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Subject: Proper Notice Requirement
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ElaineW
(Virginia)

Posts:5


05/02/2006 1:38 PM  
Our Board of Directors and Management company have passed a 50% dues increase without proper notification of 2nd special meeting.

Article V, Sectin 2 of our bylaws talk about the notice requirements of the 1st special meeting which is notice must be given no less than 10 days or more than 50 days.

Article XI, Section 4 talks about the quorum requirements of this special meeting which is 2/3 of the total membership either in person or by proxy. If this quorum is not met subsequent meetings may be called whereby the quorum is reduced by 50% each time; however subject to the notice requirements in Sections 1 and 2.

The notice requirements in Article XI, Sections 1 and 2 state that notice must be given no less than 30 days or more than 60 days which is different than the notice requirements for the 1st special meeting noted in Article V, Section 2.

Our Management company and our Board of Directors first passed this 50% dues increase at the regular board meeting with only a 25% membership quorum. When called on this, they scheduled a special meeting giving a 10 day notice. In this notice, they indicate that if the quorum was not met at 7M a second meeting would be called at 7:15 PM and a third meeting at 7:30 if the quroum was not met at the 2nd meeting.

On the day of the 1st special meeting, I notified the president and the Management company that the notice requirements have not been met to have a second meeting on the same night if the quorum was not met at the 1st meeting. Both brushed me off and insist that their interpretation of the bylaws is correct that the notice requirement for any subsequent meeting is in Article V, Section 2. I pointed out that Article XI, just says Sections 1 and 2. So we can only inject that it meant, Sections 1 and 2 of the same article and not Sections 1 and 2 of Article V, otherwise it would have so stated since there are several Articles in the bylaws.

The quorum was not met at the 1st meeting at 7PM so they proceeded to have the 2nd meeting at 7:15PM where the quorum was met and the dues increase was passed.

Any feedback as to what can be done here, if any.
HaroldS
(Arizona)

Posts:906


05/02/2006 3:18 PM  
Welcome to the world of HOAs Elaine, where the board's interpretation of the documents only means what they want it to. You don't say where you live, but your documents are probably covered under state contract law, with no oversight. "So sue me" is their attitude. If your state does have an ombudsman take it up with them. Harold
LuciusD


Posts:0


05/02/2006 6:21 PM  
It sounds to me like this is a totally blantant and arrogant perversion of the declining quorum principle. In all likelihood, if the board had followed the rules and had given proper notice, they would have still accomplished their objective. But they were in a hurry. They really didn't care about doing it right.
The first question is: are you the only one who is concerned?
Are there enough other concerned members to form a group to take the board to task?
Look at the bylaws provisions for holding a recall. Can you muster enough support to throw the rascals out? And can you muster enough volunteers to replace them?
Possibly your only practical recourse is to accept the way it is or sell your property.
ElaineW
(Virginia)

Posts:5


05/03/2006 3:52 AM  
Unfortunately, our members are predominantly made up of passive people who don't know how a HOA should be run or just doesn't want to be bothered with attending meetings. They must be sitting on a pot of gold and would rather pay than argue. The increase in dues is mainly due to the cost to replace a concrete retaining wall which only borders approximately 10 out of the 30 homes. Of course all these 10 home owners voted yes for the increase.
CalvinC
(Florida)

Posts:20


05/03/2006 4:33 AM  
Why would they raise the dues and not pass a one time special assesment to pay for the repairs?
ElaineW
(Virginia)

Posts:5


05/03/2006 8:09 AM  
The wall does not currently need to be repaired but will need to be repaired sometime in the future. An engineering study was done which proposed certain amounts to be put into the reserves fund annually. There is differneces of opinions as to how much money should be accumulated in this fund over time. However, that's another issue for another day. My concern here is whether the Board and the management company can deilberately violate the specific notice requirements of the bylaws and get away with it.
RogerB
(Colorado)

Posts:5067


05/03/2006 8:39 AM  
The Board will get away with violating the By-laws unless someone makes them comply. Since they ignored your request to comply either they think they can get away with this violation or else they and the managing agent are ignorant. You have 3 choices:

1) Do nothing.

2) If you want compliance hire an attorney and have them send a letter to the Board advising they have violated the By-laws since the meeting was not proper and therefore the increase in assessment is not valid. If they do not invalidate that meeting after being advised of their personal wrongdoing then they have created personal liability for themselves.

3) Or you can get up a petition to hold a special meeting to terminate the current Board members and elect new Board members. The new Board can pass a resolution that the previous meeting and vote are invalid. They can also terminate the contract of the incompetent MC.

After cleaning house, your HOA could also consider amending the By-laws to reduce the percentage required for a quorum.

Good luck,
Roger
RogerB
(Colorado)

Posts:5067


05/03/2006 10:25 AM  
Elaine, just wanted to add that while the Board did not comply with the By-laws their need to achieve a necessary goal may have blinded them. And it is difficult to admit our mistakes.

You may chose option (4):
Approach the Board again in a constructive cooperative manner to see if the Board members are willing to correct this problem. If they are not willing to correct the problem then educate them to their potential personal liability. Their insurance and corporate shield may not protect them if they have been advised in writting and still will not comply with their By-laws. This could cost each of them a couple thousand dollars for their legal expenses and your legal costs if awarded.
LisaS
(Illinois)

Posts:341


05/04/2006 9:13 PM  
My thought in reading this was that yes, what the Board did was inappropriate. But if enough people did not care to show up at a meeting that they knew would be the difference between raising the dues or not...then even if the requirement as understood by you had been met it ultimately would not have changed the outcome.

If a reserve study was bought and paid for, review it and take heed. Better to have the money than have a special assessment later that is in triple digits.

While it may seem unfair that a retaining wall for 10 homes has a cost born by 30, if the retaining wall is 'common property', it is the responsibility of all.
ElaineW
(Virginia)

Posts:5


05/05/2006 7:06 AM  
Lisa:
This is the very same argument the Board presneted at the 1st meeting. What if the retaining wall collapse tomorrow, we need to have a large sum in the reserves fund to pay for this or run the risk of a large special assessment in the triple digits! Well, this in my opinion, is "fear manipulation".

I would think when this retaining wall was built by the builders, they would have ensured that it would last a long time considering its importance and cost. There's no question that the wall will need to be repaired/replaced sometime in the distant future so a gradual built up in the reserves fund is reasonable and necessary. However, there is no emergency here to jack up the dues this high so that you can build up this reserves fund overnight.

Whether my vote at the meeting would have mattered or not, is not the point. The bylaws were established for a purpose and must be adhered to. Just because some residents did not attend the 1st meeting, does not necessarily mean that they don't care or that they would not have attended the second meeting. We cannot also assume that the outcome of the votes at the second meeting would be the same as the first meeting.

If the Board and Management company is not to be held accountable for enforcing the bylaws, then what's the purpose of the bylaws anyways?
TomJ
(Arizona)

Posts:42


05/05/2006 4:48 PM  
Check your by laws, they might have a provision for the maximum amount they can raise the assessments.

Ours does and the board is allowed to make the budget and set the assessments without a members voting.
TomJ
(Arizona)

Posts:42


05/05/2006 4:50 PM  
Also, do you have a reserve fund for repairs and maintenance of capital property?

You should have and have a reserve analysis done.
ElaineW
(Virginia)

Posts:5


05/10/2006 7:40 PM  
Thanks Roger and all of you who have participated in this discussion. I will explore all options.
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