MANAGERS ACTING BADLY IN HOA ELECTIONS – WHAT CAN BE DONE?

MANAGERS ACTING BADLY IN HOA ELECTIONS – WHAT CAN BE DONE? WHAT SHOULD BE DONE BY A BOARD! WHAT CAN AN OWNER DO?

Elections are coming up for many HOAs next spring. A board needs to start fairly early in the process to solicit nominations for the board and set up the election because of California law requiring certain timing. Owners must be given at least 30 days to return ballots and boards should solicit nominations at least 30 to 60 days before that so they can get names on the ballot of willing and qualified candidates. Boards may need some time to vet qualifications. And, I would add one very important thing – if the manager screws up or act badly, it puts the HOA a considerable risk. Many boards rely completely on the manager to conduct the elections. The manager is basically an agent of the Association and therefore any culpability on the part of the manager translates to culpability on the part of the HOA. And there is the important factor that most management contracts provide that the homeowners association must indemnify the manager if the manager is sued acting on behalf of the Association. What does all this mumbo-jumbo mean? If the manager acts badly, the HOA can be held solely responsible. Thus, boards, it is critical that you understand that if an owner points out bad behavior on the part of the manager, rather than ignore that, you need to take heed and investigate, and take action the manager is indeed acting badly.

Here are three things I have seen happen that are abominable.

Manager tries to change an owner’s vote claiming that she knew of the owner wanted to vote in the election and her proxy/ballot indicated otherwise. This particular scenario occurred before the new election laws took effect requiring that ballots be separated from envelopes so that no one would know who voted how. Since I was present for this one, I had the opportunity to shut the manager down before she did something dastardly. I don’t think this was the only time in California this had ever occurred and if any owner had been within hearing distance, it certainly would not have felt right to them either. The board members in this case of the manager was God and so were all for it. I resign from representing this Association shortly after the because the board did not listen to me in advising that elections must be fair.

Manager does a recount in her home the night of an election and sends out a notice to all OWNERS the next day stating that the count was wrong and in fact the new board members that have been announced were not new board members. I was present at this election. The ballots were counted and the new directors were announced. This, too, was before the new elections law took place. It would not happen today in any HOA that follows the new election laws. What happened was that the morning after the election, an owner sent me a copy of the notice from the manager. Since I was attorney for the HOA I advised the board to immediately get out a communication denouncing the manager’s notice and consider firing the manager. Again, in this case, the manager and the board were so intertwined, and the board depended so much on the manager, that they responded they were going to go with the manager’s determination. I resigned immediately from providing services to this Association.

Manager maligns board candidates, touts other candidates, usually incumbents, or maligns owners for seeking recall of the board. Oddly enough, I received an email about this problem recently after hearing from three other people of a similar situation. Some of the problems arose in a board election and the most recent question came in response to members petitioning for a recall election. Here is what the most recent email told me:

Our manager maligned the recall election petition, calling homeowners who did it “appalling and disgusting” at an open board meeting.  She said they should pay for the expenses.  Then she proceeded to say she will have our lawyers do it because she will not have anything to do with it.  She is intentionally making it a very expensive process. She was inciting a protest against the recall election.

This manager’s behavior is illegal, is it not?  She is supposed to stay neutral and not take sides in an election.  She is continuing to tell everyone who would listen, to vote against it because she does not want to lose this board member who let her do anything she wanted, include 1 bid $600k projects.

What should we do?”

I would say it is the manager’s conduct that is “appalling and disgusting. To the extent any of this is true, and not just a situation where the owner’s “hearing” was impaired by bias, it is this kind of egotistical and power-hungry personality that creates a climate where the legislators of California feel like they need to step in. These kinds of stories are real and are nightmares and they are what the legislators hear, not about the 40% or so of boards that do things right. I am attributing only 40% to doing things right based on what I hear through my readership of more than 7000 , and my own client list of over 400 associations and 400 individual owners who have received consultations in the past 30 years. I will guess that at least 80% of boards in California are clueless about what the law says and somewhere in a 10% range allow very poor conduct on the part of the manager or board members, or just act outrageously. We are talking about more than 45,000 HOAs in the state, so if even 4500 boards or managers are acting badly, someone is going to hear about it. It might be me, and it might be the legislators, and it might be the courts.

What can an owner do? This appears to be a direct violation of California law requiring equal rights in a campaign. If a board uses its resources to try and sway an election, owners have the right to the same forum. This includes use of meeting spaces and fully funded association communications. I would go so far as to say a denunciation and retraction by the Board of the manager’s comments is a place to start in this situation. An owner has the option of challenging this behavior in Small Claims Court and asking for a $500 penalty for each violation under the Davis Stirling Act (see what is required in campaigning fairness below). And under new law, Civil Code Section 4515, which is the subject of a recent E-newsletter (which is archived) AND blog that you can link to on my website at www.californiacondoguru.com, an owner may have a right to go ask a small claims judge to condemn the conduct and direct a fair election.

The Board has an obligation to hold a recall election if a petition that satisfies legal requirements (the key) is given to management or the Board.

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Boards, I can say with conviction that you must clean up your side of the street if this is happening in your HOA. Boards and Owners, get some legal advice on how to handle it. I would start if counseling an owner suggesting with a strong  letter making appropriate points, threats, and objectives. What I have found in my more than 30 years of practice is if you don’t tell boards how to do things the right way, but just tell them what they do wrong, nine times out of 10 they will put up walls. Boards that are clueless get scared, and then resign or clam up or ask their own HOA attorney to become their shield. And in worst-case scenarios, the attorneys align with the manager and the board even if the conduct is detestable and now the unfortunate owner who wants to set things right has a big hurdle to get over. Sometimes in these kinds of cases there are really only two viable options left to an owner – step up and fight (the owner will need a good plan for this), or work toward an exit strategy. So maybe one more comment is helpful – if you are an owner really frustrated with what is happening in your Association and you’re not up for the fight, and I don’t mean become obnoxious and respond in kind to the board’s actions because that will get you nowhere, you might want to consider an exit strategy before you make yourself sick or broke.

Here is the Davis Stirling Act law and some commentary that appears in my publication THE DAVIS STIRLING ACT IN PLAIN ENGLISH. You obtain this publication through my website at www.californiacondoguru.com.

5105. ELECTION RULES

(a) An association shall adopt rules, in accordance with the procedures prescribed by Article 5 (commencing with Section 4340) of Chapter 3, that do all of the following:

Comment: Many boards just do not get it – that the code requires associations to have election rules that contain certain provisions, and that having election provisions in the Bylaws is good, but not a substitute for adopting a good set of rules and circulating them to owners.

  • Ensure that if any candidate or member advocating a point of view is provided access to association media, newsletters, or Internet Web sites during a campaign, for purposes that are reasonably related to that election, equal access shall be provided to all candidates and members advocating a point of view, including those not endorsed by the board, for purposes that are reasonably related to the election. The association shall not edit or redact any content from these communications, but may include a statement specifying that the candidate or member, and not the association, is responsible for that content.

Comment: This and (2) can be a problem if candidates want to make personal attacks and/ or circulate materials criticizing the Board. There is not a lot a Board can do but if materials could incite, it would be wise to seek legal advice.

(2) Ensure access to the common area meeting space, if any exists, during a campaign, at no cost, to all candidates, including those who are not incumbents, and to all members advocating a point of view, including those not endorsed by the board, for purposes reasonably related to the election.

Comment: (1) and (2) will come to be known as the “equal access” sections. The question will be: does it mean access must be provided, or just that if it is, it must be equal. And can reasonable limits be placed, such as frequency of times and manner of use. There is a 2013 appeals case (Wittenberg) that requires boards to provide equal access if the board “advocates for” a measure in an election. And so legal advice may be needed if any question arises.

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Consultations are available and the information is at www.californiacondoguru.com. Don’t strike out on your own if your plan is to “retaliate” against a board or management because the deeper you dig your own hole, the harder it is to get out of it and get the support you need for breaking the ice or overthrowing a board that is out of control or asleep at the wheel.

 

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