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Community living: Homeowner can sue board over lax enforcement of rules

Homeowner can sue association's board over not enforcing rules

Q: Can an HOA be sued for not enforcing the deed restrictions in a subdivision? We live in a nice, older deed-restricted community where owners have trailers, boats, remote buildings and poorly maintain property. All of which are in violation of the deed restrictions found in the documents.

A: It is possible for an owner to sue the board for nonenforcement of the rules. Unless there are extreme situations, I do not recommend this action as it is expensive and time consuming. It also may cause disagreements between neighbors. If the board does not enforce the rules, as you describe, the value of homes in the community will drop in value. The failure will also make future enforcement almost impossible. The long-term nonenforcement action provides a violator an excuse to evade corrections. It is a case of use the rules, or lose the right to enforce them. If the board is not performing its duty to enforce the rules, the members must vote in new members that will. A community that neglects to elect directors who will perform their duties will find that they will pay with the loss of value in their homes.

Nonmember serving on board likely has a vested interest

Q: A member of our board of directors is a nonmember of the association and is authorized by FS Chapter 617.0802, our articles of incorporation, and the association bylaws, which all state a director need not be a member of the corporation. A nonmember of an association cannot vote in a member's meeting but can vote as a director.

How can a nonmember holding a position as a director vote as a board member since all issues voted on by the board of directors affect all members of the association? If a nonmember cannot vote in a member meeting, what rationale and legal interpretation applies here that now allows a nonmember to vote on matters affecting all members?

A: The nonmember that you are addressing could be a renter, a family member of the owner, or maybe an investor who has an employee that is placed in a position to protect the investor's interest. Keeping in mind that a director has liability, obligations to the members and a fiduciary duty, it would be lunacy for them to assume such responsibility unless they have an interest such as I describe. I do not think any person would serve unless they have some goals or obligation to become a director.

If you have such a person serving with goals that are not in compliance with the objective of the association, then why did the members elect them? Not enough volunteers to be candidates? That is your community's failure to be active and volunteer to become a candidate. I have seen directors that were not owners that put in more time and effort for the benefit of the association than any member. Do not discount a nonmember as aloof. The key is a community that supports the programs and serves by volunteering and voting.

Having board appoint members to paid positions raises questions

Q: I live in a manufactured home community which is a co-op, or share ownership park. One of our board members and an officer has appointed himself to a paid position within the park. The park has several positions available and most of them are occupied by board members. The board appoints these positions and always picks the highest paid positions. The directors also decide the salaries and work hours for those positions. The selection to fill these positions is not a lottery but by board selection. This method appears to be unethical or maybe illegal. Some of the shareholders question if holding a board-selected paid position at the same time as being a board member and or an officer of the board is ethical or even legal. Do you have any insight as to the ethics or legality of this situation? The board of directors has indicated they will not get a legal opinion from an attorney on this matter, saying they don't think spending the money for an opinion would be a worthy expense for the park.

A: Though there maybe some degree of illegality, I would say it is more an improper action. It could even be a fiduciary violation if selection of the employees is not properly conducted. I hope the board is reporting the income, withholding proper taxes, producing end-of-year reports and paying for workers' compensation and other required insurance. It would be illegal if the board is paying for the work out of pocket or under the table. I would be more concerned if the reports were not properly filed or proper insurance was not obtained. When I hear a question like this, I often think that the problem can be corrected at the next annual meeting by electing other members to the board. Right now about the only thing the members can do is write letters and put the board on notice of your concerns.

Richard White is a licensed community associations manager. Write to him at 6039 Cypress Gardens Blvd., No. 201, Winter Haven, FL 33884-4115. Please include your name and city.


Community living: Homeowner can sue board over lax enforcement of rules 11/26/10 [Last modified: Friday, November 26, 2010 3:30am]
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