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Subject: Board Member Refuses to Act
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FrankH5
(Pennsylvania)

Posts:7


01/05/2021 5:56 AM  
We have a 3-member board with one vacancy. One board member refuses to agree to anything and has always pursued his personal agenda rather than serving the best interests of the HOA community. The 2/3 vote among the homeowners to remove him from the board failed by 9 votes. The 5 most recent board members who had worked with him resigned because of his unprofessional behavior towards others and him not working in the best interests of the HOA. The recalcitrant board member refuses to agree on anything. The property manager served notice of the open board seat and 3 excellent candidates responded with impeccable credentials. One board member said that he would accept any of the three candidates; the recalcitrant board member is silent. He will not approve nor disapprove any of the three board candidates. Aside from holding a general election to elect the third board member or calling a special meeting in the hope of getting 2/3 of the attendees to vote for his removal, are there any other courses of action that we should consider? There is nothing in the bylaws that addresses this type of situation. Any ideas?
CathyA3
(Ohio)

Posts:1484


01/05/2021 6:27 AM  
Posted By FrankH5 on 01/05/2021 5:56 AM
We have a 3-member board with one vacancy. One board member refuses to agree to anything and has always pursued his personal agenda rather than serving the best interests of the HOA community. The 2/3 vote among the homeowners to remove him from the board failed by 9 votes. The 5 most recent board members who had worked with him resigned because of his unprofessional behavior towards others and him not working in the best interests of the HOA. The recalcitrant board member refuses to agree on anything. The property manager served notice of the open board seat and 3 excellent candidates responded with impeccable credentials. One board member said that he would accept any of the three candidates; the recalcitrant board member is silent. He will not approve nor disapprove any of the three board candidates. Aside from holding a general election to elect the third board member or calling a special meeting in the hope of getting 2/3 of the attendees to vote for his removal, are there any other courses of action that we should consider? There is nothing in the bylaws that addresses this type of situation. Any ideas?




This isn't all that unusual, unfortunately. However, Mr. Uncooperative is outvoted by the other two, so he won't be able to prevent things from moving forward. Offhand I can't think of anything that requires a unanimous vote from the board, so who cares if he doesn't accept something? His choice. It can be unpleasant to have to work around a third board member who is pulling in the opposite direction (ask me how I know this) but it can be done.

(The trick to dealing with folks like him is to make things uninteresting. They often thrive on conflict and controversy, so you want to make any communication with him brief, bland, factual and unemotional. No back and forth arguing. In board meetings, the response is "thank you for your comments" and then moving on.)

The only thing the other two board members should watch for is to see if he's developing a "following" among homeowners. It's also not unusual for a group of clueless folks to take over the board, and that's when trouble happens. (Ask me how I know this.) The only solution to this is well-informed homeowners who take an interest in HOA affairs and who will vote for capable people. The board should be using any available opportunity to educate homeowners - websites, newsletters, and the like. Avoid social media, though, since it's more often a source of discord and misinformation.
ChrisE8
(New York)

Posts:366


01/05/2021 6:31 AM  
Your bylaws don't allow you to hold an owners' meeting at which the owners would vote for directors (including the 3rd, vacant seat)?
JohnT38
(South Carolina)

Posts:452


01/05/2021 6:41 AM  
Posted By FrankH5 on 01/05/2021 5:56 AM
We have a 3-member board with one vacancy. One board member refuses to agree to anything and has always pursued his personal agenda rather than serving the best interests of the HOA community. The 2/3 vote among the homeowners to remove him from the board failed by 9 votes. The 5 most recent board members who had worked with him resigned because of his unprofessional behavior towards others and him not working in the best interests of the HOA. The recalcitrant board member refuses to agree on anything. The property manager served notice of the open board seat and 3 excellent candidates responded with impeccable credentials. One board member said that he would accept any of the three candidates; the recalcitrant board member is silent. He will not approve nor disapprove any of the three board candidates. Aside from holding a general election to elect the third board member or calling a special meeting in the hope of getting 2/3 of the attendees to vote for his removal, are there any other courses of action that we should consider? There is nothing in the bylaws that addresses this type of situation. Any ideas?




Just to clarify, are you saying there are now just two Board members left including the problem child?
FrankH5
(Pennsylvania)

Posts:7


01/05/2021 6:51 AM  
There are currently only 2 board members, including Mr. Uncooperative. All votes are one for; and one against. Thus, since there is no majority vote, nothing gets approved by the board.
FrankH5
(Pennsylvania)

Posts:7


01/05/2021 6:51 AM  
Yes, bylaws allow for such action. Looking for an alternative, if one exists.
FrankH5
(Pennsylvania)

Posts:7


01/05/2021 6:53 AM  
That is correct. There are currently only 2 board members, including Mr. Uncooperative. He refuses to approve those members who have volunteered to serve on the board as the 3rd member.
CathyA3
(Ohio)

Posts:1484


01/05/2021 6:59 AM  
Maybe I misread this. If you only have two board members now (Mr. Uncooperative and Mr. Reasonable) plus one vacancy, then yes, you're dead in the water if he doesn't agree on anything.

You need to get more of the community on your side, so beef up the education program so that owners understand the consequences of this situation.

You may want to try re-phrasing the motion to appoint a new board member and force him to object each time rather than affirmatively agree. Get it in the minutes so that you have hard evidence of his refusal to do his job. When the board fails to pass any other motions in board meetings, get it in the minutes. Make sure minutes are available to the entire community (on a website or via email).

The nuclear option is for the second board member to resign. You then will not have a functioning board and will need to go into receivership. This is an expensive reality for communities in such a position, and it involves paying someone to perform the functions of the board. Receivers are well paid and can even earn more per hour than a lawyer, and it's not unusual for assessments to double. In addition, homeowners will have no say in how their community is run while in receivership. The community should be aware that this could be in play if they don't solve the problem of the dysfunctional board member, and it may shake loose the necessary votes to remove the guy.

If Mr. Uncooperative's term in office will end within a year, you may want to limp along and replace him via the normal election process. If you're stuck with him for longer than that, educate the community about receivership and try to remove him again. How close was the vote before? If it's just a matter of a few percent and you have urgent matters being delayed, I'd go this route.

There are always lawsuits for negligence and the like. These are expensive and the outcome is not guaranteed, so I don't recommend this route except in specific cases (ie. a slam-dunk issue such as a clear Fair Housing violation and you're 100% committed to remaining in your community).

Last resort for you personally: move. This should always be an option if there are long-standing issues that can affect the resale value of your home.
FrankH5
(Pennsylvania)

Posts:7


01/05/2021 7:08 AM  
Cathy, appreciate your comments! Unfortunately, he has another 2 years to serve on the board. I do like the idea of having everything documented in the board minutes. That may be the only way, at least from an inexpensive financial perspective, to educate the community about his refusal to act in the best interests of the homeowners.

Thanks again.
JohnC77
(Washington)

Posts:434


01/05/2021 8:17 AM  
IF I were the property manager, excuse me, Community Association Manager, in this situation I would follow the directive of the Bylaws which probably states the association SHALL be governed by a Board of three, and set up an election to fill the vacant seat.

What is "Mr Reluctant" going to do, sue?
ChrisE8
(New York)

Posts:366


01/05/2021 9:34 AM  
Posted By JohnC77 on 01/05/2021 8:17 AM
IF I were the property manager, excuse me, Community Association Manager, in this situation I would follow the directive of the Bylaws which probably states the association SHALL be governed by a Board of three, and set up an election to fill the vacant seat.

What is "Mr Reluctant" going to do, sue?




Agreed 100%. What's so hard about calling an owner meeting to hold an election?
FrankH5
(Pennsylvania)

Posts:7


01/05/2021 9:50 AM  
We are aware of that alternative and from the responses received, it appears to be the only one available to the homeowners/HOs. Unfortunately, there is a financial cost associated with this action and the HOs have grown weary of his self-interest projects and refusal to abide by the bylaws, UPCA, and other governing instruments. It is clear from this self-serving board member that he is doing everything within his power to prevent a 3rd board member being elected as then he would be in the minority. By way of history, when earlier board openings occurred, he simply appointed a personal friend of his to the board to get his way. When his two friends disagreed with him, he simply said "I'm the president of the board and I override your two votes." They were weak-kneed and simply let him get his way which is how we got into this predicament.

Thanks to everyone for their input.
GenoS
(Florida)

Posts:4242


01/05/2021 11:57 AM  
Posted By FrankH5 on 01/05/2021 6:51 AM
There are currently only 2 board members, including Mr. Uncooperative. All votes are one for; and one against. Thus, since there is no majority vote, nothing gets approved by the board.

Forgive me because I know you're not in Florida, but perhaps there's something in PA law that's similar. In Florida corporations are required to have a minimum of 3 directors. If PA has a similar requirement then being in violation of state law might be persuasive to the owners that the recalictrant director needs to go. Sounds like all you need are an additional 5 people to get the number you need.

Also, in Florida (may not be so where you are), a meeting isn't required to hold a recall. It can be done by written instrument (a petition).
NpS
(Pennsylvania)

Posts:4005


01/05/2021 1:10 PM  
Hey Geno. PA does have something similar.

Under Condo law, minimum of 3 Board members. 68 - 3303(e). Same for HOAs under 68 - 5303(e).

Also under Condo law, Bylaws must state the number of Board positions available. 68 - 3306(a). Same for HOAs under 5306(a). This is typically stated in the Bylaws as a range - something like "minimum of 3 and maximum of 7".

So first place to look Frank is your Bylaws to see what the allowed range is.

As far as the minimum of 3 is concerned, I've seen a number of PA HOAs/Condos that dropped down to 2. Every vote had to be unanimous for anything to pass, but there is no penalty under PA law for an HOA that drops down to 2. It can go on for years that way. As you already know, miserable if the 2 can't agree on anything.

Best suggestion to Frank. The same owners who were uncomfortable voting to remove a Board member might be a lot more comfortable voting to add additional Board members. Looks like you were close the last time. Maybe adding rather than removing can get you over that emotional hump that some owners might be feel about firing a neighbor.

If you can get the Board up to 5 as Geno says, you can probably break the logjam, get things moving, and maybe even get rid of the inconvenience in 2 years when the seat is open.

Sikubali jukumu. Read all posts at your own risk.
JohnC46
(South Carolina)

Posts:10366


01/05/2021 1:40 PM  
I say review your Bylaws as to BOD size. Ours say 3 to 7 and we have always settled on 5.

Either call for a Special Election to elect BOD Members to the amount specified or wait until Annual Elections to have an election to increase the BOD size at that time.
FrankH5
(Pennsylvania)

Posts:7


01/06/2021 9:16 AM  
Thanks for everyone's input. Greatly appreciated.
AugustinD


Posts:4828


01/06/2021 9:32 AM  
Posted By NpS on 01/05/2021 1:10 PM
Hey Geno. PA does have something similar.
Under Condo law, minimum of 3 Board members. 68 - 3303(e). Same for HOAs under 68 - 5303(e).
The exact wording from the Pa Condo Act is:

"Not later than the termination of any period of declarant control, the unit owners shall elect an executive
board of at least three members at least a majority of whom must be unit owners, except that the
executive board may consist of two members, both of whom must be unit owners, if the
condominium consists of two units."

The Pa HOA Act says similar. I'd say the requirement for three is a one-time requirement, occurring "not later than the termination of any period of declarant control."

The Pa Nonprofit Corporation Act states:

"5723. Number of directors.

The board of directors of a nonprofit corporation shall consist of one or more members. The number of directors shall be fixed by or in the manner provided in the bylaws. If not so fixed, the number of directors shall be the same as that stated in the articles or three if no number is so stated."
JohnC46
(South Carolina)

Posts:10366


01/06/2021 11:26 AM  
You posted from PA:
The board of directors of a nonprofit corporation shall consist of one or more members. The number of directors shall be fixed by or in the manner provided in the bylaws. If not so fixed, the number of directors shall be the same as that stated in the articles or three if no number is so stated."

SC Corporate laws, rules, regulations, etc. are riddled with the expression:

"unless Corporate Bylaws say different."

SC believes in letting Corporations run as they wish to run versus be controlled by the state.
AugustinD


Posts:4828


01/06/2021 12:13 PM  
Posted By JohnC46 on 01/06/2021 11:26 AM

SC believes in letting Corporations run as they wish to run versus be controlled by the state.
-- I wouldn't quite put it like this. For example, nationwide state nonprofit corporation acts frequently have certain requirements for the Bylaws.

-- I see nothing that particularly distinguishes SC from the rest of the country, with regard to its HOA/condo and corporate laws.
JohnC46
(South Carolina)

Posts:10366


01/06/2021 12:41 PM  
Posted By AugustinD on 01/06/2021 12:13 PM
Posted By JohnC46 on 01/06/2021 11:26 AM

SC believes in letting Corporations run as they wish to run versus be controlled by the state.
-- I wouldn't quite put it like this. For example, nationwide state nonprofit corporation acts frequently have certain requirements for the Bylaws.

-- I see nothing that particularly distinguishes SC from the rest of the country, with regard to its HOA/condo and corporate laws.



As I said:

SC Corporate laws, rules, regulations, etc. are riddled with the expression:

"unless Corporate Bylaws say different."

I say this allows the BOD to run the corporation especially as they can make Bylaws. The State of SC does not breathe down the necks of corporations.
AugustinD


Posts:4828


01/06/2021 1:21 PM  
Posted By JohnC46 on 01/06/2021 12:41 PM
The State of SC does not breathe down the necks of corporations.
To my knowledge, nor does any other state. The nonprofit corporation statutes of every state of which I can think is 'riddled with' language deferring to the corporation's governing documents.
NpS
(Pennsylvania)

Posts:4005


01/12/2021 7:27 PM  
100 years ago, most States required any corporation to provide specifics in corporate filings about the nature and activities of the proposed corporation. Some States actually had an approval/rejection process for applications.

Today, the filings are a mere formality. The only thing of practical relevance that's recorded is the name and location where legal service can be delivered. Also, whether legal protection under corporate laws is active or lapsed. Essentially, a government data base like many others.

Sikubali jukumu. Read all posts at your own risk.
AugustinD


Posts:4828


01/12/2021 7:39 PM  
The Articles of Incorporation are typically filed with the Secretary of State. From my reading, the Articles have significant legal force.
NpS
(Pennsylvania)

Posts:4005


01/12/2021 8:06 PM  
Posted By AugustinD on 01/12/2021 7:39 PM
The Articles of Incorporation are typically filed with the Secretary of State. From my reading, the Articles have significant legal force.



Yes, the Secretary of State's Office is where the database filings I talked about are made. Just like many government databases, they do have "legal significance", a phrase that I prefer over "legal force" because it generally requires the application of other laws for anything to happen.

My point was that 100 years ago, there was more significance and restrictions on what could be filed. Today's filings provide much less information and anyone can buy a fill-in-the-blank form at an office supplies store, and establish a corporation with the State in an hour or so. Nowhere near as complicated and restrictive as in the distant past.

Sikubali jukumu. Read all posts at your own risk.
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