Reader Questions - HOA Needs Intensive Care

Hello Mr. Richardson,

Long story short, the members have all been reluctant to get involved on our board for many years. They are all fine with someone else doing it.

Our vice president resigned and then appointed herself “manager.” She paid herself each month as vice president, and upon becoming “manager”, she gave herself a raise. The association didn’t file 990 forms with the state and now the HOA’s status as a corporation has been suspended.

The member-manager illegally dismissed the board and got another member to support her, and this person is now called the “CEO”. There is no board now, just the self-appointed manager and the CEO. Her forged documents have the police snowed (they say it’s a “civil matter”). She has gone as far as to fire the gardener and her and husband are now gardeners.

My question to you is how to remove this person. It’s quite a mess, but if there is any advice you can give, I would be grateful.

Sincerely,

J.G., San Jacinto

Dear J.G.,

Your HOA’s experience is a textbook example of what can happen when too few neighbors pay attention and fewer still are willing to serve the community as directors.

I am often asked about various ways in which associations might be reclaimed from dysfunction. Government takeover is not an option, as there is no state agency which enforces the Davis-Stirling Common Interest Development Act. Receivership, in which the court appoints an outside person to be paid to run the association, is a terrible option, as it will drain the association financially. Litigation will not reform an association; it is very expensive, creates major rifts in the community, and does not effect permanent change. The best approach is for a group of neighbors commit to set aside their egos and personal agendas (that is difficult but is absolutely necessary), learn how to govern their HOA the right way, and then set about doing just that.

Change alone is not enough. Each year I see associations taken over by motivated neighbors seeking and promising “change,” when the change which ultimately results is simply the board personnel and nothing more – the new board, just as the previous board, ignores law, governing documents, and clean governance as it settles old scores and allows its ends to justify its improper means.

Your neighbors should not tolerate an association operating without a functioning board, officers being paid, or neighbors taking over as paid vendors (management, landscaping, or anything else). A newly installed board should commit not only to fixing what is wrong, but also to learn how to do what is right. Directors can join the Community Associations Institute, and take the online and live board training courses it and its Chapters offer. Insist not only upon an educated board, but also that the board educate the membership as to what things truly cost, and why assessments are at their level. Insist that the board operate in a highly transparent and communicative way, working to earn and maintain the community’s trust.

Hire a good management company, with credentialed managers. The cost is offset by the expertise and relief a good manager can bring. Volunteers are often scared off by the workload – which can be largely handled by a manager.

Hoping things improve,
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.