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Subject: What is the legal process to replace a BoD that resigned?
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GreggK2
(Kansas)

Posts:86


07/23/2016 5:15 PM  
Our HOA has been under attack by a handful of home owners. We've been dealing with this for about a year and tonight, all but 1 of the board of directors has resigned. I am now the last man standing, which was part of the plan. I spoke briefly with our HOA attorney yesterday and he indicated that, once I resign, there is no more board. Our concern has been that these aggressive home owners think they can just step in and appoint themselves since there will be no board but the attorney confirmed they would have to court through the district court to make that happen. Is anyone familiar with that process?
NpS
(Pennsylvania)

Posts:3987


07/23/2016 5:34 PM  
What do you want to do?

If you want to stay on the board, there is probably a provision in your bylaws on the authority of the remaining board members to SELECT replacement directors until the next election.

If you resign, then there will have to be a new election. Until that new election is held, the board cannot conduct business. Doesn't mean that everything stops - only that if anything needs board approval, it will have to wait.

Sikubali jukumu. Read all posts at your own risk.
TimB4
(Virginia)

Posts:16700


07/23/2016 5:36 PM  
Gregg,

As a Director, you likely have the authority to appoint individuals to the Board to fill vacancies.
You definitely have the ability to call a general membership meeting to elect new directors.

If you resign, who will pay the bills, collect the assessments, etc?

As for the process you speak of, those individuals would need to petition the court to have the court appoint them to the Board or have the court appoint a receiver until an election can be held. I really doubt either option would be to your liking.

Being the last Director, you are now in the Drivers seat.
If you resign without appointing replacements you can be sure that those handful of owners will be on the board in the near future.


Your options as I see them:

1) appoint individuals to serve out the remaining term and carry on the business of the Association
2) call a general membership meeting for the purpose of electing new Directors (this likley won't keep those individuals off the Board unless you and your previous board members have been active in explaining the issues to the membership).
3) petition the court to place the Association into receivership (not a great option as the receiver answers to the court and not the membership. However, the members pay the salary of the receiver through court ordered increased assessments or special assessment). This will not place you in a good light with your neighbors.
4) Resign and walk away - which would be the worst thing you could do in my opinion as this would leave the Association wide open for all sorts of issues.


It's better to have an orderly transition between boards then to involve the courts or to just walk out and let what happens happen (as what happens will affect you and your property).

If it were me, I would do one of the following:

1) Appoint individuals to serve with me and counter the attacks by informing the membership.
2) If I was set on resigning, hold a special general membership meeting for the purpose of electing a new Board (at least this way, you can inform the membership what is happening when you send out the notice of the meeting).
GreggK2
(Kansas)

Posts:86


07/23/2016 5:40 PM  
My goal and desire is to walk away. While some might see this as a screw over number, that fact remains that we were 5 people trying to keep everyone happy and then a group, who had no love for anything we did, circulated a petition for my removal. Of 114 homes, they got the minimum number of signatures required for me to cal a special meeting for my own removal. The vote will fail due to a lack of people showing up, but when it does fail my plan is to announce my resignation and let them, the ones who wanted me out, to deal with it all.

So while I appreciate the suggestions of an orderly transition, assume it will not be. Come August 4th, there will not be anyone left on the Board of Directors so what process will the home owners have to go through to get someone in to take over where we left off? bear in mind that when I and the other treasurer, remove ourselves from the bank accounts the bank will close the accounts and hold the money in trust until a new board member steps up and takes over.
NpS
(Pennsylvania)

Posts:3987


07/23/2016 5:54 PM  
Were you the target of the recall or was it the entire board?

Would any of those who already resigned be willing to reconsider?

Sikubali jukumu. Read all posts at your own risk.
KerryL1
(California)

Posts:7050


07/23/2016 6:25 PM  
I see, Gregg, that you wrote it was all a plan that they resign and the you, I guess.

But I ask NpS's question: Will any of the others reconsider? It seems you should know the options for your HOA and the possible expenses before you give up.

It won't be "them" who has to "deal with it." It will be all of you!
LarryB13
(Arizona)

Posts:4099


07/23/2016 6:27 PM  
Gregg,

My understanding is that the last director standing cannot just resign and be done with it. That is, he remains the only director until he appoints someone to take his place or until the members vote for new directors.

If I was in your place, I would pack the board with my friends (assuming you still have some) and put the train back on the track.

Your plan to wait until the dissidents' recall fails and then resign is puzzling. You are giving the dissidents just what they want. Their failed recall is also their successful removal of the entire board. They win if they win and they win if they lose.

You might want to review state law and your own documents. If there is no board, the alternative to seeking relief in the courts is to hold a special meeting for the purpose of electing a new board. The advice that the members' only alternative is to go to court is hard to believe. Get a second opinion on that one.

GreggK2
(Kansas)

Posts:86


07/23/2016 7:13 PM  
I confirmed with our attorney yesterday. There is nothing in Kansas that requires the final board member to stay in place. This is an all-voluntary board and, as he put it, "slavery was abolished long ago"

The target of the petition to remove/recall was me. While the people behind it will fail, their hopes are that I be removed unaware that the rest of the board has already resigned. I am fine with allowing them to deal with the consequences of having spent the past years screwing with us. I've yet to speak to a single home owner about this that doesn't understand what we were put through. I didn't sign up to have individuals harass me night and day or question every little thing we do for the sole purpose of jsut being a nuisance.
AugustinD


Posts:2932


07/23/2016 7:27 PM  
Gregg, I think it's vindictive to resign and let the members somehow sort this out. It tempts a legal morass. If you do not want to serve, at least consider being enough of a stand-up kind of guy to ask one of the dissidents to step up and accept your appointment as a director (which is probably what your Bylaws say under these circumstances), to serve with you for the ten seconds it takes for you to then subsequently resign. Then the Director Dissident can re-build the Board.

Otherwise you may wreak havoc on your HOA's insurance by doing this. Plus any entity with whom the HOA has a contract can sue the HOA for breach. Nor do I think the bank is quite going to do what you say it will. Maybe get another attorney.
NpS
(Pennsylvania)

Posts:3987


07/23/2016 8:03 PM  
Marbury v Madison is a famous 1803 US Supreme Court case. Just before John Adams' term as US President was about to expire, he appointed William Marbury as a federal judge. But by the time the appointment was delivered to Marbury, Adams' presidency had expired and Thomas Jefferson was the new president. Jefferson's Secretary of State James Madison refused to grant the appointment. Marbury sued Madison.

The Supreme Court decided that the appointment was effective when Adams signed it. But the Court also decided that it did not have the authority to force the new administration to grant the appointment. Marbury never got his appointment.

Why am I telling you this story?

Because unlike President Adams, your term isn't expiring. You plan to step down, but think about what you want to put in place for when you leave. It's up to you and only you.

Let's say your docs say that you can have 3 to 7 board members. With 2 people of your choosing, you can make a new board.

I would suggest finding 2 new people - not members of the old guard - not members of the opposition - just 2 ordinary homeowners who weren't involved in the dispute. Appoint them as directors.

Then you can step down as you wish.

In other words, you can leave without abandoning the HOA to the vultures.




Sikubali jukumu. Read all posts at your own risk.
GreggK2
(Kansas)

Posts:86


07/23/2016 8:13 PM  
The interesting thing is, the only people who showed interest in getting on the board are the ones who are trying to get me off the board. For example, one woman lives in our HOA and has a condo in another and both HOA's had to sue her for non-payment of dues. This is not someone who should be even close to the financials. I know none of you can see all of the drama that has taken place out here but no matter what we have done, this small group of people have just badgered us left and right and it is not what we signed up for. As of tonight, I am now the only BoD member left. I will give them their vote, it will fail due to lack of a quorum and then I will step down. The finger of blame will go straight towards the woman who demanded the special meeting be called to remove me and then the rest of the home owners can pick up the pieces. It's a small HOA...no common areas...just once a week mowing but they did enjoy the annual picnic I put on (cancelled now) and I also spent 6 months getting our bylaws re-written to conform to Kansas law. We need 76 home owners to send in their ballots to approve the changes and with only a week left we've gotten 26. That shows you how involved people want to be.
SheliaH
(Indiana)

Posts:3058


07/23/2016 8:49 PM  
Why not send all the homeowners a letter and tell them this and call a special homeowners meeting to clear the air? It may be the rest of the homeowners will wake up and tell this woman to sit the hell down. If it's a small group of homeowners driving this, I'd ask them (in front of everyone) whether they intend to step up.

No? Well tell them all about receivership - and that will be your next step if people don't make up their bloody mind as to what they want to do. Get some figures on the court costs and attorneys fees, plus paying the receiver AND losing control over the HOA. Let's see how people respond to that.....If this woman gets all the blame for this mess, so be it (don't start none, won't be none)
AugustinD


Posts:2932


07/23/2016 9:58 PM  
Posted By SheliaH on 07/23/2016 8:49 PM

No? Well tell them all about receivership - and that will be your next step if people don't make up their bloody mind as to what they want to do. Get some figures on the court costs and attorneys fees, plus paying the receiver AND losing control over the HOA. Let's see how people respond to that...




The reason I know the strategy Shelia graciously describes above can have a lot of force is because it was employed at my old HOA. Hearing and reading about what they would be forced to pay a receiver really got people thinking. Rightly so.
DanaT


Posts:0


07/24/2016 12:23 AM  
Posted By AugustinD on 07/23/2016 7:27 PM
Gregg, I think it's vindictive to resign and let the members somehow sort this out. It tempts a legal morass.




Gregg, I think that AugustinD is correct. I was going to ask you why a hand full of people wanted you out of office, but from reading your responses, I may have figured it out. To abandon your post with the sole intent to wreak havoc on your community, leads me to believe you are not the type of person, that needs to have control over others. Your words, not mine. Sometimes being able to say, "I Told You So", comes with a very heavy price tag!
TimB4
(Virginia)

Posts:16700


07/24/2016 4:47 AM  
Posted By GreggK2 on 07/23/2016 8:13 PM
The interesting thing is, the only people who showed interest in getting on the board are the ones who are trying to get me off the board.




That is typical. For one reason or another, there are those who see things from one perspective and believe that they can do a better job or simply have an agenda.




Posted By GreggK2 on 07/23/2016 8:13 PM

For example, one woman lives in our HOA and has a condo in another and both HOA's had to sue her for non-payment of dues. This is not someone who should be even close to the financials.




However, if you resign, that individual may very well be your Treasurer.
Scary thing to think about unless you are planning on selling in the next year.



Posted By GreggK2 on 07/23/2016 8:13 PM

I know none of you can see all of the drama that has taken place out here but no matter what we have done, this small group of people have just badgered us left and right and it is not what we signed up for. As of tonight, I am now the only BoD member left. I will give them their vote, it will fail due to lack of a quorum and then I will step down. The finger of blame will go straight towards the woman who demanded the special meeting be called to remove me and then the rest of the home owners can pick up the pieces. It's a small HOA...no common areas...just once a week mowing but they did enjoy the annual picnic I put on (cancelled now) and I also spent 6 months getting our bylaws re-written to conform to Kansas law. We need 76 home owners to send in their ballots to approve the changes and with only a week left we've gotten 26. That shows you how involved people want to be.







Posted By GreggK2 on 07/23/2016 8:13 PM

I know none of you can see all of the drama that has taken place out here but no matter what we have done, this small group of people have just badgered us left and right and it is not what we signed up for.




Understood. Many here have been though similar or, depending on perspective, were those that brought the issues to the membership and were likely seen as badgering the Board.




Posted By GreggK2 on 07/23/2016 8:13 PM

I will give them their vote, it will fail due to lack of a quorum and then I will step down.




Certainly your choice.
If it were me, I would have held the vote. When it failed, I would have then asked those who organized it to now let the Board do it's job and, if they desire, they may submit names as nominees to serve on the next board. I would also point out the cost of holding that meeting.



Posted By GreggK2 on 07/23/2016 8:13 PM

The finger of blame will go straight towards the woman who demanded the special meeting be called to remove me and then the rest of the home owners can pick up the pieces.




To be honest, I doubt it.
If you and your former board members have not been transparant about these issues and informed the membership of what has been going on and the cost of time, energy and money to respond to those few homeowners, then it's more likely that you and your fellow board members will be blamed. This is because only one side of the story will be voiced to the membership.

Please don't think that resigning will have everyone blame those who were such a pain that you chose to resign. Some will. However, the majority likely will not place the blame there (if they blame anyone).

Posted By GreggK2 on 07/23/2016 8:13 PM

It's a small HOA...no common areas...just once a week mowing




Mowing of what? Common area or private property?


Posted By GreggK2 on 07/23/2016 8:13 PM

We need 76 home owners to send in their ballots to approve the changes and with only a week left we've gotten 26. That shows you how involved people want to be.




Yep, membership apathy sucks.

If you really want those signatures, you are going to have to go door to door requesting them. Otherwise, it's likely the proposal will fail.


JonD1


Posts:0


07/24/2016 5:51 AM  
Gregg sounds like a sad situation all around.

I justifiable to ask how many make up this group? You say a handful what is the number?

And if you had to point to their main complaint against you what would that be?

And if you had to list your main issue with them what would that be?

Are any of these folks former board members?


I have served now for 29 years. To say things have gotten challenging at times would be an understatement. We had a group who wanted the board removed. I always ask myself, what is best for the property? Resigning was NEVER an option.

I have been sued, arrested, had my property vandalized, been threatened, had rumors spread about me, you name it, it was done.

Now I have to wonder about why the others resigned. Just what did they think that would accomplish besides making their lives easier.
And your response to their resignation? Or did you agree? More desirable would be the group decided to stick together.

As for your plan to time your resignation to then dump responsibility onto these others in the end means nothing. It accomplishes little and leaves your community where you live in jeopardy. You might wish to tell yourself your plan has worked but my guess it has and will do little.

So you have to options. These folks now take over or the court will appoint a receiver to administer the affairs of the community. And that comes with a hefty price tag. Then the control and day to day operations are in the hands of someone who knows nothing about your property.

One pair of ding dongs sued us and demanded we be put under the control of the court. Luckily we were able to avoid this. SomInhave some idea of just how damaging that will be.

You have people who pushed and now everyone but you gave in to their demands. Because this was not what you signed up for. And you like to tell yourself this will now be their problem. Well as Tim pointed out unless you plan to move soon this will be your problem one way or the other.

No I know some people don't have the stomach for conflict. And some people knowing this us conflict to get their way. It was up to you and the Baird members to decide just who got their way. And in my view they took the easy way out.

And as suggested there will be consequences for doing so. You don't always do what you want to do. Sometimes you simply need to do what needs to be done. Many times over the past 29 years I would have been better off walking away and throwing in the towel. That is just not my style. People don't force me into doing anything. Not now not then. Life sometimes requires you travel the hard road for awhile. Not throw up your hands and give in to people who you believe will not serve your property's best interests.

The hard road requires effort, work, and determination. Some people just don't have it....
NpS
(Pennsylvania)

Posts:3987


07/24/2016 6:16 AM  
Posted By JonD1 on 07/24/2016 5:51 AM
So you have to options. These folks now take over or the court will appoint a receiver to administer the affairs of the community. And that comes with a hefty price tag. Then the control and day to day operations are in the hands of someone who knows nothing about your property.



A few have mentioned that, in a receivership, the cost is very high and an outsider makes the decisions about day to day operations.

I don't think that says things strongly enough:

1. Typically, the Receiver is an administrator, not a day-to-day operator. This administrator will delegate day to day operations and the HOA will have no say in the selection or the cost.

2. The Receiver gets paid for his services directly out of HOA funds.

3. The Receiver is only answerable to a judge. If the Receiver gets the judge to approve his proposal, it's a done deal.

4. Only the judge can decide when to lift the Receivership. You can jump in that pond voluntarily, but once you're in, you can't just say the water's too cold and climb out. You get out when a judge says you can.

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


Posts:2932


07/24/2016 9:56 AM  
Posted By NpS on 07/24/2016 6:16 AM


A few have mentioned that, in a receivership, the cost is very high and an outsider makes the decisions about day to day operations.

I don't think that says things strongly enough:

1. Typically, the Receiver is an administrator, not a day-to-day operator. This administrator will delegate day to day operations and the HOA will have no say in the selection or the cost.

2. The Receiver gets paid for his services directly out of HOA funds.

3. The Receiver is only answerable to a judge. If the Receiver gets the judge to approve his proposal, it's a done deal.

4. Only the judge can decide when to lift the Receivership. You can jump in that pond voluntarily, but once you're in, you can't just say the water's too cold and climb out. You get out when a judge says you can.





Excellent recap.
JohnC46
(South Carolina)

Posts:9316


07/24/2016 12:07 PM  
Gregg

My advice, assuming your are correct and the others were the bad guys, is to stay on as President and appoint others to fill the vacancies. Bring the BOD up to strengt. Get it functioning properly than decide on your future on the BOD.

As others have said, stay away from receivership. A receiver will get paid and can spend the association's money pretty much anyway they want, including going through the reserves in order to get paid. The can also raise assessments. The courts rarely look over a receiver's wishes. Many just rubber stamp what the receiver wants.
KerryL1
(California)

Posts:7050


07/24/2016 12:08 PM  
So, Gregg, what is the new plan??? I really like Sheila's idea and someone else says it works.
TimB4
(Virginia)

Posts:16700


07/24/2016 4:02 PM  
Posted By KerryL1 on 07/24/2016 12:08 PM
So, Gregg, what is the new plan??? I really like Sheila's idea and someone else says it works.




Kerry, see Subject: I've reconsider my position... Gregg's recent thread.
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