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08/22/10: Dealing With A Difficult Board

HOUSING COUNSEL

By: Benny L. Kass

Q: Is there a time by which a Condominium Board of Directors must reply and set a date for a special meeting? A number of us unit owners are concerned about the lack of disclosure of serious financial conditions and possible Bylaw infractions by the Board. Our Bylaws require that the Board call a special meeting if 25 percent or more of the owners (based on percentage interest) file a petition requesting that meeting.

To date, more than three weeks have passed since we formally presented the petition. What can we do?

A: Certainly, I do not have all the facts regarding your matter. In any event, there are good Boards and "not-so-good" Boards. A good Board would probably never get into this situation, because communication generally resolves most association disputes. However, when a Board holds closed meetings, and does not disseminate information to the membership that elected them to office, suspicion and distrust rises to such a level that often the community becomes seriously polarized.

My general advice to owners who complain about their Board and their community: you have three alternatives. Fight the system, and get yourself and your friends elected to the Board; accept the situation; or sell and move out.

You have chosen the first approach. Assuming that your petition is valid - i.e. that the requisite percentage of unit owners have signed - the Board its legally obligated to call that special meeting. That meeting is to discuss only what is contained in the Petition. It is not a free-for- all where everyone can discuss everything that concerns them. In your situation, you have asked the Board to discuss the financial condition of the community as well as alleged Bylaw violations. Unless your petition specifically listed questions for the Board to answer, I am concerned that your petition is too vague, and even when the special meeting is called, you may not be given responsive answers.

Review your petition. If it is too general in nature, I suggest that you submit a revised petition (again signed by the requisite number of unit owners), and present a number of specific questions for the Board to answer.

The petition should list three or four dates when the meeting can be held. While the Board does not have to honor those dates, it does have the obligation to call a special meeting. Give them one month in which to call the meeting. If it is not called, then depending on where you live, you may have the following remedies.

In Virginia, you can contact the newly created Ombudsman (www.dpor.virginia.gov). In Montgomery County, Maryland, you contact the Commission on Common Ownership Communities (www.montgomerycountymd.gov).

In the District of Columbia, or in other Maryland counties, you will have to file a lawsuit in the appropriate court.

But even if the Board is responsive and calls for that special meeting, will that satisfy you and your other owners? If not, here's another suggestion: "throw the rascals out".

Every community association has a provision in its legal documents allowing for the recall of elected board members. Keep in mind that while a board elects its officers - and has the right to remove those officers - usually only the membership can remove a board member. You have to carefully review the procedure - and the requisite number of votes needed for the recall - spelled out in your association legal documents.

Mount a good old fashioned political campaign, much like the politicians do when they run for federal or state offices. Get team (or floor) captains to gather petitions signed by as many owners as you can. If there are absentee owners, demand that the board send your materials to all such owners. The Board should not release the names and addresses to you, but should be required to send the material if you provide the necessary postage (and administrative costs) to the board.

The recall vote can be held at a special meeting, and again you will have to file that formal petition with the Board. Alternatively, if your annual meeting is coming up shortly, use that as the vehicle. But, once again, you must comply with the legal requirements in your Bylaws, including requesting the removal and election of board members.

You should have a slate of potential Board candidates included in your petition, so that owners who will not attend the meeting will vote for those owners by proxy.

It is recommended that your group retain an independent attorney to guide you through the process. The association's lawyer will challenge any deviations from the requirements, so you want to make sure that you follow the rules.

It is unfortunate that many Boards do not understand that they were elected to serve the best interests of the association. Most Board members are hard working, but some are on an ego-trip: this is the first time they can be called "Madam (or Mister) President."

Board members have a fiduciary duty to diligently represent the owners who elected them. If they are not doing their job, it is up to the association members to either hold them to this duty or remove them from office.

- Boilerplate--

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