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KASS: Dealing with an unruly board

Q:     For a dues increase our governing bylaws require a 60 percent vote at first meeting, a 30 percent at second meeting if not voted at first meeting. Additionally, our bylaws say they can raise by no more than 10 percent without vote of previous year’s dues and after the first two meeting of 60/30 percent vote. The board is not being transparent with funds. They never send out an expense report with the budget, at annual meeting, or after election and annual meeting in end of 2016 and in mailings? One more issue: they have started to fine for having your garbage can in front of your home. There is no wording or fine structure for this in our governing documents and no such city law. Any guidance on an unruly board? Abraham.

A:   Abraham, it probably won’t be any consolation to you, but you are not alone with complaining about unruly boards of directors. In fact, I recently heard from a condo lawyer that two of the five board members were fighting the remaining three and that both sides were about to file suit against each other. If you want to read an interesting book, I suggest “Escaping Condo Jail,” by Benson and DeBatt.

What can you do? Are you fighting these problems on our own or do you have the support of many other owners? What’s the old saying: there is strength in numbers? Get others to join you in demanding transparency. What do your bylaws say? Do you have access to the books and records of the association? Although some condo laws require that you have to show an “interest” before you can review the associations books, you clearly have such an “interest.” It’s your money and you want to know much is collected and how much is spent annually.

Bottom line: Read your legal documents. You have more rights than you probably realize. And if you – and hopefully a large groups of similarly inclined owners – can retain a local attorney who understands community association law, that would be the best offense.

 

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Q:   Three years ago I bought a condo in a development that had gone bankrupt and all units owned by the developer were repossessed by the bank. There was a condo fee and a management company in place when I moved into the property, but no board of directors. Within a year a developer took possession and built more units, paved the streets, erected decorative fencing, street lighting, entrance gate, garages etc. The community has doubled in size, looks finished and is indeed bona fide.

The developer pays condo fees from what we are told. He owns half the units which he rents. We were told by the management company that we would probably form two condo associations with shared common ground, such as the pool, landscaping and two ponds and the roads. The management company really works for the developer. We were told to be patient and let the developer finish the project on his dime.

Well, we are waiting for the real condo thing to happen with a board of directors to handle rules and repairs and other issues which are arising. We are told the condo people own their units and the plot of earth under them, but the developer owns the rest. It feels weird to me. We get a yearly Readers Digest version of the financials with not too much in reserves.

So do we just wait for the developer to make a move or can we nudge this along. What is your thinking please? Barbara

 

A:     Dear Barbara, Regardless in what state you live in, there are condominium laws in effect. When a bank forecloses on a developer before all of the units are sold, a new developer may or may not be what is known as the “successor declarant.” Oversimplified, that means that the current developer may or may not be responsible for any promises that the original developer made to the current owners.

This is a complex area of law, and you – and all of the other owners – need to retain a local attorney who practices community association law.

However, there is a condominium in place and the current developer is in control and must comply with the state laws. For example, there has to be a board of directors, even though the developer most likely still controls the board. You should review your state condo law since with the passage of time, some of the current owners may be eligible to serve on the board. And board meetings must be held and be open to the public unless such things as litigation or personal unit owner issues are discussed. You are entitled to review the books and records. You are entitled to a more comprehensive annual accounting. And there has to be at least an annual meeting where there can be a give-and-take between the owners and the developer board of directors.

You need legal counsel. You can go to the Community Association Institute (caionline.org) for guidance and suggested attorneys in your area.

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