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Subject: Homeowner that is breaking CCRs
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Author Messages
AnyaR
(Georgia)

Posts:26


05/08/2021 4:13 PM  
I have a Homeowner that is running business out of his garage he is jeopardizing safety of the rest of the Homeowners and possibility of raising our premium insurance. I have sent him a letter of a warning and I gave him 10 days to correct that problem. What is my next step and how do I pursue with this?


KerryL1
(California)

Posts:8705


05/08/2021 4:31 PM  
What's your role in your HOA, Anya? Owner? Property Mgr.? Board member?

Is there some sort of rule or covenant against this type of home business in you AOA? If so, what do they say about enforcing rules? They will tell you your next step. If they say nothing about enforcement, do GA statutes help you? Or maybe your local statues prohibit them?
JohnC46
(South Carolina)

Posts:11638


05/08/2021 4:32 PM  
Posted By AnyaR on 05/08/2021 4:13 PM
I have a Homeowner that is running business out of his garage he is jeopardizing safety of the rest of the Homeowners and possibility of raising our premium insurance. I have sent him a letter of a warning and I gave him 10 days to correct that problem. What is my next step and how do I pursue with this?





Why the I versus WE? Are you the dictator? Are you not a team player? That aside more information is required.
AnyaR
(Georgia)

Posts:26


05/08/2021 5:37 PM  
My role is president, treasurer and secretary I run Community all by myself. In our CCRs it says no business at all he is breaking five rules and it does not say anything else besides that.
AnyaR
(Georgia)

Posts:26


05/08/2021 5:40 PM  
Everybody quit on me after I told them that everyone pays dues including myself and that I am going strictly by our CCRs.
JohnT38
(South Carolina)

Posts:790


05/08/2021 6:06 PM  
Posted By AnyaR on 05/08/2021 5:40 PM
Everybody quit on me after I told them that everyone pays dues including myself and that I am going strictly by our CCRs.




This could be a rare acception but one has to wonder if your 'board' is even legit since there is only you.
KerryL1
(California)

Posts:8705


05/08/2021 6:12 PM  
I think JohnT's right. You need to talk with your HOA attorney about this!

What size is your HOA?
AugustinD


Posts:1855


05/08/2021 8:09 PM  
Posted By AnyaR on 05/08/2021 5:40 PM
Everybody quit on me after I told them that everyone pays dues including myself and that I am going strictly by our CCRs.
Please confirm: Have you attempted to appoint a second director? Then after there are two directors, the two of you vote to appoint a third director; and so on until hopefully all seats on the board are filled. I believe any competent HOA attorney would say filling seats on the board should be your first priority.
JohnT38
(South Carolina)

Posts:790


05/09/2021 5:18 AM  
Posted By AugustinD on 05/08/2021 8:09 PM
Posted By AnyaR on 05/08/2021 5:40 PM
Everybody quit on me after I told them that everyone pays dues including myself and that I am going strictly by our CCRs.
Please confirm: Have you attempted to appoint a second director? Then after there are two directors, the two of you vote to appoint a third director; and so on until hopefully all seats on the board are filled. I believe any competent HOA attorney would say filling seats on the board should be your first priority.




This raises the question does AnyaR currently even have the authority to warn/fine or do anything else about this issue?
CathyA3
(Ohio)

Posts:2569


05/09/2021 5:51 AM  
Posted By JohnT38 on 05/09/2021 5:18 AM
Posted By AugustinD on 05/08/2021 8:09 PM
Posted By AnyaR on 05/08/2021 5:40 PM
Everybody quit on me after I told them that everyone pays dues including myself and that I am going strictly by our CCRs.
Please confirm: Have you attempted to appoint a second director? Then after there are two directors, the two of you vote to appoint a third director; and so on until hopefully all seats on the board are filled. I believe any competent HOA attorney would say filling seats on the board should be your first priority.




This raises the question does AnyaR currently even have the authority to warn/fine or do anything else about this issue?




It's unlikely - giving the scofflaws a perfect reason to fight any attempt to deal with violations. One could argue that what the OP is doing is a more serious violation of the law (ignorance being no excuse, etc, etc,).

I think the ONLY thing the OP can lawfully do at this point is to appoint a second director and get the board squared away before even thinking about violations.
AugustinD


Posts:1855


05/09/2021 5:52 AM  
Posted By JohnT38 on 05/09/2021 5:18 AM
Posted By AugustinD on 05/08/2021 8:09 PM
Posted By AnyaR on 05/08/2021 5:40 PM
Everybody quit on me after I told them that everyone pays dues including myself and that I am going strictly by our CCRs.
Please confirm: Have you attempted to appoint a second director? Then after there are two directors, the two of you vote to appoint a third director; and so on until hopefully all seats on the board are filled. I believe any competent HOA attorney would say filling seats on the board should be your first priority.

This raises the question does AnyaR currently even have the authority to warn/fine or do anything else about this issue?
In https://www.hoatalk.com/Search/ForumSearch/tabid/87/forumid/1/postid/299218/view/topic/Default.aspx, AnyaR explained that this is a condominium with 23 units. If she has tried to appoint other directors and has not met with success, then so far it appears to me that she, by herself as one director, does meet the quorum requirement for "meetings" of the board. In theory, I think she could hire a management company. It sounds like there is a condo attorney already in the picture. The assessment would likely have to go up to pay for the management company. Consulting the condo attorney is essential but will cost the condo members still more. As the veterans here know, few understand why reserve funding exists and how it is particularly critical for condos. I think AnyaR should expect an outcry, particularly about any assessment increases. With the condo members so far refusing to serve on the board unless they are compensated, this condo's governance is well on the path to dysfunction.

If AnyaR is the only person willing to serve on the board, then I think her time would be better spent having the condo attorney educate her on how to proceed (as opposed to soliciting suggestions from hoatalk) and having the condo attorney do much of the heavy hitting until such time as a manager is hired.
PatJ1
(North Carolina)

Posts:283


05/09/2021 6:56 AM  
If there is only one Board member, there is no quorum and there is no Board. I guess that a violation letter can be sent to hope they stop, but enforcement stops at the hearing stage since a Board would need to be present at the hearing. Do you have a management company? What are they saying?

Can you find 2 other owner's to serve on the Board and not go into receivership? Focus is needed on getting a Board together, not violations.

Been there. We had a board of 2 of 5 for many years. Thankfully all of our maintenance needs were met without receivership.

Board members are volunteers. Many have no idea what they're doing. Educate them. Don't beat them up.
AugustinD


Posts:1855


05/09/2021 7:10 AM  
Posted By PatJ1 on 05/09/2021 6:56 AM
If there is only one Board member, there is no quorum and there is no Board.
How do you know this?

Here is what the Georgia Condo Act says on the point: "Unless the condominium instruments or bylaws specify a larger percentage, the presence of persons entitled to cast one-half of the votes of the board of directors shall constitute a quorum for the transaction of any business at any meeting of the board." As interested, see https://law.justia.com/codes/georgia/2019/title-44/chapter-3/article-3/section-44-3-103/

If the condo instruments/bylaws do not specify a larger percentage for quorum, and since AnyaR by herself represents the presence of persons entitled to cast one-half of the votes of the board of directors, then a quorum is achieved.

The Georgia Nonprofit Corporation act (1) permits a board to have only one director and (2) does not require AnyaR to appoint another director. Though in my experience, any competent condo attorney would tell her it is in her best interests to fill all vacancies on the board.
CathyA3
(Ohio)

Posts:2569


05/09/2021 7:35 AM  
Posted By AugustinD on 05/09/2021 7:10 AM
Posted By PatJ1 on 05/09/2021 6:56 AM
If there is only one Board member, there is no quorum and there is no Board.
How do you know this?

Here is what the Georgia Condo Act says on the point: "Unless the condominium instruments or bylaws specify a larger percentage, the presence of persons entitled to cast one-half of the votes of the board of directors shall constitute a quorum for the transaction of any business at any meeting of the board." As interested, see https://law.justia.com/codes/georgia/2019/title-44/chapter-3/article-3/section-44-3-103/

If the condo instruments/bylaws do not specify a larger percentage for quorum, and since AnyaR by herself represents the presence of persons entitled to cast one-half of the votes of the board of directors, then a quorum is achieved.

The Georgia Nonprofit Corporation act (1) permits a board to have only one director and (2) does not require AnyaR to appoint another director. Though in my experience, any competent condo attorney would tell her it is in her best interests to fill all vacancies on the board.




I think this will hinge on how you read the section I bolded. Does it mean one-helf of the votes of the board of directors *as it currently exists* (ie. 1 person) or *as it is defined in the bylaws* (a minimum of 2 persons in a 3-person board)?

I've always heard it interpreted as the latter, and a single director cannot legally transact business. On the other hand, this interpretation doesn't leave an association that's down to one board member a legal pathway forward other than receivership - seems unlikely that this was the intention of lawmakers.

Beats ms...
LetA
(Nevada)

Posts:1457


05/09/2021 7:54 AM  
What type of business is he running out of the house or garage? It might not even be worth pursuing.
AugustinD


Posts:1855


05/09/2021 8:54 AM  
Posted By CathyA3 on 05/09/2021 7:35 AM
Posted By AugustinD on 05/09/2021 7:10 AM
Posted By PatJ1 on 05/09/2021 6:56 AM
If there is only one Board member, there is no quorum and there is no Board.
How do you know this?

Here is what the Georgia Condo Act says on the point: "Unless the condominium instruments or bylaws specify a larger percentage, the presence of persons entitled to cast one-half of the votes of the board of directors shall constitute a quorum for the transaction of any business at any meeting of the board." As interested, see https://law.justia.com/codes/georgia/2019/title-44/chapter-3/article-3/section-44-3-103/

If the condo instruments/bylaws do not specify a larger percentage for quorum, and since AnyaR by herself represents the presence of persons entitled to cast one-half of the votes of the board of directors, then a quorum is achieved.

The Georgia Nonprofit Corporation act (1) permits a board to have only one director and (2) does not require AnyaR to appoint another director. Though in my experience, any competent condo attorney would tell her it is in her best interests to fill all vacancies on the board.


I think this will hinge on how you read the section I bolded. Does it mean one-half of the votes of the board of directors *as it currently exists* (ie. 1 person) or *as it is defined in the bylaws* (a minimum of 2 persons in a 3-person board)?
I hear you. The phrase "the presence of persons entitled" is what got my attention (maybe yours too). Who are the 'persons entitled to cast votes of the board of directors'? To me, this means only the directors currently on the board. At present, this is exactly one person.

Still, I understand your own takeaway.

I do not remember seeing (appeals court) case law on the point. Maybe because appealing a court's order appointing a receiver does make sense. After the receiver is appointed and the increase in assessments hits the membership's bank accounts, the membership should straighten things out enough pronto to ask the court to get rid of the receiver. Or the receiver will make the application to the judge.

As well, a little "Come to Jesus" talk with a HOA attorney, telling the membership 'to step up, suck it up, and serve on the board, or you and your neighbors will pay a fortune' could lead to a new board sooner rather than later.

Posted By CathyA3 on 05/09/2021 7:35 AM
I've always heard it interpreted as the latter, and a single director cannot legally transact business. On the other hand, this interpretation doesn't leave an association that's down to one board member a legal pathway forward other than receivership - seems unlikely that this was the intention of lawmakers.
I am going to stick with the counsel from my favorite HOA attorney where I am: If even one reasonably competent person is willing to run the place as a volunteer, a judge will not appoint a receiver. My take: If one competent person is willing to run the HOA/condo per the covenants (including seeking additional directors), then seeking a receiver ties up the courts unnecessarily; costs taxpayers for court time; and burdens a HOA/condo greatly with the costs of the receiver.

On the other hand, it seems like I have read of courts ordering the appointment of receivers in other states without giving the order much thought at all.
AnyaR
(Georgia)

Posts:26


05/09/2021 10:35 AM  
I have tried multiple times to appoint additional director but no one wants to take that responsibility and additionally we do not have finance to hire a managing company I’ve checked into that multiple times the price is $400 to $600 a month and we only have 23 units. I have sent off a latter with all the violations that specifies in our CCRs I gave the Homeowner 10 days or he will be fined. I am trying to do everything I can out of my heart to help my community. I have done more in two months then it has been done in 10 years so I feel like I’m very accomplished with everything I have completed.
JohnT38
(South Carolina)

Posts:790


05/09/2021 11:28 AM  
Do you have liability and D&O insurance? I sure hope so!
AugustinD


Posts:1855


05/09/2021 11:31 AM  
Posted By JohnT38 on 05/09/2021 11:28 AM
Do you have liability and D&O insurance?
Do you expect AnyaR to go to court and arrange for a receiver to be appointed?

The Board is obliged to enforce the covenants. Failure to enforce the covenants could ultimately result in the covenants being legally "abandoned."
JohnT38
(South Carolina)

Posts:790


05/09/2021 11:37 AM  
Posted By AugustinD on 05/09/2021 11:31 AM
Posted By JohnT38 on 05/09/2021 11:28 AM
Do you have liability and D&O insurance?
Do you expect AnyaR to go to court and arrange for a receiver to be appointed?

The Board is obliged to enforce the covenants. Failure to enforce the covenants could ultimately result in the covenants being legally "abandoned."




No it had nothing to do with what I expect. I asked the question because the HOA seems to have not been run properly and apathy is rampant. This made me wonder if they even bothered to get insurance? If they didn't my advice to the OP is to resign, hire a mover and get the hell out of there. Hopefully my instinct on this is wrong and it's not an issue. There is no way I would serve on a board without protection.
JeffT2
(Iowa)

Posts:636


05/09/2021 12:09 PM  
Suggestion:
Find one or two owners who don't like the garage business, appoint them to the board, have a legal board meeting (according to your bylaws/state law), have the new board elect you as president and delegate all the board's power to you (especially to issue fines and start legal action to enforce the docs), record the decision in the minutes, and then these board members can resign. It will only take them 10 minutes of their time.
MelissaP1
(Alabama)

Posts:10575


05/09/2021 12:24 PM  
Did I miss the post of what is going on in the garage to qualify it as a "business" and what the danger is? I mean keeping paint in or other chemicals in your garage is a "danger'. Unless one is selling oxygen tanks out of their garage, any person's garage can be considered a "danger".

Former HOA President
CathyA3
(Ohio)

Posts:2569


05/09/2021 12:36 PM  
Posted By JohnT38 on 05/09/2021 11:37 AM
Posted By AugustinD on 05/09/2021 11:31 AM
Posted By JohnT38 on 05/09/2021 11:28 AM
Do you have liability and D&O insurance?
Do you expect AnyaR to go to court and arrange for a receiver to be appointed?

The Board is obliged to enforce the covenants. Failure to enforce the covenants could ultimately result in the covenants being legally "abandoned."




No it had nothing to do with what I expect. I asked the question because the HOA seems to have not been run properly and apathy is rampant. This made me wonder if they even bothered to get insurance? If they didn't my advice to the OP is to resign, hire a mover and get the hell out of there. Hopefully my instinct on this is wrong and it's not an issue. There is no way I would serve on a board without protection.



I agree with John here. It appears that the OP is trying to do the right thing for her community, but it's still an open question whether or not she has any authority to do what she's doing. She's sticking her neck out, and appears not to know all of the ins and outs of being a director. She needs to protect herself and not put her personal assets at risk, because frankly her neighbors deserve a wake up call.
CathyA3
(Ohio)

Posts:2569


05/09/2021 12:45 PM  
Posted By CathyA3 on 05/09/2021 12:36 PM
Posted By JohnT38 on 05/09/2021 11:37 AM
Posted By AugustinD on 05/09/2021 11:31 AM
Posted By JohnT38 on 05/09/2021 11:28 AM
Do you have liability and D&O insurance?
Do you expect AnyaR to go to court and arrange for a receiver to be appointed?

The Board is obliged to enforce the covenants. Failure to enforce the covenants could ultimately result in the covenants being legally "abandoned."




No it had nothing to do with what I expect. I asked the question because the HOA seems to have not been run properly and apathy is rampant. This made me wonder if they even bothered to get insurance? If they didn't my advice to the OP is to resign, hire a mover and get the hell out of there. Hopefully my instinct on this is wrong and it's not an issue. There is no way I would serve on a board without protection.



I agree with John here. It appears that the OP is trying to do the right thing for her community, but it's still an open question whether or not she has any authority to do what she's doing. She's sticking her neck out, and appears not to know all of the ins and outs of being a director. She needs to protect herself and not put her personal assets at risk, because frankly her neighbors deserve a wake up call.



Case in point about sticking her neck out:

* What do the governing documents say about fining, if anything?

* Has the board enacted a fining schedule which has been publicized to the community? (I'd bet not.)

* What do the governing docs and/or state law say about due process for dealing with violations - eg., is the alleged violator entitled to a hearing, and what is the timing on that?

This is the kind of stuff that can trip up a duly-elected board and land the association in court, and that's trouble the OP doesn't need.

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