they are also at a disadvantage and it would be sent out with the ballots.

The election rules were written with an attorney at the davis-stirling.com site, so I think it is on pretty good footing. Just saying!

Been there, Done that
AugustinD


Posts:1886


07/03/2019 9:40 PM  
Posted By RichardP13 on 07/03/2019 9:29 PM
it does disadvantage a candidate, but it is legal. If candidate nomination forms are to be filled out and the candidate doesn't return theirs, they are also at a disadvantage and it would be sent out with the ballots.


You do not know if it's legal until a court rules.

A Board-created rule requiring candidates to submit a nomination form, containing basic info, within a certain, reasonable timeframe, is fair, reasonable, and consistent with the governing documents. A HOA could not run a fair election without such a rule.

In New York or New Jersey a number of years ago, a certain condo board created a rule requiring all proxies to be notarized. The court observed that the only thing the Bylaws stated that had to be on a proxy was the member's name, address and signature. The court ruled the notarization requirement unlawful. Other corporate case law on elections observes similar: Add something extra to a voter's or candidate's task, that is not reasonably implied in the Bylaws, and the courts will throw it out.

We disagree.
RichardP13
(California)

Posts:3764


07/03/2019 10:14 PM  
You're absolutely right, asking a person to read their governing docs, act in a responsible way shouldn't be considered fair and reasonable.

In California, unlike most other states, we are required to have Election Rules for all association. Most don't. But, we are required to follow California Civil Code, not the governing docs in their creation. One of the provisions that need to be followed is stated as:

(3) Specify the qualifications for candidates for the board and any other elected position, and procedures for the nomination of candidates, consistent with the governing documents. A nomination or election procedure shall not be deemed reasonable if it disallows any member from nominating himself or herself for election to the board.

Doesn't say that it had to be in the governing docs.

These rules are to be sent to all owners for a 28 day (used to be 30 day) review prior to the Board taking action. If the members don't like the rules, they do have recourse to overturn.

Many Bylaws have provisions for nominating committees where the Board oversees its operation. I am sure that rally fair and that there isn't any bias on the Board part, haha.

I have these rules in 10 associations and never had a problem with a candidate signing the pledge, actually they like it. Those that might have an issue probably just don't run.

Been there, Done that
AugustinD


Posts:1886


07/04/2019 7:30 AM  
I agree you and I are "just saying" here.
Posted By RichardP13 on 07/03/2019 10:14 PM
You're absolutely right, asking a person to read their governing docs, act in a responsible way shouldn't be considered fair and reasonable.


Your "pledge" has nearly 20 items to which a candidate must agree to be listed on the ballot, per your post at athttp://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/259074/view/topic/Default.aspx . Here's a couple of attorney's responses, telling directors not to sign these:

https://www.latimes.com/business/la-fi-associations-ethics-codes-20160526-snap-story.html

https://dessaules.com/blog/2018/2/17/hoa-codes-of-conduct-and-why-they-are-unforceable

(Thanks to a certain Californian for sharing these with me.)

In California, unlike most other states, we are required to have Election Rules for all association. Most don't. But, we are required to follow California Civil Code, not the governing docs in their creation. One of the provisions that need to be followed is stated as:

(3) Specify the qualifications for candidates for the board and any other elected position, and procedures for the nomination of candidates, consistent with the governing documents. A nomination or election procedure shall not be deemed reasonable if it disallows any member from nominating himself or herself for election to the board.


Requiring candidates to sign your long pledge (fraught with legal land mines, according to the above two web sites) and specifying qualifications are two different things.

I have these rules in 10 associations and never had a problem with a candidate signing the pledge, actually they like it. Those that might have an issue probably just don't run.


Fine.
CathyA3
(Ohio)

Posts:338


07/04/2019 7:57 AM  
Wow, this has been an eye opening discussion. I hadn't realized that signing a Code of Ethics can make a director liable for a breach of fiduciary duty. A quote from the LA Times article:

"Directors who exercise reasonable judgment are protected by the business judgment rule from liability for claims of breach of fiduciary duty. When a director signs a pre-written document stating what he or she can and cannot do while performing duties as a fiduciary, the business judgment rule is unavailable as a defense."

I'd considered these codes to be well-intentioned but mostly ineffective and misleading, but hadn't realized that they can do actual harm. I stand re-educated.
JohnC46
(South Carolina)

Posts:8550


07/04/2019 9:06 AM  
Also, cheaters cheat no matter what they sign.
RichardP13
(California)

Posts:3764


07/04/2019 9:21 AM  
Augustin,

Your post is a load of crap. You reference a post where I put the pledge on. There is not one "may" or shall" and there is no consequences if you didn't comply. But, the homeowners who voted have a record of what you pledged. If you didn't sign, it didn't stop you from getting elected, just made it harder. People actually want directors that put a little effort into what they are doing.

As I said, I have it in all my associations that didn't already have election rules. I have never had an issue with anyone refusing to sign one. I have had a Code of Conduct placed in front of me after being elected to a Board. I told them to put it where the sun don't shine. Here is such a sample: https://www.davis-stirling.com/HOME/Ethics-Policy.

As far as I am concerned, it's legal and it works just fine and the law was followed. You are the type of person who would fine fault in anything someone does.


Been there, Done that
AugustinD


Posts:1886


07/04/2019 9:31 AM  
Take your arguments to the several online attorneys who say otherwise about your "pledge."
RichardP13
(California)

Posts:3764


07/04/2019 10:29 AM  
Posted By AugustinD on 07/04/2019 9:31 AM
Take your arguments to the several online attorneys who say otherwise about your "pledge."



WHY? Would it make you happy? I did my due diligence.

Enough said.

Been there, Done that
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