Whereas most books on Homeowners Associations focus on running them right this 2014 book examines what can go wrong with self governance when boards run amok. I will look at all the chapters in separate blog posts but Chapter 9 particularly hit home for me. Excerpts follow:
The majority of associations have a few narcissistic, goal-oriented board members focused on gaining control and power. Other these power-hungry people arbitrarily level fees, fines, and assessments, and before other owners know it, the board is comprised of like-minded friends and associates. The result is that ordinary property owners are powerless to influence any of the board’s decisions. (page 219)
Board directors have been known not only to manipulate, edit, and censor minutes, but to also tamper with elections. Election tampering has been so severe in parts of Florida that election monitors from the state’s ombudsman’s office are often brought in to oversee proceedings. Unfortunately, many states have neither an ombudsman’s office nor state-qualified election monitors. (page 220)
Battle-weary veteran owners advise youthful owners to stay away from litigating if at all possible. The board has its own attorneys, and deep pockets consisting of your money….Association living is supposed to be a democracy, not a dictatorship. (page 222)
There are no real protections against violations of the election process or any true oversight to ensure fair elections, as the incumbent board often controls the elections and hears andy and all claims of voting irregularities. (page 223)
The abuse of proxies has been a long-standing and continuous complaint among many association members. Entrenched boards gather proxies from unsuspecting and trusting owners and then use the proxies to remain in power – often for their own personal gain. (pages 224-5)
The moment someone who stands to gain or profit from an elected position touches a proxy, it becomes contaminated and invalid – unless the conflict of interest is disclosed. Officers should disclose all conflicts of interest in writing to the owner prior to requesting a proxy. The owner giving the proxy must have informed consent. If informed consent was not obtained, the profiting proxy holder becomes an “undisclosed dual agent.” Undisclosed dual agency is illegal in all 50 states in America. (pages 225-6)
Many ask if a quorum consists of the people attending the meeting. The answer is no. A quorum consists of a percentage of all of the unit owners. At a board meeting however, a quorum may refer to a majority of directors present. (page 227)
The primary difference between a meeting of the members (special meeting)and a meeting of the board (board meeting) is that the members can make motions and vote at a meeting of the members and cannot do so at a meeting of the board. The board may attend and facilitate at a members’ meeting but does not have a decision-making role whatsoever. (pages 228-9)
As to the minutes of a special meeting, the rule of thumb is that minutes of members’ meetings are approved by the members. It is improper for the board of directors to approve minutes of a members’ meeting. Finally, if any substantial items are covered and voted upon, a motion must be made at the meeting to have a special committee of attendees meet and approve the minutes for the next board meeting. (page 230)
A recall is a vote to remove existing board members. Recalls are not rare,. Sometimes the only way to get a rouge board under control is to conduct a recall. This will take a majority of the owners to attend a special meeting for the purpose of recalling existing board directors. Governing documents and state statutes should offer guidance for removing board members. (page 233)
Where possible, bylaws should be amended to allow online voting. Online voting makes reaching a quorum much more likely and effectively thwarts proxy and election abuses. (page 235)