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Subject: Rogue Boards & Guerilla Shareholders--Time for "Something Else"
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KathleenF
(Illinois)

Posts:19


02/05/2006 10:08 PM  
I just read the recent posts on Douglas' HOA Boards topic, and I am moved to create a new "topic heading" for my response. . . .

With genuine respect to the folks who suggest using the letter of the Bylaws and organizing decent shareholders to oust the bad guys. . . I think it is high time for us to acknowledge that this approach often fails, that litigation is costly and draining, and that many of the millions of Americans living in COI's need SOMETHING ELSE.

I'm not yet clear exactly what that "Something Else" is, but I'm thinking it would start with legislation establishing low-cost arbitration and mediation, real sanctions against Rogue Boards (& Guerilla Shareholders?), and equal rights for cooperative owners and other non-condo forms of HOA's. A few states are already moving in this direction.

I for one am going "on the record" to say that it is NOT OK to tell every victim of a Rogue Board to just get busy and organize his neighbors to elect a better board--or to imply that anyone who can't restore order and decency with that method is a whiner, a slacker, or a whacko.

In some buildings, it is simply IMPOSSIBLE to educate and organize enough honest shareholders to vote out an incompetent or dishonest board. Rogue Boards can hold on to their power by deceit, intimidation, sleight of hand, character assassination, courting swing voters with attention and favors, and trading on personal loyalties. They can regain power--when they lose it--by becoming Guerilla Shareholders who lie, backstab, and harass new boards that are trying to play by the rules.

All of these strategies can be employed to "blacklist" the reformers and make it dangerous for other shareholders to even talk with them.

Rogue Boards and Guerrilla Shareholders learn who needs a carrot and who needs a stick and who just wants to be left alone. Sometimes, the more rules they break and lies they tell, the easier it is for them to get away with it. Bad news is unpleasant to hear; the truth can get complicated. Sometimes good people just shut down and wish the building "watchdogs" would stop barking, even if there are rats in the cellar.

I am a lawyer, with years of experience as a succesful organizer, author, administrator, and teacher. Although retired and quite ill, I have worked hard trying to clean up my little Dodge City. I joined the board of my 18-unit cooperative almost immediately , even serving as president for a while. I memorized our governing documents and invoked them to institute wide-ranging reforms--despite a truly vindictive backlash from the old guard.

At the best point, I had organized 9 out of 18 residents and we held a slight majority of shares. But it would have been a full time job to hold that coalition together in the face of so much manipulation. Then 2 of the 9 moved out--in complete disgust with the old guard--and new owners were immediately warned not to associate with me. The board issued defamatory letters and minutes, painting me as the bad guy. That last move will serve me well when I sue them, as their lies are rebutted by the record. But I cannot devote my life to educating new residents and maintainng alliances with the honest people who are, by this point, too stressed out, bought off, timid, ticked off, disinterested, or snowed to stand against the tide.

While board president, I had a Reserve Study done and tried to implement it--violating the old's guard's cardinal rule against spending money to maintain our common elements. And I led an effort to make the insiders pay dues on time and buy unit insurance (like everyone else). The backlash was so furious I could not get a quorum for board meetings or obtain board approval for even the most routine decisions. The old guard made it clear: cooperation with me was strictly forbidden.

Once I resigned, the old guard took over and, by its deeds, repealed my reforms--returning the building to closed meetings, hidden records, late budgets, missing financial reports, harassment of political "enemies," suppressed and inaccurate minutes, flagrant cronyism, conflict of interest, and bald disregard for our governing documents. The Reserve Study was buried and has stayed buried for 2 1/2 years. Whether or not the insiders are complying with our insurance rules remains a closely guarded secret.

My experience is not unique or even unusual. So--those of you who have found success with your efforts to reform from within--please realize that even with hard work and proven skills, this does not always work.

As we all know, much depends on the governing HOA documents and state law. For example, here in Illinois we have a comprehensive Condo Property Act which mandates the fundamentals of good business practice and open government. But I live in a cooperative, and coops are governed by the business corporation laws--which don't even address many fundamental issues. Unless you get lucky, your IL coop may resemble the Wild West. Even small efforts to extend some civil rights to coop owners get shot down in the legislature. For example, if your coop has less than 24 units, the board can close all of its meetings.

INVITATION: But I would love to invite a constructive discussion about just what "Something Else" would be. Do you live in one of the states that have started to deal with mediation, arbitration & enforcement issues? How's that working? Do you live in a state like Illinois that leaves coop owners in the dust? Or gives you no options besides costly litigation? What kind of help do you NEED?

REQUEST: I've heard there's a proposed Uniform Law on HOA's out there somewhere and will be taking a look at that, as well as the HOA laws in NJ, PA, and CA. If anyone has citations or text handy for these laws, that would be appreciated.

Kathleen

PS: I'm not personally interested in debating whether or not "Something Else" is needed in many states. If you do want to debate that, I'd consider it a courtesy if you would post a new topic.


SamuelB
(North Carolina)

Posts:83


02/06/2006 4:51 AM  
I hope many of us take the time to read Kathleen’s pursuit for honest government above. Sadly, I agree that the dishonest boards do exist and the madness that accompanies so many of them have discredited many well meaning home owners.

In North Carolina, the legislature is trying (and succeeding) to make laws governing HOA’s more owner friendly. Sadly, however, the very same laws that are meant to help the owners, take the bite out of the enforcement procedures that would help honest boards properly maintain a development.

I do not know the answer to the “something else” but strongly suspect it does not lie in corporate law. By this I mean treating HOA’s as a non-profit corporation, in my opinion, will not rid good developments of the stench of bad management. I would suggest that maybe HOA’s might fall under a different classification of law, not entrenched in “corporate “ structure intended to control corporations who do not have the same mission as HOA’s. I do believe that the answer is more closely aligned with “law” than any other facet of enforcement. Sadly, enforcing law is time consuming and costly by intent (IMHO). With all due respect to our legal professions, laws are made by lawyers; I see this as a conflict of interest. I make this statement only to point out my opinion that any procedures addressing “something else” which are based in “law” can never be anything but time consuming and expensive. I hope I can be proven in error.

I fly because it releases my mind from the tyranny of petty things . . . - Antoine de St-Exupéry
ChrisM
(Maryland)

Posts:3


02/06/2006 10:05 AM  
As a professional community manager, I can tell you this is a problem we sometimes encounter and it's a nightmare. If the board is not properly elected, any action they take may be challenged.

First, write to your president and, if you have one, your property manager. Point out what they are doing wrong and that you do not intend to sit quietly and watch. Cite the sections of the bylaws that they are violating. Check to see if you have your state code online. Maryland, for example, has COMAR online at http://www.dsd.state.md.us/comar/ This is a searchable site that enables us to find particular laws on HOA and condo management. Find your code and be specific.

If all else fails, contact your state's attorney general. Sometimes, they'll get involved.
EdR
(Texas)

Posts:170


02/07/2006 6:32 AM  
All:
It appears to be a big gridlock in these associations with the management company (MC) and the board. We have written to the board about the problems (from members). Even when I was on the board, the MC seemed to have them locked in to where if you complained, the MC threaten to sue you; if you complain to the board, they do nothing (because the president is in cahoots with the MC). Five of a nine member board would have to vote to terminate the MC, and that couldn't happen because of favoritism and prearrangement. I recently complained to the MC because they held our dues check until after election (3 weeks)and then wouldn't prove to us that our vote counted when they were asked; the wife of the MC owner who is their office manager/accountant told me it was slander and libel to even ask her why they held the check. Isn't this outrageous? Frankly, I think we touched a nerve. We are at our wits' end with this. IF the MC was doing a good job, I think it would be tolerable, but even the president of the board complained about them all the time until she became president.

Kathleen: We are in TX. Do you know of any agency, Attorney General, anyone that could at least investigate these matters? If someone set these rules up (if there are rules) then their have to be laws or someone to complain to. We have also found that even though our assn. members know that we have a serious problem with the board and MC, that no one wants to spend (upfront) the monies to go after them legally. Their dues are all they care to part with and then they disappear until there is something to complain about, like if the landscaping looks terrible and they find out that the monies were spent on the pool that they don't use, instead. A group of us are forming a watchdog group, but even when we gather the information about the illegalities, who do we take it to? The budget was not discussed with the members, the board spends the members' monies for showcasing so that outside tennis players, swimmers, club-house-users all use our facilites for free--so they are mishandling our money. These outsiders sometimes live in country clubs settings where their facilities are not free back to anyone unless a deal has been worked that we are not aware of. Is this all a social matter? If so, why involve the HOA? Even though I sound frustrated, there are others in the assn. feeling their hands are tied also.
EdR
LisaS
(Illinois)

Posts:341


02/07/2006 7:59 AM  
Not going to debate the need for something else- but the proposal that MORE regulation should exist and that 'government' and bureaucracy should get their hands into something is ludicrious.

Kathleen took what she saw as a bad situation and did something about it. And continues to do so. So should ALL that have similar problems. Democracy and all that...

As President, if low cost mediation and arbitration existed, how many hours would that time she held office as President have been spent entertaining those with agendas, vendettas, and personal issues in an office somewhere rather than seeing to the business of the Association. Dues would go up (due to even low cost mediation etc), volunteerism would go down, and those we least would want to be on our Boards would have an open door.

SamuelB
(North Carolina)

Posts:83


02/07/2006 8:35 AM  
Lisa, Everything you say is true but I am failing to see your point. The fact is that the best intentions of a well performing board are being detracted from their mission by not so well meaning individuals "with their own" agendas. The world you describe is the one we all strive for. What is being discussed is "how to get there". Bureaucracy is inherent in the legal system. The legal system is how we maintain order. And the legal system, or the threat thereof, is the only way to resolve these issues.

If you have 10 people on the Board and all 10 think alike, 9 of them aren't needed. But the first time one individual thinks differently, you need some kind of rules (CC&R's, Legal System?) to maintain order. Nothing new here, and I know you already know this. I mention it only to show why I do not see where you are going with your comments.

I fly because it releases my mind from the tyranny of petty things . . . - Antoine de St-Exupéry
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