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Subject: CA law- HOA president getting paid against HOA bylaws- what recourse?
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JulieA3
(California)

Posts:7


12/28/2010 11:46 AM  
Our HOA president suggested at a homeowners meeting that she should get paid for her time and effort and wanted to be exempt from paying monthly HOA dues. At the time the homeowners agreed to this and no one checked with the HOA bylaws.

Several years have gone by and recent review of the HOA bylaws clearly states that no board member can receive compensation for any services rendered for the Association.


Can we demand that the President reimburse the HOA for the HOA dues that she never paid? or are we out of luck since the homeowners did vote in agreement for the president to receive this stipend?

JonD1
(New York)

Posts:1556


12/28/2010 12:09 PM  
Is she still being paid? At the very least if the Board decided to operate under your documents that should be halted.

How was it the homeowners voted to pay her? Wouldn't that be a decision made by the Board? Under what circumstances did this come to a vote of the homeowners?

As to asking her to repay this amount you can ask for anything. IMO your chances she might pay slim to none.

A mistake was made. The Board other than the Presdient failed to operate under your governing documents. My guess you can change that error but can't go back and do it over.

Was the President paid or granted a waiver of her common charges? In either case was she issued a 1099 each year? If not I would think she should have been.

TimB4
(Virginia)

Posts:8074


12/28/2010 12:16 PM  
It will depend on how the meeting was done and what the ballot actually said. If it amended the bylaws to allow compensation - then your Association would be legal. However, the individual should have paid their assessments and the Association cut a check for the fees (along with the proper filing of an IRS 1099-misc. at the end of each year).


However, if the wording did actually violate the bylaws then it probably violated the covenants as well.

You can explain that it was a violation of your bylaws to compensate the President and inform them that the assessments will no longer be done. I also suspect that your Association covenants specify that assessments would be equal to all lots - thereby waiving the assessment was also a violation of this covenant.

You should also ask if 1099's were created as, the person should have counted the waivers as income. However, this could also have the IRS ask, why you didn't create the 1099's in the past and is the individual an employee (which would require the Association to withhold taxes and pay a share of the ss/medicare taxes), or an independent contractor. Here is a link to the IRS website - Independent Contractor (Self-Employed) or Employee?


You should then propose a motion that the individual establish a payment plan to repay what was not collected.


Therefore, the first thing that should be determined is if the bylaws were amended and if so, was it done properly?

Tim
JulieA3
(California)

Posts:7


12/28/2010 12:18 PM  
I do not believe she was issued a 1099.

We are a small condo complex consisting of 10 owners. We were at a HOA/ homeowner meeting to discuss the use of HOA reserves and the president suggested at this time that she be excluded from her responsibility of paying monthly HOA dues in exchange for the time and effort.

A majority of the homeowners at this meeting voted in agreement and no one checked the bylaws.

I am a homeowner who read the bylaws and discovered the mistake.

Is there any legal action that I can take, sue in small claims court, or anything to get the HOA reimbursed for the dues the President has not paid?

JulieA3
(California)

Posts:7


12/28/2010 12:22 PM  
There was no written ballot... just verbal vote. The bylaws have never been amended.

I am 99% sure no 1099 was created. this person just was exempt from paying monthly HOA dues.
JeanneK3
(Maryland)

Posts:547


12/28/2010 12:40 PM  
Julie:
How badly do you need your condo president? If there is no one to take her place, I would inform her that the bylaws do not allow for what is happening and try to get her to understand it must stop or the association could be sued. Probably she didn't know it was illegal and it isn't worth the time and money to go to court.
Jeanne
JonD1
(New York)

Posts:1556


12/28/2010 12:46 PM  
The President was paid or not required to pay how much?

For what period of time?

So the estimated total cost to the 10 unit property would be ____________.

(Why she was entitled to pay for serving as President for 10 units would require a good answer for me.)


As to a small claims case it is not YOU alone that was affected.
Where are the other owners and Board members on this issue?

How this can proceed if you were willing to take action I would guess you might need some legal advice and then the cost clock begins. That clock can run very quickly. Is this matter worth it in your time, effort and money?

Taking on any legal action might in the end cost you personally and with your neighbors and fellow owners on the property.

Seems the homeowners violated their own documents and the Board sat by and did not do their job. Hence my question as to why this was done by a vote of the homeowners. As most have more than likely never read or understood the by-laws of your property they would be the last group qualified to vote on such an item.

Sounds like the President arranged this to happen and everyone sat on their hands and did nothing.

JulieA3
(California)

Posts:7


12/28/2010 12:51 PM  
I agree that no one knew it was illegal at the time.

We have some necessary repairs that require attention so the missing HOA dues are sorely missed. we do not feel individual homeowners should have to pay special assessments for repairs when the president owes over $12,000 in illegal waivers of her dues.



JulieA3
(California)

Posts:7


12/28/2010 1:05 PM  
The president was not required to pay $245 monthly for about the past 4 years. So the total estimated cost to the hOA is around $12000.

At the time we were getting bids of having the buildings repainted and it seemed like a big headache because all the bids were well above our reserves. basically no one else volunteered to be president and this person said she was putting in way too much time and effort to not be compensated.

The board is just made up of volunteer homeowners so none of us are really "qualified."

As a homeowner I read the bylaws because people were complaining that in recent years the president has not been holding regular meetings, not scheduling required fire alarm inspections, and basically does nothing and they expected her to fulfill duties since she is getting paid the stipend, or whatever you call it, for the waiver of her HOA dues.


BrianB
(California)

Posts:2803


12/28/2010 9:29 PM  
Julie

Stop the payment going forward. it shouldn't be happening, it shouldn't have happened, stop it ASAP, and start a new line/slate.

What's past is likely water under the bridge. I doubt the HOA can ever recover that money.

I am happy, however, to see that the owners within the HOA have finally decided that although they don't know anything about their own HOA and rules, and were happy to violate their own contract laws to give away their money, is finally upset enough about another homeowner who doesn't know how to follow the rules of the HOA either, and demanding that the person learn and follow the very rules they are themselves ignorant of, since that is what they are paying that person to do. Good luck!

SusanW1
(Michigan)

Posts:5202


12/30/2010 10:27 AM  
The "president" can resign and be hired as a manager, if there is SO much work that has to be done. Then she, or anyone else, can be paid.

If she is also doing the billing, newsletter, contracting vendors, secretarial role, filing, paperwork, etc., you may want to consider this kind of setup.

BrianK1
(Colorado)

Posts:54


12/30/2010 11:25 AM  
Does the President also owe interest and/or late fees for 4 years of unpaid dues?
JulieA3
(California)

Posts:7


12/30/2010 12:00 PM  
There is not "so much" work. We pay to have an outside company collect dues and all the accounting. we have shared the responsibility to get bids on work, etc. Some of us help with the landscaping for free to minimize costs to the HOA, etc. There is hardly any work at all and we have a VP and treasury to assist. Three board members are mandated by our CCR's.

It also says in our laws that regardless of any homeowner majority vote, the bylaws can not be changed unless a formal amendment is submitted with our city and approved. Of course, this was never done so I am 100% confident that the vote is null and void.

The president has made many references in other issues that implied she has read the CCr's and is knowledgeable about the contents. She authorized work and also threatened to not pay for work/maintenance that she personally believed feel outside the HOA responsibilities.

i sent an email to all homeowners saying that the compensation should be stopped and maybe it was a mistake in good faith, but a good faith effort needs to be made to correct the problem. No one knows what to say or do. Several of us think she should make some sort of effort to repay the association, but no one has mentioned late fees that are typically charged other homeowners.

Some of us feel cheated because we assumed the president had read the bylaws and the most clear wording in the entire document is related to the board and the fact that they can not be compensated.

We do not know how to properly suggest the idea that the President at least make an attempt to pay the association the missing money. I figure all she will do is resign and say it is not her fault because when she brought up the idea of waiver of dues- others agreed so it is now our problem.

I just think if we paid a vender to do work, and then the vender actually overcharged or never completed the work, we would try to get our money back somehow.

I mean, if you think you have paid enough taxes to the IRS in good faith, but you are audited and they find that your own money... you still have to pay the back taxes. I know our HOA is not the IRS... but it feels equally frustrating right now.
JonD1
(New York)

Posts:1556


12/30/2010 3:17 PM  
Julie:

Good luck collecting this money back. The property paid her and all seemed to support those payments at the time.

If the Board can find the nerve to bring up the subject they can put a stop to it by informing her she now longer gets her dues waived.

This supports my contention that amny times the unit owners themselves neither know or understand the details of the operations of their property.

Some folks think everyone should have a say in every matter. I'm not one of them. Your entire property Board members included never bothered to read nor had they read the documents not permitting this payment to the Presient.

Many times owners form opinions based on what they thing should be or a misunderstanding of the legalities of HOA property ownership.

In this case it has cost the property $12,000 to date and counting along with now placing the Board and property owners in a rather delicate situation no one seems willing to address.

KellyM3
(North Carolina)

Posts:1039


12/31/2010 8:20 AM  
Julie:

Unless you have gobs of time on your hands, I wouldn't start a war over this. However, the payments would stop immediately and legally must do so. If the HOA president is inconvenienced, then the president should leave office and consider being a non-officer member.

Verbal votes don't matter. If nothing else, suggest the board launch a petition to officially change the by-laws if the community wants a paid HOA president. It won't happen.

If the negligent behavior continues, then you proceed to further steps.
RichardP13
(California)

Posts:1332


12/31/2010 9:32 AM  
I'm wondering what people would say if this was an homeowner that violated a provision in their CCR's. I have read here on this site where Board members would go after a homeowner even so far as 4 years recouping back dues, fees, you name it. Now, if it's a Board member, tell the same homeowner, forgive and forget.

I'm from California, and it's VERY clear in the Bylaws, that the President, just like the homeowneer, should have read, NO COMPENSATION. Recall the President, and collect on your past due account!!
TimB4
(Virginia)

Posts:8074


12/31/2010 9:45 AM  
Richard,

I do agree that based on the OP the bylaws are clear.

The muddying of the waters come from the vote of the membership (not the board) that allowed it to happen.
JulieA3
(California)

Posts:7


12/31/2010 10:39 AM  
I agree that the problem is more confusing because homeowners did vote to approve the compensation. i think some homeowners who have not had to deal with any complications with the board now feel their opinion (and vote) is being undermined.

We all want to do the right thing and no one wants the issue to get punitive if it means a big battle and legal fees.

The president is making the issue more confusing by declaring they used money that they did not spend on their HOA dues for other HOA things like postage. There is another rule, listed right after the no comp rule, that says board members can be reimbursed for specific expenses like postage or other costs associated with HOA business. No one expects the HOA to pull money out of their own pockets for admin stuff... we did not need a vote for that.

Basically the president thinks she did nothing wrong and the backing of the homeowner vote only secures that concept... even if it technically was not legal.

The president thinks "compensation" is not the same thing as not paying HOA dues in full.



KellyM3
(North Carolina)

Posts:1039


12/31/2010 1:13 PM  
It sounds like the property owners were pleased with the HOA president aka on-site, pseudo-property manager arrangement until it came time for capital improvements and a possible assessment. Only then did a problem become a problem and the arrangement could hit folks in the wallet for property maintenance because $12,000 is allegedly owed.

I blame the community for going along with this deal for so long and the president ABSOLUTELY should know better or quit if the HOA obligations were financially burdensome.

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Forums > Homeowner Association > HOA Discussions > CA law- HOA president getting paid against HOA bylaws- what recourse?



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