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Subject: Proposed Budget vs Approved Budget
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TerriM8
(Missouri)

Posts:10


09/03/2020 5:42 PM  
At our HOA meeting, the proposed budget was approved by the majority of the owners. In that budget, there is a statement about how the docks will be assessed. Now when owners look at the "approved budget" that is online, the statement about dock assessments is different. Owners are upset that this was changed after voters approved the budget, and the new assessment of docks is not what was presented in the proposed budget. How should our board handle this?

* The docks are a common element, but on the dock are boat slips, that owners purchased. Not everyone has a boat slip.
So some on our Board do not feel the non-slip owners should pay the same for the docks (common element).
I reminded other board members we got a legal opinion about this and the opinion stated the docks are a common element per our declarations, and that everyone pays according to their percentage of interest.
The board changed the budget to have the non-slip owners pay less than slip owners for the dock assessment.

Owners feel this was dishonest and maybe illegal. We stated in our budget what the cost would be, but in the end the approved budget is different and most owners are paying more than what was proposed at the meeting.


How should we go about fixing this? I don't think owners are going to sit still for how and why this happened. So now the board says they will get a new legal opinion on this issue. The other legal opinion was 4 years ago and nothing has changed in regards to declarations and bylaws.


AugustinD


Posts:3900


09/03/2020 6:06 PM  
Posted By TerriM8 on 09/03/2020 5:42 PM
At our HOA meeting, the proposed budget was approved by the majority of the owners. In that budget, there is a statement about how the docks will be assessed. Now when owners look at the "approved budget" that is online, the statement about dock assessments is different. Owners are upset that this was changed after voters approved the budget, and the new assessment of docks is not what was presented in the proposed budget. How should our board handle this?

* The docks are a common element, but on the dock are boat slips, that owners purchased. Not everyone has a boat slip.
So some on our Board do not feel the non-slip owners should pay the same for the docks (common element).
I reminded other board members we got a legal opinion about this and the opinion stated the docks are a common element per our declarations, and that everyone pays according to their percentage of interest.
The board changed the budget to have the non-slip owners pay less than slip owners for the dock assessment.

Owners feel this was dishonest and maybe illegal.
It is illegal. Specifically, the amount assessed is a violation of the covenants on assessments.

I see two issues1) the violation of the covenants on assessments (very serious); and (2) a possible violation of any covenant or bylaw that exists regarding approval of the budget by owners.

I would be inclined to have the group angry about the assessments being inconsistent with the covenants immediately send a letter like the following to the Board, registered mail, return receipt requested:

Dear Directors,

On ___, the membership approved a budget that assessed owners on the basis of their percent interest. This is consistent with the HOA's Declaration and therefore is lawful. A few years ago an attorney opined the same. Yet after the annual meeting, the Board changed the budget and indicated that now, owners would be required to pay assessments inconsistent with the Declaration. Our understanding is that this action is inconsistent with the HOA's Declaration. We believe this action, of requiring owners to pay assessments that are not as indicated in the Declaration, is unlawful.

Please revert back to the original budget approved by the membership. Please let us know by Sep 20 that you intend to do so.

Thank you,

names
addresses
phone numbers
email addies
=================

Meanwhile what does your Declaration say about enforcing the covenants? Also start getting an idea of what attorneys in your town do HOA law.

Report back with the Board's response. Subsequently this forum can give more advice.
AugustinD


Posts:3900


09/03/2020 6:08 PM  
Post-o. Change the first paragraph of the proposed letter to read as follows:

On ___, the membership approved a budget that assessed owners on the basis of their percent interest. This is consistent with the HOA's Declaration and therefore is lawful. A few years ago an attorney opined the same. Yet after the annual meeting, the Board changed the budget and indicated that now, owners would be required to pay assessments inconsistent with the Declaration. We believe this action, of requiring owners to pay assessments that are not as indicated in the Declaration, is unlawful.
SheliaH
(Indiana)

Posts:3460


09/04/2020 5:02 AM  
You really have to ask? I would think this would be obvious, but....

Whose idea was it to turn this around? That person or persons should be held responsible. Assuming there are enough board members who feel the same and can outvote them, the board should hold an executive meeting and censure them - strongly. Send a letter, as Augustine suggested, apologizing for the misunderstanding and note the charge will be set as originally proposed and approved.

If these board members are also officers, I'd also consider relieving them of that position (in many HOA boards, the owners vote for board members and board members select officers from among themselves).

If you're not on the board, you know what's necessary - rally your neighbors together and check your documents to see what you need to do to call a special meeting where a recall can be considered. Give the board members a chance to explain themselves (each of them should speak for themselves). I suspect they'll try to throw each other under the bus or everyone will point towards the person who cooked this up. Even so, I'd still push to recall most, if not all of them - if there was a board member or several who disapproved of this, why didn't they sound the alarm early instead of standing there and letting this happen?

If you have a property manager, it would also be helpful to remind him or her NO changes should be made to any board decisions without proper authorization (that is, one person, including the president, don't get to go to the property manager and say "I know what we voted on, but do this instead...).

TerriM8
(Missouri)

Posts:10


09/04/2020 7:42 AM  
Thank you for your responses. There is a group of owners that are drafting a letter, so I appreciate the suggestions on the letter.
Some things I should have mentioned: (my first time in this forum, so initially I thought this should be another topic), but maybe not.

There are 3 Board members. None of the three have boat slips, so it is a definite advantage for them the way they changed the proposed dock assessment portion of the budget. What the board did (against the declarations) was to charge boat slip owners per square footage of the boat slip. Then non-slip owners pay a dock contribution, and this is also paid by slip owners. In summary, non-slip owners are paying 6% of the total dock expenses.

At our meeting it was discussed that their would be a special assessment on much needed dock repairs. The board was not quite sure how owners were going to be assessed for this, questions were asked and answers were vague. The PM stated that state statute (Missouri) calls for payment to be determined according to square footage of the docks, and so the board would have to figure out how to handle the non-slip owners. I intend to look at statutes for accuracy of this statement.

The board did figure out how to handle the Special Assessment, in their Board meeting, just minutes after the HOA meeting, and owners received notice by mail 5 days later.

Every owner is paying a base amount, which is 20% of expenses. The rest is being paid by slip-owners per the square footage of their boat slip. I questioned the special assessment, in an email to the board. They basically said they did not want owners mad at them, so did not discuss what owners would pay during the meeting. It is likely they determined the amounts with guidance from the Property Management Company.

So the board is now saying to owners, (I just learned this) that they don't know what the 2021 dock assessment is going to look like (who is going to pay what) because they are waiting on a new "legal opinion." Yet on our website, the "Approved Budget" is inconsistent with what was approved at the meeting- they have not removed that from our website, so in my opinion all we have to go on in 2021 is what is posted as the approved budget.

It has been suggested to the board by owners, that the Special Assessment cannot charge owners differently, as per the declarations and percentage of interest. The special assessment is due Oct 1st. I think the letter to the board is also going to say owners are not going to pay until there is a special meeting, special assessments and future assessments are allocated per the declaration. The board does have the power to charge a special assessment, but again they are not charging consistent with the declarations. Seems this legal opinion they are waiting on for the 2021 dock issue would also be needed to determine owners payment for the special assessment on the docks. Am I correct in my logic?

I personally contacted the board (by email), as have others about a special meeting. At this time they refuse. Maybe one letter, signed by many owners will help them change their mind.

* The board attempted to use another association's legal opinion (one that had a similar issue with expenses on docks), but not really the same as our complex at all. I got a copy of it, from the management company. I questioned the board how they could apply it to our dock situation (especially when the basis of it referred to the other associations declarations and bylaws)! At that point they said they would get our own legal opinion. Then I shared the legal opinion from 2016. They don't want to use that opinion, I would guess because it does not fit their agenda.

I do not want to be charged late fees or interest for not paying the Special Assessment on time. I am tempted to pay the amount that it should be based on what the declarations say, not on what the board has determined my fee to be.
Is this the reasonable thing to do?

I will update with how this turns out.

This situation happened so fast and so much has occurred, I feel my information may be convoluted. My apologies.
AugustinD


Posts:3900


09/04/2020 8:01 AM  
TerriM8, is this a condominium?
AugustinD


Posts:3900


09/04/2020 8:11 AM  
If the OP's community is a condominium, then the section of the Missouri Condo statute excerpted below may justify some (maybe all) of the board's actions. In particular note this statement from the statute: "3. To the extent required by the declaration: ...   (2) Any common expense, or portion thereof, benefitting fewer than all of the units shall be assessed exclusively against the units benefitted;"


=== From the Missouri Condo Statute ===
448.3-115. Assessments for common expenses. — 1. Until the association makes a common expense assessment, the declarant shall pay all the common expenses. After any assessment has been made by the association, assessments thereafter shall be made at least annually and shall be based on a budget adopted at least annually by the association.

  2. Except for assessments under subsections 3 and 4 of this section, all common expenses shall be assessed against all the units in accordance with the allocations set forth in the declaration pursuant to subsection 1 of section 448.2-107. Any past due common expense assessment or installment thereof shall bear interest at the rate established by the association not exceeding eighteen percent per year.

  3. To the extent required by the declaration:

  (1) Any common expense associated with the maintenance, repair, or replacement of a limited common element shall be assessed against the units to which that limited common element is assigned, equally, or in any other proportion that the declaration provides;

  (2) Any common expense, or portion thereof, benefitting fewer than all of the units shall be assessed exclusively against the units benefitted; and

  (3) The costs of insurance shall be assessed in proportion to risk and the costs of utilities shall be assessed in proportion to usage.

  4. Assessments to pay a judgment against the association shall be made only against the units in the condominium at the time the judgment was entered, in proportion to their common expense liabilities.

  5. If any common expense is caused by the misconduct of any unit owner, the association may assess that expense exclusively against his unit.

  6. If common expense liabilities are reallocated, common expense assessments and any installment thereof not yet due shall be recalculated in accordance with the reallocated common expense liabilities.

=== End Excerpt ===

https://revisor.mo.gov/main/OneSection.aspx?section=448.3-115&bid=24931&hl=
TerriM8
(Missouri)

Posts:10


09/04/2020 9:30 AM  
We are a condominium complex.

Thank you for the information on statutes. I will look at it in more depth.

Here is the question and legal opinion that was from 2016:

Question: How are costs allocated for docks?

Answer (Legal Opinion): Costs of an association shall be levied pursuant to each unit's allocations.
Pursuant to section 448.3-115 of the UCA, exceptions are permitted for maintenance
and repair of limited common elements or for costs that benefit fewer than all
of the units. However, these exceptions are only permitted if they are contained
in the declaration, and in this case, the declaration does not contain exceptions.

Pursuant to Section 32 (c) (17) of the Declaration, the common expenses of the
Association are divided by "common ownership interest in and to the general
Common Elements and the Association Facilities." Each units ownership is provided
in Exhibit B of the Declaration.

It was not until 2016, that the dock assessment was made an issue by non-slip owners. The reason for the legal opinion on the matter. The board at that time went with this opinion and that "exceptions are only permitted if they are contained in the declaration- and therefore assessed each owner per their common ownership interest.

Hopefully all this can be sorted out. I can see where non-slip owners feel they should pay less because they don't have a slip. Yet they are not excluded from the docks, and use it for fishing, swimming, visiting etc. Most chose not to purchase one when they had the opportunity.
In the end, I guess the declarations (or Mo Statutes) trump everything else- or a new legal opinion that may say something different.
You are so very helpful!



AugustinD


Posts:3900


09/04/2020 10:23 AM  
-- TerriM8, thank you for posting the legal opinion. This helps a lot.

-- For now, one question: Is there anything in your declaration that says the costs of maintenance of common elements, that only benefit certain units, can be assigned to the owners of these units? I have seen wording like the latter in other condos' declarations. I am betting the 2016 attorney found there is not, but I do want to double check this.

-- I am glad to see that both the 2016 attorney and I homed in on the same section of the Uniform Condo Act: 448.3-115 and especially Section 3 of 448.3-115. I am not an attorney. Still I read these types of statutes a lot. I find Section 2 and Section 3 of 448.3-115 a bit confusing. They seem redundant to the well-established law on covenants. Maybe 448.3-115 is just to re-inforce the notion that covenants, as given in the Declaration, are to be respected by the courts and all?

-- Unfortunately I think there's an outside chance that some attorney looking to line his/her wallet will side with the board, claiming that "to the extent required by the declaration" can be construed so that the 2020 board is justified in divyving up the assessment in a way different than what the Declaration says. Is that a stretch? A court looks to the plain meaning of the words of a statute first. But interpretation is a huge, enormous topic.

-- I find zero support for the manager's contention that state statute says to use square footage et cetera. Many Property Managers have a high school diploma at best. Your PM may be basing his contention on some truly weird (and legally unacceptable) reading of the Missouri Condo statute. (If I am wrong on this, I will be the first to admit it. But in my experience, it is quite rare for condo/hoa statutes and nonprofit corporation statutes to speak about square footage as a determinant of a part or all of the assessment. The statutes tend to be more generalized in their language and frequently, explicitly defer to the Declaration or Bylaws.)

-- As I think you know, how 'just' or 'unjust' owners feel the Declaration is does not matter. The courts view the terms of HOA/condo declarations as terms of a contract. These are terms to which all agreed when they bought a condo unit. The terms are enforceable to the extent that contract/covenant law allow. Covenants (the Declaration) are the law. If enough people feel strongly that the Declaration should be amended, then they can gather support to complete a formal amendment, per the procedures for amending that the Declaration gives, and where supported by state law.
TerriM8
(Missouri)

Posts:10


09/04/2020 1:27 PM  
-AugustinD- Thank you for such detailed information.

I see nothing in the declaration that says the cost of maintenance of common elements, that benefit certain units, can be assigned to those unit owners. I reviewed again, and have thoroughly reviewed before, and just don't think the statement is in our declarations.

There is a strong possibility that the attorney will side with the board, for the reasons you mentioned. Owners have asked who the attorney is, and the board president stated, "I don't want to say." Owners are wondering if it is a person with a connection to our property manager. For some reason he (PM) thinks this dock expense allocation is unfair to non-slip owners and wants to fix it. (I believe a board member said this to me in an email).




AugustinD


Posts:3900


09/04/2020 1:49 PM  
Posted By TerriM8 on 09/04/2020 1:27 PM
I see nothing in the declaration that says the cost of maintenance of common elements, that benefit certain units, can be assigned to those unit owners. I reviewed again, and have thoroughly reviewed before, and just don't think the statement is in our declarations.
Thank you. I have reviewed the pertinent section of the Condo Act afresh. I come down squarely on the side of the 2016 attorney. I do figure the statute is merely buttressing what the declaration's covenants say. Perhaps there were some lawsuits arguing xyz in other condos' covenants was unfair, and the Missouri legislature wanted to bolster the power of condo covenants, way back when. As in 'the covenants are what they are when it comes to assessments. We in the legislature do not want anymore stupid lawsuits where owners say that, for example covenants requiring non-slip owners to pay for the maintenance of slips is patently unfair. For criminy's sake, owners, before purchase, knew the terms of owning in the condo in advance."

The Missouri Condo Act appears to date to 1983. Maybe things were getting out of hand around, say, the Lake of the Ozarks and too much litigation was coming up? Lobbying forces did their job?

Posted By AnnS12 on 09/04/2020 12:09 PM
There is a strong possibility that the attorney will side with the board, for the reasons you mentioned.
Right now I think it's less likely that the attorney will side with the board. If it were before 1983 and so before the Condo Act became law, maybe the attorney could argue that the covenants are patently unfair. At times courts will throw out covenants they feel are patently unfair. I am not seeing this here, especially with the statute.

Posted By AnnS12 on 09/04/2020 12:09 PM
Owners have asked who the attorney is, and the board president stated, "I don't want to say." Owners are wondering if it is a person with a connection to our property manager.
For what it is worth, for one, owners have a statutory right to review condo records, under the Missouri Condo statute and probably also under Missouri's Nonprofit Corporation statute. The invoices from this attorney are included in the records. In short, owners have a legal right to know who the attorney is.

I do feel the owners sending a letter sooner rather than later will help their cause. It will let the new attorney know they know the law on this and give an inkling to the new attorney and board that there will be legal action if the board does not behave. If this new attorney is worth anything, he will see the letter and take this matter seriously, so as to avoid litigation.

Posted By AnnS12 on 09/04/2020 12:09 PM
For some reason he (PM) thinks this dock expense allocation is unfair to non-slip owners and wants to fix it. (I believe a board member said this to me in an email).
I think that, somehow, the PM needs to be reminded it is unfair to change the terms of a contract (the covenants in this case) after all agreed to the terms (upon buying into the condo). Furthermore, the Missouri Condo statute is clear on this point.

I have not addressed the changing-of-the-budget issue to any great extent. There might be serious legal issues with it as well.

If we are lucky, some of the other HOA/condo veterans here will read the excerpt from the Missouri Condo Act and offer their opinion on whether the 2016 attorney's interpretation is clearly correct.
AugustinD


Posts:3900


09/04/2020 7:33 PM  
Posted By TerriM8 on 09/04/2020 7:42 AM

It has been suggested to the board by owners, that the Special Assessment cannot charge owners differently, as per the declarations and percentage of interest. The special assessment is due Oct 1st. I think the letter to the board is also going to say owners are not going to pay until there is a special meeting, special assessments and future assessments are allocated per the declaration. The board does have the power to charge a special assessment, but again they are not charging consistent with the declarations. Seems this legal opinion they are waiting on for the 2021 dock issue would also be needed to determine owners payment for the special assessment on the docks. Am I correct in my logic?
In my opinion, and assuming you have scoured the declaration on the subject of how Special Assessments are to be paid, yes, you are correct.

Posted By TerriM8 on 09/04/2020 7:42 AM

I personally contacted the board (by email), as have others about a special meeting. At this time they refuse. Maybe one letter, signed by many owners will help them change their mind.
Do your Bylaws give directions for how to call a Special Meeting? If not, here is what the Missouri Condo Act says you need:

"48.3-108. Meetings. — A meeting of the association shall be held at least once each year. Special meetings of the association may be called by the president or by twenty percent, or any lower percentage specified in the bylaws, of either the executive board or the unit owners. Not less than ten nor more than sixty days in advance of any meeting, the secretary or other officer specified in the bylaws shall cause notice to be hand-delivered or sent prepaid by United States mail to the mailing address of each unit or to any other mailing address designated in writing by the unit owner. The notice of any meeting shall state the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the declaration or bylaws, any budget changes, and any proposal to remove a director or officer."

­­
Posted By TerriM8 on 09/04/2020 7:42 AM
I do not want to be charged late fees or interest for not paying the Special Assessment on time. I am tempted to pay the amount that it should be based on what the declarations say, not on what the board has determined my fee to be. Is this the reasonable thing to do?
If you use the Declaration's amount, would you be paying more than what the Board is asking? If so, fine. If not, then unfortunately it is probably not the lawful thing to do. The courts expect condo/hoa owners to pay what the board asks, and if the owners do not like it, then they have to take the condo/hoa to court.

Posted By TerriM8 on 09/04/2020 7:42 AM
This situation happened so fast and so much has occurred, I feel my information may be convoluted.
I have not found it convoluted (quite the contrary), especially given how quickly you respond. To me it sounds like you have a much better handle on how condos operate than most people.
AugustinD


Posts:3900


09/04/2020 7:38 PM  
Posted By AugustinD on 09/04/2020 7:33 PM
Posted By TerriM8 on 09/04/2020 7:42 AM


Posted By TerriM8 on 09/04/2020 7:42 AM

I personally contacted the board (by email), as have others about a special meeting. At this time they refuse. Maybe one letter, signed by many owners will help them change their mind.
Do your Bylaws give directions for how to call a Special Meeting? If not, here is what the Missouri Condo Act says you need:

"48.3-108. Meetings. — A meeting of the association shall be held at least once each year. Special meetings of the association may be called by the president or by twenty percent, or any lower percentage specified in the bylaws, of either the executive board or the unit owners. Not less than ten nor more than sixty days in advance of any meeting, the secretary or other officer specified in the bylaws shall cause notice to be hand-delivered or sent prepaid by United States mail to the mailing address of each unit or to any other mailing address designated in writing by the unit owner. The notice of any meeting shall state the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the declaration or bylaws, any budget changes, and any proposal to remove a director or officer."


In addition, the Missouri Nonprofit Corporation Act says:

355.236. Special meetings. — 1. A corporation with members shall hold a special meeting of members:

  (1) On call of its board or the person or persons authorized to do so by the articles or bylaws; or

  (2) Except as provided in the articles or bylaws of a public benefit corporation which is a church or convention or association of churches if the holders of at least five percent of the voting power of any corporation sign, date, and deliver to any corporate officer one or more written demands for the meeting describing the purpose or purposes for which it is to be held.

  2. The close of business on the thirtieth day before delivery of the demand or demands for a special meeting to any corporate officer is the record date for the purpose of determining whether the five-percent requirement of subsection 1 of this section has been met.

  3. If a notice for a special meeting demanded under subdivision (2) of subsection 1 of this section is not given pursuant to section 355.251 within thirty days after the date the written demand or demands are delivered to a corporate officer, regardless of the requirements of subsection 4 of this section, a person signing the demand or demands may set the time and place of the meeting and give notice pursuant to section 355.251.

  4. Special meetings of members may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings shall be held at the corporation's principal office, or at such other location as may be specified by the board of directors.

  5. Only those matters that are within the purpose or purposes described in the meeting notice required by section 355.251 may be conducted at a special meeting of members.

­­--------

See https://revisor.mo.gov/main/OneSection.aspx?section=355.236&bid=19200&hl=

Hence per the Nonprofit Corporation Act, I think only 5% of the members are needed to successfully call a Special Meeting.

Of course, you may have to threaten the board to get it to comply with the statute.
TerriM8
(Missouri)

Posts:10


09/05/2020 12:38 PM  
Again, thanks so much.

Do I understand correctly, that the MO Statute on Special Meetings prevails over our bylaws? Our bylaws state that the president of the BOD can call a meeting, or a petition signed by two-thirds of the owners. We are 64 owners, so it would be quicker and simpler to have 20% call for a meeting (per the statute). Is this done in the form of a petition? I supposed we would refer to the MO Statute on Special Meetings? Then is the board obligated to call a meeting in the specified time frame.
The information about special meeting per the Nonprofit Corporation Act is also an option for our membership.
Does either one or the other allow for a meeting sooner. I see the guidelines for having a meeting. Does one hold more weight than the other (Mo Statute or NonProfit Act)?
I read that under the NonProfit Corporation Act that if a special meeting is not given 30 days from demand (when delivered to Corporate office) that the person signing the demand may set the meeting, give notice etc. What happens then. I guess the meeting is held?

Owners feel that is where we are- calling a special meeting.

What if board still refuses to have a meeting if we follow Mo Statutes?

Thanks.
JohnC46
(South Carolina)

Posts:9877


09/05/2020 1:28 PM  
Terri

One thing about Special Meetings. The purpose of such has to be clearly defined. It cannot be a bytching session. In your case it would have to be confined to the equal share of dock costs, assuming I understand the issue.

Also any Amendments made must follow yours docs as to amount of owners needed to approve. It cannot be just a % of those in attendance at the meeting voting to change.
AugustinD


Posts:3900


09/05/2020 1:33 PM  
Posted By TerriM8 on 09/05/2020 12:38 PM
Do I understand correctly, that the MO Statute on Special Meetings prevails over our bylaws Our bylaws state that the president of the BOD can call a meeting, or a petition signed by two-thirds of the owners.
In this case, yes the Missouri Condo statute prevails over your Bylaws. Per the Condo statute, if at least 20% of the owners ask for the Special Meeting, then the Board must call this meeting. But more below on this and how the Nonprofit Corp Act comes into play.
Posted By TerriM8 on 09/05/2020 12:38 PM
We are 64 owners, so it would be quicker and simpler to have 20% call for a meeting (per the statute). Is this done in the form of a petition? I supposed we would refer to the MO Statute on Special Meetings? Then is the board obligated to call a meeting in the specified time frame.
Per the Condo Act, you need 13 owners to ask for the meeting. Here is how I would proceed:

-- Write a letter stating the following: Dear Directors, the following 13 owners request a Special Meeting of the Membership. Pursuant to the Missouri Condominium Act, Section 48.3-108, and the Missouri Nonprofit Corporation Act, Section 355.236, please coordinate this Special Meeting. The sole item on the agenda is, "Assessments Inconsistent with the Declaration and the Missouri Condominium Act." Please let us know of your intent to schedule this Special Meeting and so comply with the Missouri Condominium Act by September 10, 2020. Thank you for your assistance, [list at least 13 owners' names, addresses, phone numbers and email addies; have all sign in ink]

-- Send the letter registered mail, return receipt requested, to the registered agent of the condominium and the President. Consider cc'ing the condo attorney.
Posted By TerriM8 on 09/05/2020 12:38 PM
The information about special meeting per the Nonprofit Corporation Act is also an option for our membership. Does either one or the other allow for a meeting sooner.
The timeline is as specified in the statutes. In other words, if the Board wants to monkey with your group, it could set the meeting well after October 1.
Posted By TerriM8 on 09/05/2020 12:38 PM
I see the guidelines for having a meeting. Does one hold more weight than the other (Mo Statute or NonProfit Act)?
If there is a conflict between statutes, the one more specific to the situation controls. But "the situation" is your group's desire to have a Special Meeting, and this is covered in both statutes. When it comes to how many owners must request this for the request to have legal clout, in my opinion the magic number is 5%.

But I advise getting at least 13 owners to sign, for some insurance. If you cannot get 13, then get at least four to sign. Four is slightly greater than 5% of the membership's 64 owners.

I will do some calculations of statutorily required timeframes in a subsequent post.
Posted By TerriM8 on 09/05/2020 12:38 PM
I read that under the NonProfit Corporation Act that if a special meeting is not given 30 days from demand (when delivered to Corporate office) that the person signing the demand may set the meeting, give notice etc. What happens then. I guess the meeting is held?
If the board fails to give notice for the special meeting within 30 days after the demand for the Special Meeting is received by the President, then per the Nonprofit Corp statute, your group can go ahead and send out notices, using Missouri Code section 355.251 for details (and maybe a bit of counsel from an attorney). See https://revisor.mo.gov/main/OneSection.aspx?section=355.251&bid=19203&hl=

At the same time, the Condo Act is stricter in some ways. The Condo Act gives the Board zero choice about whether to send out notices for a Special Meeting. But per the Condo Act, this does not have to be done by any particular date. What would a court expect? A court would expect the Board to be reasonable about this.

The Condo Act gives the board some room to monkey around. The Nonprofit Corp Act, less so. The Board has to comply with both, period, unless there is a bona fide conflict between the two statutes.
Posted By TerriM8 on 09/05/2020 12:38 PM
What if board still refuses to have a meeting if we follow Mo Statutes?
In my opinion a court would expect the owners to send out notices and hold the meeting on their own, complying with this option exactly as given in the Missouri Nonprofit Corp Act.

Document all communications with the Board. Get a three-ring binder and stick copies of the communications in it. For emails, save the email on the server.

There is an outside chance that, if your group indicates it knows the law, the Board will capitulate. If you all send the first letter I suggested above, I would actually cite the Missouri statutes and the 2016 attorney's opinion. I think the Board and its attorney need to know you all are serious and well-studied on this matter, so they do not pussyfoot around and know they are in for a fight.

I have some thoughts about the manager but will keep them to myself for now, in case I missed something here.
AugustinD


Posts:3900


09/05/2020 1:47 PM  
Posted By AugustinD on 09/05/2020 1:33 PM
The timeline is as specified in the statutes.
Do your Bylaws say anything about the date the Board has to set for a Special Meeting? To review what the statutes say:

Missouri Condo Statute
"Not less than ten nor more than sixty days in advance of any meeting, the secretary or other officer specified in the bylaws shall cause notice to be hand-delivered or sent prepaid by United States mail to the mailing address of each unit or to any other mailing address designated in writing by the unit owner.

Missouri Nonprofit Corp Statute:
"If a notice for a special meeting demanded under subdivision (2) of subsection 1 of this section is not given pursuant to section 355.251 within thirty days after the date the written demand or demands are delivered to a corporate officer, regardless of the requirements of subsection 4 of this section, a person signing the demand or demands may set the time and place of the meeting and give notice pursuant to section 355.251."

Assuming the Board does not cooperate, the earliest your group could send notice for a Special Meeting is 30 days after receipt of the demand letter. Notice has to be sent "no fewer than ten, or if notice is mailed by other than first-class or registered mail, thirty, nor more than sixty days before the meeting date;" Here's a possible timeline:

Sep 7: Send demand letter. President receives it on Sep 14 (per USPS receipt returned to your group).

⎪-day clock starts. 30 days go by.]

Oct 15 Set date for meeting on Oct 25. Send notices on Oct 15 to all owners by first class mail and flyers under doors. Email owners also. Document sending out this notice.

Stay tuned and see if any of the HOA veterans have more input on what to put on the agenda for this Special Meeting or how to proceed. The membership has only so much power. But this includes recalling directors. Your group may want to consider recalling all directors, but this puts a lot of legal burden on your group to 'do this right.' Many a recall has failed because owners did not dot every i and cross every t.
JohnC46
(South Carolina)

Posts:9877


09/05/2020 3:03 PM  
I am not sure but I believe the First Order of a Special Meeting is to appoint someone to preside over the meeting. I would collect a few bucks from each like thinking person and hire an attorney to present/represent my group at the meeting. Likely the BOD may come armed with an attorney and try to sidetrack the meeting.

I might even begin with a letter requesting the Special Meeting from a local lawyer. It will have more weight than any Internet play lawyer person.
JohnC46
(South Carolina)

Posts:9877


09/05/2020 3:04 PM  
Posted By JohnC46 on 09/05/2020 3:03 PM
I am not sure but I believe the First Order of a Special Meeting is to appoint someone to preside over the meeting. I would collect a few bucks from each like thinking person and hire an attorney to present/represent my group at the meeting. Likely the BOD may come armed with an attorney and try to sidetrack the meeting.

I might even begin with a letter requesting the Special Meeting from a local lawyer. It will have more weight than any Internet play lawyer person.




ADD ON
This advice from one that thinks most lawyers are scumbags but one of them is my scumbag, not yours.
TerriM8
(Missouri)

Posts:10


09/05/2020 6:33 PM  
Our bylaws state about Special Meetings: Any such meetings shall be held at such place, date, and time as the President determines within thirty days after receipt by the president of such resolution or petition.

As I have been talking to other owners- I have asked,"What is our goal, what do we want from the outcome of the meeting?" So we want our board to follow the declarations and Mo Condo Law in regards to our dock assessment so that it is figured correctly according to percentage of interest - for the Special Assessment and our 2021 assessment.
However, they are in the midst of seeking another legal opinion, I suppose that is already in the works. I think they will tell us they are waiting on the legal opinion, or they may have it by the time a meeting occurs.
What happens then if the attorney gives an opinion different than the one from 2016? Does it become a legal battle for a judge to decide, if pursued?

I learned just this evening, just now, that the board wants this new attorney to look over "boat slip agreements," that the slip owners have when they purchased slips. (I am quite sure the other attorney (from 2016) did this as well). However, it is not mentioned in his opinion.
The slip agreement has the usual lingo about location of slip, using it for intended purposes, can only transfer to another member in good standing etc. There is a statement that says Fees for Maintenance: Second Party (slip owner) shall pay to First Party (Association) fees for upkeep of boat dock. Currently, First party estimates that each owner's pro-rata share of estimated expenses is $0.00 (zero). This is a one time agreement, not something owners renew each year. Does this change the situation, in your opinion? I would be curious to know if this makes a difference. I do recall a long-time owner saying one time, that all agreements say $0 because they had to be in line with the declarations and Condo Law about our common elements.

Thanks

TerriM8
(Missouri)

Posts:10


09/05/2020 6:36 PM  
Thank you. So does the Board President not reside at a Special Meeting?
TerriM8
(Missouri)

Posts:10


09/05/2020 7:24 PM  
We can get the 13 signatures. Can we do this electronically or digitally? I wonder if that would be allowed? A few of the owners live a distance away, so just wondering.

Thanks again for the help offered.
AugustinD


Posts:3900


09/05/2020 7:33 PM  
Posted By TerriM8 on 09/05/2020 6:33 PM
Our bylaws state about Special Meetings: Any such meetings shall be held at such place, date, and time as the President determines within thirty days after receipt by the president of such resolution or petition.
I would reference the Bylaw section in the letter asking for the Special Meeting and say no more about the Bylaw. Then see what happens (assuming your group goes forward with its request/demand for a Special Meeting).

Posted By TerriM8 on 09/05/2020 6:33 PM

As I have been talking to other owners- I have asked,"What is our goal, what do we want from the outcome of the meeting?" So we want our board to follow the declarations and Mo Condo Law in regards to our dock assessment so that it is figured correctly according to percentage of interest - for the Special Assessment and our 2021 assessment.
I think you are asking about strategizing? I do not have suggestions for same, other than informing the Board that they are violating covenants and asking the Board to cease doing so (and so revert back to the original, approved budget's plan). What I am trying to convey is your legal rights and how to see that they are enforced. There are a few ways to proceed. You asked about getting a Special Meeting. I gave you the steps. I do not know if the Meeting would accomplish what you want. It might.

Posted By TerriM8 on 09/05/2020 6:33 PM
However, they are in the midst of seeking another legal opinion, I suppose that is already in the works. I think they will tell us they are waiting on the legal opinion, or they may have it by the time a meeting occurs.

What happens then if the attorney gives an opinion different than the one from 2016? Does it become a legal battle for a judge to decide, if pursued?
Short answer: Per the Missouri Condo statute, yes.

Long answer: Your group, preferably through an attorney it hires, would send a series of formal demand letters to the Board asking it to adhere to what the Declaration says re assessments or your group (using an attorney) will take the Board to Court, pursuant to Missouri Condo Act Section 448.4-117. This section reads as follows: "Effect of violations on rights of action — attorney's fees. — If a declarant or any other person subject to sections 448.1-101 to 448.4-120 fails to comply with any provision hereof or any provision of the declaration or bylaws, any person or class of persons adversely affected by such failure to comply has a claim for appropriate relief. Punitive damages may be awarded in the case of a willful, wanton and malicious failure to comply with any provision of sections 448.1-101 to 448.4-120. The court, in an appropriate case, may award reasonable attorney's fees."

Your group's attorney and the condo's attorney will have exchanges, in an effort to avoid court. A judge will expect the two attorneys to do all they can to keep this out of court.

If this goes to court and your group wins, t's almost guaranteed that the judge will not award your group the cost of its attorney's fees. It's a rule of law in the United States that judges nearly always exercise.

Ballpark: The initial cost of the attorney will be on the order of $3000. This is just the cost for him or her to review your governing docs and state law and opine about the strength of your claims. Having the attorney send letters of demand will likely run another $2000 or so. Filing in court will run another few thousand dollars.
­
Posted By TerriM8 on 09/05/2020 6:33 PM

I learned just this evening, just now, that the board wants this new attorney to look over "boat slip agreements," that the slip owners have when they purchased slips. (I am quite sure the other attorney (from 2016) did this as well). However, it is not mentioned in his opinion.
The slip agreement has the usual lingo about location of slip, using it for intended purposes, can only transfer to another member in good standing etc. There is a statement that says Fees for Maintenance: Second Party (slip owner) shall pay to First Party (Association) fees for upkeep of boat dock. [snip stuff about $0 being charged; not sure I understand]
If the essence of the agreement is to charge owners in a way inconsistent with the Declaration, then the agreement is invalid, period. I cannot tell exactly what's going on with this alleged "agreement."

Remember, the Board and owners cannot change the original "contract" (meaning the covenants), using a separate agreement or any other means, without a vote of the owners to amend the original contract. The vote in favor of the amendment must be whatever your Declaration or the Condo Act requires. Generally it is difficult to get amendments passed.

Regarding who presides at this Special Meeting: Let's wait until you actually send a request for the meeting to the Board.


AugustinD


Posts:3900


09/05/2020 7:37 PM  
Posted By TerriM8 on 09/05/2020 7:24 PM
We can get the 13 signatures. Can we do this electronically or digitally?
This is a huge legal topic but I understand Missouri allows electronic signatures. Because it would take hours to research, I suggest you go ahead and get the signatures electronically and roll the dice that the board will not question this.

Here's my quick google result on the subject:

Missouri has adopted the Uniform Electronic Transactions Act (“UETA”). ... The UETA provides that “[a] record or signature shall not be denied legal effect or enforceability solely because it is in electronic form.” § 432.230.
TerriM8
(Missouri)

Posts:10


09/06/2020 1:45 PM  
Thanks all for your expertise in this matter.
I especially appreciate your insight AugistinD. It has been extremely helpful. Owners will be mailing a letter requesting the Special Meeting this week.
I will update with the outcome.

Thanks again.
JohnC46
(South Carolina)

Posts:9877


09/06/2020 2:43 PM  
I saw that in CA the President of the BOD runs the meeting unless he appoints another person to do so. Not sure about other states but would not surprise me if most states are the same.
FrankL10
(New Jersey)

Posts:2


09/09/2020 7:56 AM  
Don't need a legal opinion to establish what the Board did is dishonest (switching the budget that was approved). At the very least the minutes of the meeting should be disputed. In the meantime a group of unhappy owners should review by-laws to determine of an emergency meeting can be held.
TerriM8
(Missouri)

Posts:10


09/16/2020 12:11 PM  
Update: A group of owners did send a letter to the HOA Board and Management Company requesting a special meeting about dock assessments and budget.

1. On Sept. 10th, the board and management company received the letter from owners requesting the special meeting. On this same date, the board shared the new legal opinion on dock assessments and allocation. This attorney evaluated the declarations and came to the same conclusion as the 2016 attorney- that docks are assessed according to percentage of interest in the common elements.


2. The board is looking over the budget, and claim they did not know that the budget had been changed, and have no idea why the management company changed this. Who really knows how all that transpired.
The board will be talking with Management company to fix this so the budget that was approved is the one that will be used for 2021.

The board is talking of having a Special Meeting by Oct. 10th, however, both issues may be resolved by then.

I cannot thank all of you enough for the good advice received. We followed through with suggestions, and it appears that we may be getting somewhere with the board.

Unfortunately, it leads to some concerns about our management company. Seems they have given the board some poor guidance, and have maybe altered the budget.

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