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Subject: Voting for movement of funds
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NancyD1
(Florida)

Posts:447


11/09/2008 3:44 AM  
Fl 720 states that the HOA now has to vote to move any funds from the reserve accounts to the operating. As Treasurer at the time, I put together a budget with the funds in the operating and without to show the homeowners what the maintenance fees would be for 2009. The quorum was met and our attorney at the meeting called the vote legal. The vote and the budget were not voted on at the budget meeting, it was adjourned to another day.
In the interm, 2 board members and myself resigned. The new Treasurer has prepared a new budget which is much higher and does not address all the issues in the budget and the vote is not honored.
We are going to file a Civil Rights violation for an injunction against the budget with my original budget to stand in place until the case is heard. The injunction will turn into a class action from all the voters. Before everyone gets up in arms, a civil rights violation for not honoring votes is not covered under D&O insurance. The board as individuals will have to pay for the suit. They are knowingly violating our basic rights as homeowners. They are operating under vindictivness. I gave them warning of the suit but the Treasurer seems to be telling the others on the board not to worry. They should worry.
I and my attorney are looking for any violations of a similar nature. We have reviewed most case law suits and have not found anything but voting in elections violations. Have you heard of any similar suits? Or know of a HOA that has had a similar problem?
SusanW1
(Michigan)

Posts:5202


11/09/2008 5:30 AM  
Nancy - I can't understand your first 2 paragraphs.

As soon as another treasurer took over and presented another budget, it did not go into effect until approved (by the Board or the membership) or the year ended. Was that done?

Good luck with the Civil Rights lawsuit. It doesn't fit the spirit of the law, if you ask me. But you will have some pre-hearings when you file it, so you will hear more then.
NancyD1
(Florida)

Posts:447


11/09/2008 5:54 AM  
I presented a budget at a special meeting. It was not voted on at this meeting because of time constraints. I resigned the next day. The board then appointed a new Treasurer. He came up with a new budget. There were no oppositions to my budget at the meeting (2/3 represented), but for the new Treasurer, he said he could do it better and for lower fees. 3 weeks later and he cannot. He backed himself into a corner. The new budget is in the mail to be voted on in 2 weeks. There are 2 out of 7 on the board who do not agree with the new budget and want the vote used. 5 are calling that the budget be sent out to the HOA without the vote.

The lawsuit does fit the civil rights bill. We have a HOA governed by documents that give us the right to vote, the vote is not being honored. D&O insurance does not cover the board in a blantant violation of homeowners rights. So it will not cost the HOA a penny, the board members will have to defend themselves.
MaryA1


Posts:0


11/09/2008 6:47 AM  
Nancy,

So, your lawsuit is based on the fact that your budget was not voted on even though there was a quorum at the meeting? Frankly, this really sounds like sour grapes on your part. Why put the members of the assn through a lawsuit just because your budget was not approved? Wouldn't the board members only be liable for the costs if they lose the lawsuit? If the assn wins, the members foot the bill -- all because your budget was not voted on. Sorry, but I can't see a good reason for this lawsuit.
SusanW1
(Michigan)

Posts:5202


11/09/2008 6:52 AM  
Under job description for board members, it should say WHO is responsible for developing the budget for approval. Then there is the issue of WHO approved the budget. The budget should have been hammered out at a board meeting before being presented to the Members. If that was not done, then the motion to approve could be withdrawn at the meeting and sent back to the board to get their final approval. (You aren't stating the procedures, but I am guessing these are the steps)The board can always call a special meeting to approve the budget.

Sorry, but to prove that the board is preventing the Members from voting is not seen in your situation. The board will argue that it is acting responsbily in not presenting the budget for approval.

ARe there written deadlines for approval of the budget?
NancyD1
(Florida)

Posts:447


11/09/2008 7:33 AM  
Mary, The vote was only for reducing the budget using reserve funds not the budget itself. After I go input from the other board members and the budget was set it was placed on the agenda. The explination and questions took a lot of time (2 hours). People were walking out because it was almost 10:30 pm. We are facing many financial problems as are most HOA's. There were 246 members who attended the meeting. A lot of votes cast and counted. The count was not announced because we had not finished the questions and answers when we posponed the meeting to a later date. The attorney has the votes. I had already made the discission to resign the week before the budget meeting. The board was ready to vote on my budget at the meeting. Before he was appointed the new Treasurer stood up at the budget meeting. He got board members ears and they decided to let him redo the budget. The new budget does not include the vote and it does not address the cash flow when we have homeowners who are not paying. 2 current board members disagree with this budget. The other board members are friendly with the Treasurer and do not care what he does even if it is illegal.

NancyD1
(Florida)

Posts:447


11/09/2008 7:33 AM  
Mary, The vote was only for reducing the budget using reserve funds not the budget itself. After I go input from the other board members and the budget was set it was placed on the agenda. The explination and questions took a lot of time (2 hours). People were walking out because it was almost 10:30 pm. We are facing many financial problems as are most HOA's. There were 246 members who attended the meeting. A lot of votes cast and counted. The count was not announced because we had not finished the questions and answers when we posponed the meeting to a later date. The attorney has the votes. I had already made the discission to resign the week before the budget meeting. The board was ready to vote on my budget at the meeting. Before he was appointed the new Treasurer stood up at the budget meeting. He got board members ears and they decided to let him redo the budget. The new budget does not include the vote and it does not address the cash flow when we have homeowners who are not paying. 2 current board members disagree with this budget. The other board members are friendly with the Treasurer and do not care what he does even if it is illegal.

NancyD1
(Florida)

Posts:447


11/09/2008 7:40 AM  
Susan, we followed those procedures. The suit falls under civil rights violations. D&O does not cover this, so the board will be responsible as individuals. I would not sue if I thought the homeowners were going to pay. Also it is not just myself. We have over 160 peple who voted yes and want their vote counted. Some walked out and did not vote because they thought the vote would continue at the next meeting. This was their impression not announced. That is why it will become a class action after the injunction.
MaryA1


Posts:0


11/09/2008 8:44 AM  
Posted By NancyD1 on 11/09/2008 7:33 AM
Mary, The vote was only for reducing the budget using reserve funds not the budget itself. After I go input from the other board members and the budget was set it was placed on the agenda. The explination and questions took a lot of time (2 hours). People were walking out because it was almost 10:30 pm. We are facing many financial problems as are most HOA's. There were 246 members who attended the meeting. A lot of votes cast and counted. The count was not announced because we had not finished the questions and answers when we posponed the meeting to a later date. The attorney has the votes. I had already made the discission to resign the week before the budget meeting. The board was ready to vote on my budget at the meeting. Before he was appointed the new Treasurer stood up at the budget meeting. He got board members ears and they decided to let him redo the budget. The new budget does not include the vote and it does not address the cash flow when we have homeowners who are not paying. 2 current board members disagree with this budget. The other board members are friendly with the Treasurer and do not care what he does even if it is illegal.





Nancy,

I'm really trying to understand everything that happened. I don't understand why votes were cast b/4 all discussion had ended. What do you mean in saying: "The new budget does not include the vote. . ."? Am I correct in thinking the new budget cannot be adopted w/o a vote of the members? If this is the case, then I don't see what the problem is. All the board has to do is have a meeting to vote on the budget. If the members don't like it, they don't need to approve it.
JohnK3
(Pennsylvania)

Posts:967


11/09/2008 8:46 AM  
I could be wrong, but I don't believe "budgets" have any particular legal force unless the docs say so. All they are are projections; guidelines for proposed spending.

The transfer of funds from reserves to operating expenses is a separate issue. If the FL law says the HOA (Membership?) has to approve, so be it.
DonnaS
(Tennessee)

Posts:5671


11/09/2008 9:36 AM  

Nancy,
Could you please quote the section from your Docs which shows that the membership votes to adopt the budget?
Members have to vote to transfer or change Reserve accounts but most documents state that the Board adopts regular budgets so I am interested in how that is worded.
NancyD1
(Florida)

Posts:447


11/09/2008 10:03 AM  
Mary, votes were cast before and during the meeting. Our attorney said we could do this because of the length of te meeting. The new budget should include the vote because it was a legal vote. The new Treasurer does not want to include the vote to reduce the budget. The members do not vote on the budget the board does. The vote was only for transfering the funds from the reserve account. FL720 says we need a vote to do this. We got the vote but now the board is not honoring it. They want to put out a budget without the vote. Our contention with the board is: put out any responsible budget, but include the vote. They are proposing a budget without any vote.
DonnaS
(Tennessee)

Posts:5671


11/09/2008 10:14 AM  

Nancy,
Again I ask, do your Documents state that the membership votes on your budget. Most documents do not state that and the Board is responsible for adopting a budget. Why do you state that "They are proposing a budget without" any vote" and you said--"The members do not vote on the budget the board does". I am confused.
JohnK3
(Pennsylvania)

Posts:967


11/09/2008 10:15 AM  
Posted By NancyD1 on 11/09/2008 10:03 AM
Mary, votes were cast before and during the meeting. Our attorney said we could do this because of the length of te meeting. The new budget should include the vote because it was a legal vote. The new Treasurer does not want to include the vote to reduce the budget. The members do not vote on the budget the board does. The vote was only for transfering the funds from the reserve account. FL720 says we need a vote to do this. We got the vote but now the board is not honoring it. They want to put out a budget without the vote. Our contention with the board is: put out any responsible budget, but include the vote. They are proposing a budget without any vote.




I'm lost. Did the vote state funds "shall" be transferred or "may/can" be transferred? Was an amount given? Was a purpose given?


DonnaS
(Tennessee)

Posts:5671


11/09/2008 10:27 AM  

Nancy,
The vote to transfer the Reserve Funds passed the membership by a vote. Where did the Reserve funds go? Why were they transfered? Reserves are like "sacred money" and to move them, I hope that it was worth all of this hassle that you all are going thru and the purpose of the move was something spectacular.
NancyD1
(Florida)

Posts:447


11/09/2008 10:29 AM  
Donna, they is the board. Members do not vote on the budget the board does. We needed the members to vote to transfer funds as per FL720 from the reserve account to the operating account to reduce the quarterly maintenance. The vote was counted during the meeting before adjournment. The board now refuses to honor the vote. The board put out a new budget without the vote. The new budget is not the problem, but not including the vote is.
John, the vote stated "we will transfer funds from the reserve to reduce the quarterly but we need a vote from the community". The amount from each account was given. There were 4 accounts given, but they were combined for 1 vote. Our attorney told us to do it this way.
NancyD1
(Florida)

Posts:447


11/09/2008 10:35 AM  
Donna we were overfunded in these accounts. We needed to reduce the heavy increases in the budget to make it palitable for the homeowners. Homeowners were up in arms about having to pay for someone else who is getting the same services that the paying are. We looked for a way that the paying could live with and hopefully the new budget would not put more people over the edge and not pay. It was meet with great approval by the HOA as evidenced with the vote. 1/3 of our quarterly fees have not come in. We have taken the proper steps, liens, but foreclosure is out of the question. Most homeowners are upside down in their mortgages.
DonnaS
(Tennessee)

Posts:5671


11/09/2008 10:43 AM  

Nancy,
Thanks so much for clarifying that for us. Now it is understandable. Has the Board given a reason why they are just ignoring this vote and the reduction of assessments will also be ignored? As you are already talking with an attorney, I am going to stay tuned for what this turns out to be.

I know that the Board is not following the votes of the members but I do ask why you went the route that you did. Would not a mediator been a whole lot less expensive than the Civil Liberties route?

Remember all of the money that you were going to save on dues? I can see them gone in a blink on the lawyers. I also do not understand why D.and O. will not cover the Board. That's what that insurance is for.
JohnK3
(Pennsylvania)

Posts:967


11/09/2008 10:46 AM  
Nancy,

You wrote:

"the vote stated "we will transfer funds from the reserve to reduce the quarterly but we need a vote from the community".

Okay. That, under the FL law mentioned, and if passed, would seem to binding on the BOD.

However, if the BOD controls the budget, and if no amount or % was stated, then the BOD could reduce Q fees by $1 and be in compliance, yes?
NancyD1
(Florida)

Posts:447


11/09/2008 11:19 AM  
Donna,
I asked the board members why they were not honoring the vote. 5 of them said they do not care what the quarterly fees are. The exact words of one was "let them pay" as if he were talking about a HOA across the street.

Two board members want to go with the vote and my budget. The problem is the new Treasurer and I clashed constantly. He does not like me. I really don't care about him but I do care about the HOA. Five board members think he is to be followed because of his credentials.

He is a CPA and he made remarks that he could lower the bottom line figure and give us a better budget. We gave him two weeks. He gave us a bdget that is over $70./q more than mine, it reduces the reserve funding by over $7,000, where I reduced it by only $715. and he still does not address where the money will come from when the bad debt happens. We know from the foreclosures that we will have a certain number of auctions this coming year. He has not funded the bad debt enough. We also need cash flow for all the late quarterly's. I know the money is in receivables, but you can't pay the electric bill with the receivables.

His answer to not funding the bad debt and not having enough money for the payables is one of three choices "we will take a loan", "we will paint the houses every 9 or 10 years instead of 7", or this is a great one, we will borough the money from ourselves. He has made himself look like a fool and now he has no way out. The two board members tried to talk with him. He will not budge.
MaryA1


Posts:0


11/09/2008 11:26 AM  
Nancy,

OK, now I understand. The vote was to approve a transfer of funds not to approve the budget. The fact that the transfer doesn't show up on the budget does not mean the money wasn't transferred. The budget of my assn doesn't show transfers from the reserve fund, it only shows what is being transferred TO the reserves because that money comes from assessments collected. The proposed reserve spending for the new year is shown at the bottom, but is not a line item on the budget. The reserve accounting is separate from the accounting for the operating fund. The budget reflects income and expenses relating to the operating fund.

I wouldn't be concerned that the transfer is not shown on the budget; I'd only be concerned if the transfer doesn't show up in the operating fund bank account!
NancyD1
(Florida)

Posts:447


11/09/2008 11:35 AM  
Mary,

The transfer of funds has to show on the bottom line because it effects the bottom line in what we will pay in 2009. The money will not be transfered until 1/1/09. We could not transfer funds out of the reserves without the vote. The board at least five members said they will not honor the vote.
MaryA1


Posts:0


11/09/2008 1:35 PM  
Nancy,

You know a budget is only an estimate of income and expenses and can be amended at any time. Since you say the funds cannot be transferred until 1/1/09, aren't you jumping the gun on this lawsuit? The board can change their mind, amend the budget and transfer the funds.


BillG6
(Florida)

Posts:41


11/12/2008 7:29 AM  
NancyD....I'm interested in reading up movement of reserve funds. Specifically who is doing the voting...the entire membership or the BOD?? Please provide the FL Statue #. Thanks Nancy & good luck with your concerns.
NancyD1
(Florida)

Posts:447


11/12/2008 7:54 AM  
BillG6,

The BOD called for a vote by the membership as required in FLS 720.303 6 (d). The HOA attorney told the BOD yesterday that they have to continue the meeting with the original budget and the vote. The BOD at a meeting last night told the HOA this. At the end of the meeting when they were questioned on the process of the meeting the President then stated that it would not be a budget meeting as it was adjourned from and to. She then stated that the voters who did not vote will now have a chance to vote at this next meeting. They are looking into some convoluted way to look at who voted and who did nor and give the voters who did not a chance to vote. The vote was counted at the last meeting. It was called legal at this meeting by the attorney who atteded.

They are now calling it a Reserve meeting. They also have not sent out a supposed new budget as required by FLS 720. 14 days before the meeting.



SusanW1
(Michigan)

Posts:5202


11/12/2008 9:32 AM  
The Board can call a Special Meeting and hold a vote on a motion. As long as they comly with the Notice of the Call and other procedural steps, the outcome is "official."

P.S. They can also make a motion to "recind" any other previous vote and vote again on the motion. If Members don't want all this to happen, they can just keep voting NO on the motions put forward by the board.

That's how you can stop this transfer, which seems to be your main aim.


JohnM3
(Florida)

Posts:288


01/25/2009 10:33 AM  
Nancy I am a treasurer and exactly where does it say in 720 or since the patients have taken over the snatorium in 719 does it state that members have to vote on transferring money from 1 account to the other.
We have done this so many times its no longer worth working up a sweat over.

First of all the smart Florida way would have been to have a Budget Workshop meeting for the Budget alone nothing else can be discussed period/ Cities do it every year and thats what a hoa is in florida a minature city we both know that
second if funds had to be moved move them with a motion and a second at a reguar meeting under the treasurers portion of the agenda. Using your and your atty ideas a certain percentage of the community must show up and vote for or against. In 21 years I have only met the state and ccr requirement once for quorum numbers are you trying to tell me we cannot do what we have done for the past 21 years when we have n emergency such as you got it a hurricane.

Budget workshops allow everyone on planet earth to argue about it with there facts not suppositions TOPS reins supreme. Then at the following meeting you the treas make a motion to approve or disapprove the Budget that was a product of the Budget Workshop with changes requested by the members. The folks vote end of problem period.

Please dont hide behind the atty we dont we govern not all attys are right every time thats why you guys get the big bucks I would not have resigned I would stick to my guns you got to develop a thick skin to serve on a BOD for sure.....................seen a lot of good people quit because they were spoken bad of thats life...............
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