Question: Dysfunctional does not begin to describe our homeowner association. Owners have not received financial reports including budgets since 2008. Association taxes have not been filed since 2008. We are on our third management company in less than a year. Last night's board meeting was cancelled because of a lack of a board quorum. Three board members are rumored to be resigning this week.
There are two factions of warring homeowners, but the majority pay no attention to any aspect of our association. More than 30 of the more than 450 owners are seriously delinquent in their dues, with several bankruptcies and several short-sale offerings pending. These figures are approximate because no answers have been forthcoming from the board. Much-needed maintenance is not performed because the board is chronically indecisive. There have been at least three lawsuits brought by owners for which our insurance company had to pay out.
Is there a way we can hold the directors responsible for their failure to provide financials and other negligence-related problems without incurring another insurance claim and having our rates go up?
Answer: All directors must be responsible to the law, to the association and to the titleholders. It appears your board is at the very least being perceived as doing something right, as it has been reelected at least twice since your 2008 meltdown.
Just because items such as financial statements were not distributed does not mean they do not exist. Obtaining them can be as simple as making a request or as time-consuming as going to Small Claims Court for an order that the association produce those records.
Civil Code Section 1365.2 defines the records that can be viewed by homeowners, the time limits the association has for providing them and the penalties to be paid if they fail to do so. You should compare the actions noted with the documents you acquired from your demands.
If these items are not produced or they do not exist, immediately begin the process of removing the board. Rally titleholders who feel as you do and vote together. Send a notice that conforms to the requirements of your covenants, conditions and restrictions (CC&Rs). If there are no requirements in your CC&Rs, then follow the requirements under Corporations Code Section 7510(e) requesting a special meeting for the purpose of removing all the existing board members and electing new ones.
The new board should meet with delinquent owners and discuss payment plans and liens. Even though these types of financial circumstances may appear to be beyond the board's control, acting to preserve association rights could result in a recovery of at least some of the past-due fees.
Titleholders have personal assets at risk and must know the association's status in order to protect themselves. Nominating directors who take their jobs seriously and pursue actions that are necessary to maintain and preserve the association, collect dues and respect homeowners is primary to the association's well-being.
"Transparency" must be more than just a buzzword. Paying taxes, holding meetings, producing and distributing budgets and repairing the development are all obligations required by law and must be performed in the open if the association is to avoid further lawsuits.
Send questions to Box 10490, Marina del Rey, CA 90295, or e-mail firstname.lastname@example.org.