Problem Boards What to Do When Your Board Breaks the Rules

Problem Boards

A condominium, cooperative, or homeowners’ association elects a board for a specific purpose: to manage the community’s day-to-day business, oversee special projects, and draft and uphold the rules and regulations that keep life orderly and harmonious. In fact, the board has an inflexible fiduciary duty to act in the best interests of the community as a whole. 

This means that boards have an obligation to stay consistently on the side of good, advocating for residents and promoting neighborly well-being – and most boards do just this. However, boards are made up of humans, and humans are wildly fallible. Having sampled even a morsel of power, some find themselves starving for more; oftentimes other less malicious folks simply make mistakes, and rather than correct them, keep on stumbling down a wrong path. 

Once a board crosses over to the dark side, it can mean serious consequences for not only its members, but every owner or shareholder in the building or HOA. Infighting, backstabbing, loss of funds, declining property values, and even legal consequences may well ensue if the ship isn’t righted.

As Henry A. Goodman, a principal at Goodman, Shapiro & Lombardi, LLC, a law firm that has offices in Massachusetts and Rhode Island, puts it, “In any organization, things can go wrong; either by virtue of error in judgment, human frailty, or even corruption of one sort or another.”

It’s imperative that both boards and residents be aware of the reasons and signs that an operation has gone bad, in order to avoid the former and correct the latter as quickly as possible. 

Misguided Members

Board members of residential communities rarely view their position as an opportunity to head a criminal enterprise. When blunders occur, it’s usually due to ignorance of the rules, or an unwillingness to alter ill-advised behavior that has simply become habit. 

“In Illinois, a majority of appellate court decisions in which they’ve found a board or members thereof to be in breach of fiduciary duty have been because the board failed to adhere to the covenants of its declaration or the rules and regulations,” says attorney David Hartwell, a founding partner with the Chicago law firm of Penland & Hartwell. “One of the big problems is that a fair number of board members, either when they take their position or even throughout their time serving, have not fully read through the declaration and rules and regulations. So many times I get a call from a board member asking ‘Can we do this?’ And the answer lies within their documents; they just haven’t read them. You can’t know whether you’re within the boundaries if you don’t have a clear view of what those boundaries are.”

When it comes to board business, this type of ignorance is anything but bliss. “I have found that the boards that are operating improperly are rarely doing so due to malice,” notes Michael E. Chapnick, a shareholder with the Florida-based law firm of Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, PA. “It’s usually due to ignorance of their duties and obligations. They’re simply unsure as to what they’re allowed to do, what they are not, how they’re allowed to do a thing... and sometimes it comes down to simple education. Board certification courses certainly help.”

A board can err by doing something as seemingly minor as failing to notify owners of a rule change. “Sometimes a board will adopt or amend a house rule, and, rather than send a formal notice, they’ll send an email, or simply begin enacting the rule,” explains attorney Stewart E. Wurtzel, a partner with Tane Waterman & Wurtzel, P.C., in New York City. “Then, when down the road it comes time to enforce this rule, the fact that they didn’t follow the corporate documents can become a problem. Say that the documents specify that a notice must be sent by certified mail; they may spend an excessive amount of time litigating over a fine or a rule change that they simply failed to notice properly. It’s not usually malicious; they just feel as if they always did something a particular way, and it’s a minor issue until it’s actually enforced.”

Social Calls

Other board transgressions manifest due to relationships – or lack thereof – within the community. Showing favoritism toward friends, aggression toward rivals, or letting those with whom one does not want to deal at all act out unchecked are examples of this. It’s the board’s responsibility to treat everyone in their association fairly, and it’s a slippery slope once a board starts straying from this basic tenet.

“I’ve seen cases where a board has allowed board members – and only board members – the privilege to sublet,” says Andrew D. Stern, also a partner with Tane Waterman & Wurtzel. “Needless to say, this leaves corporations vulnerable to claims of disparate treatment and unreasonable conduct, and this can expose them to liability.”

“Boards, especially in bigger buildings, will occasionally look the other way when dealing with a direct neighbor who is breaking the rules,” admits Keith Hales, president of Hales Property Management in Chicago. “Obviously, this isn’t fair to everybody else. And then there’s the flip side of that, where someone they don’t like steps over the line, and the board throws the book at that individual.”

Hales also warns against a recent trend he’s seen of conflict-averse boards. “Boards don’t want to pick up the phone or talk to a person,” he says. “Nobody wants to call someone to see what’s going on regarding a particular incident and maybe squash it. I’ve found that all you have to do a lot of times is reach out, and you can solve 90 percent of the problems – especially with things like noise issues. As a manager, I’ll get calls saying ‘We have noise; you guys need to do something about this,’ and my response is ‘Have you gone upstairs? Have you knocked on the door? Have you told them that the noise was somewhat bothersome, and asked them to turn it down?’ And they’ll reply that it isn’t their problem. But yes, it actually is. They’re adults, and they’re not in a rental building. They’re an owner in a condo property, just like all of their neighbors. You get people hiding behind a manager or an attorney, and that’s when fireworks start. It just fuels animosity between both parties, and then you escalate it to the board, and when they don’t want to deal with it, it spills over. Then you have people wasting time and money because someone didn’t want to turn off their music.”

Abuse of Power

Sometimes board members can just get way out into the weeds, blatantly ignoring clearly stated rules. While these transgressions may arguably provide the most engaging anecdotes, they’re also the most destructive to the fabric of a building or association community.

“You’ll see with some frequency instances where an officer or president runs the board as if it’s a one-man show,” says Wurtzel. “They’ll refuse to approve an applicant solely because they don’t like them, dismissing a board vote. Or they’ll approve contracts without proper bidding or full documentation; without backup. And of course, if they’re hiring someone’s friend as a contractor who’s not as independent as they should be, things can get even worse.”

“I knew of a board where for years, unbeknownst to anyone, the president was embezzling enormous sums of money,” relates Hartwell. “The property manager eventually noticed various anomalies via the building’s accounting, and called out this president. That property manager was abruptly fired. Then the next property management company was so happy to get a big account, that they were unwilling to call anybody out on the carpet.”

And occasionally board transgressions can reach late-night cable levels of tawdriness. In one building, “A board member invited an employee of the condominium to her home for lunch,” recalls Goodman. “When the employee arrived, she indicated that she was for lunch, and asked him if he liked what was on the menu. An affair ensued – until the wife of the worker got wind of it. The worker quit his job and indicated that he was going to sue the board for sexual harassment. This was a case of vulnerability and ignorance of the consequences of a board member’s actions.”

Citizens on Patrol

So what authority does the owner or shareholder have to check a board that has violated its trust and neglected its duty?

“The owners’ or shareholders’ power relies on the association’s transparency,” says Stern. “To the extent that it’s possible, the shareholders should be reading minutes and developing a relationship with the managing agent. An absence of transparency is often considered a red flag. To an extent, these organizations are representative democracies, and there is a limit to how much an individual shareholder or unit-owner can supervise their board’s activity. Needless to say, in almost all of these organizations, audited financials are distributed to owners and shareholders annually, and to the extent that they’re able, they should be reviewing these documents. Should money start to disappear, that’s another red flag.”

Chapnick urges residents to consistently attend board meetings. “Listen up, and understand what’s happening,” he says. “If you don’t follow something, ask questions. If you can’t get answers from your board, ask your property manager. Understand what the law is, and how it applies to your community. That starts with the declaration, the articles, the bylaws, whatever the relevant statute is.”

Truth and Consequence

Of course, it doesn’t fall entirely on the owners or shareholders to police their board. Should a board willfully disregard the rules for long enough, it can face serious personal, financial and legal consequences.

“There’s a mechanism that allows a unit ownership to remove a member from serving on a board,” says Hartwell. “The board itself can’t do it; it has to go to a vote of the unit membership. Board members can also be held personally liable, without indemnification coverage from association or coverage from the directors and [officers] insurance policy. And sometimes the mistakes can leave them on the hook for hundreds of thousands of dollars.”

Some offenses, like misappropriation of association funds, can result in criminal charges, depending on local statutes. “The best way to handle this type of financial issue is to begin with a records request,” suggests Chapnick. “Examine the association’s official record, get copies of the budget, get copies of the check registers; just follow the money. Understand who is using what, and by what right they’re doing it. Once you’ve compiled that, if you believe that there’s evidence of fraud, theft, self-dealing, etc., take your account to the police department’s economic crimes division.”

“Being on a board is about administering a multimillion-dollar asset, and members need to have that mindset when they agree to serve,” Hartwell summarizes.  “Because it’s serious stuff. When you start doing things that could materially affect a unit owner’s property value, they’re going to come at you with pitchforks and spears. So you better make sure that you’re doing it correctly.”   

Mike Odenthal is a staff writer/reporter for The Cooperator. 

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  • What about Boards charging back DOB maintenance violations to shareholders ? Isn’t this illegal?
  • My board has a vote last night at 6pm. The tally with everyone there was 37 yes 21 no. The majority would be 40 since there are 78 homes. It seems the board stayed around after the vote and convinced 2 people to change their vote and stated 1 vote came in late. At 10:17 we git an email from the president that they got the 40 votes, stating the reasons just mentioned. The condo is on Long Island NY
  • I am starting to have an issue with a member of my board. Our pet, rule in our Doc's Clearly states we can have one only (1) dog or cat under 15 lbs. We have a board member that is allowing her son and daughter-in-law to have 2 small dogs. Normally I would not care but, They are causing a noise issue with the residence that live near by.
  • Been living here 2yrs the past 2 summers I have taken my dog out on the community back deck. A month ago I was just coming in from the deck and a board member stopped me and said I can’t bring him out there I asked why and he got in my face like a drill Sargent telling me “well you better learn the rules buddy or I’ll slap a $25 fine on you” he was very hostile and people were watching. Shortly there after I received a warning notice from management company. This board member lied to the board and also didn’t notify the president. He also lied to the management company but they also didn’t follow the rules. This hostile board member walks the halls confronting residents. How do I deal with this the president of the board acknowledged the situation but nothing they can do?? Lots of rules and laws broken?
  • My condo board president is harassing me in South Norwalk, CT and getting away with it. He and the property management group break the rules and neglect their duties to the complex, which is sad and pathetic, but they've been aggressive in pursuing me, and it's all based on his lie. I have been trying to find a lawyer, but no lawyer will help me. I am not going to appear before this corrupt man and his board, his property manager, and his condo law firm. I feel beat down by a bully. I feel it's not only racially motivated but this guy is obsessed with intentionally hurting me. This includes bogus fees fines and theft, and even physical aggression. I've tried HUD, Fair Housing and the DOJ, and even left a message for CT's Assistant Attorney General, but no one cares. What can a condo unit owner do when faced with corruption and discrimination? I read all these little stories of hurt feeling on the web these days, over shirts and hair and notes, but I have a real significant issue that could cost me my home and tens of thousands of dollars. There are no laws for protecting condo home owners and there should be.
  • We have a HOA which is mainly to cut grass. The president and vice president have been friends for years and yeras ago the one of them woman made a meeting in her home to have a following meeting on voting. That never happened. Everyone got a paper in on their doors stating the NEW PRESIDENT AND VICE PRESIDENT there was no VOTE EVER. Since then, since hardly anyone goes to meeting they been on the board. They put who they choose with just few votes less than 5. Now they are making decisions to install more lights and in previous meetings never discussed what their plans were going to be. Now we have a meeting and all the sudden a letter stating they want to add lights in the entrance. Further, I personally went out of my way to a hall near the complex I live to have meeting closer to the house . I advised the HOA Financier., since last year they spent 600 for only 12 people to come which takes at least 15 min to get too and today he tells me there is no space to where I told him. When in fact there is plenty of space plenty. I feel because his office is near the hall they chose is for convinience and the two president and vice president know no one is going to come the farther away they do it no one will come and they stay in position. . These people are violating and not informing properly the community and doing as they wish and I find that is should be illegal
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  • I Have Lived in my community for 19 Years. I have been on the Board of Managers for 5 years. When I first moved in I was given a tour of the grounds and it’s Facility’s. The Grounds are Beautiful and the Pool, Clubhouse,Playground and Picnic area with Barbecues was very nice. So I was very happy for my family. In 2001 in June I went down to the deck that is attached to the Clubhouse one day to Barbecue with my family. To enjoy the Grounds and have a nice day with my Family and some Friends. So I went to put my Hamburgers and Hot Dogs in the Refrigerator in the Clubhouse until we were ready to use them because it was hot out. The Clubhouse was locked. So I had to get in my car and Drive back home to put my food in my Refrigerator and then return later to get the food to bring back to cook. I was inconvenienced and embarrassed in front of my family and friends. They ask why it was Locked. So I went and asked a Board Member why the Clubhouse was Locked and their reply was. It’s always are not aloud to use it. Unless you want to pay and use it. I said why can’t I use my Clubhouse that has my furniture, Refrigerator, Stove Etc... That I pay for. I said...why me? He said it’s not you It’s everyone. I said why he said that’s the way it has been. When the complex opened in 19 £.74 the Clubhouse was open to community it was that way swirl 20 years.and then it was shut down sometime in the early 90s So now it’s 2020... I am on the Board of Managers Trying to fight to get the Clubhouse open to the Community. I have Read the Bylaws and rules and Regulations. The Bylaws say “All the unit owners, their Permitted Lessees,Their Families,and Guess, will Be Entitled To Use The Facilities subject to such Rules and Regulations as the board of Managers may adopt from time to time” My Questions is ‼️ Isn’t it the responsibility and the Duty of the Board of Managers. To Find a way to open the Clubhouse with Rules and Regulations that protects the community and the Property from Damage and Harm. Not to Just shut and Lock it up. The Owners Pay for the Clubhouse and everything in it and the electric etc. when they first bought their unit they were Led to believe that it was there for them and their Family and community to use. ‼️ By the way there’s No rules or Regulations or even a record of a Vote of the Board of Managers to close and Lock the Clubhouse. I have tried to get it open with no results I even text the Attorney and got into trouble for that. The board of managers has people on it that have been on it for over 20 years. That are stuck in their ways. I Need Help‼️ To get the owners of my community the right to use Their Clubhouse. Which was taken away from them. Help‼️ PLEASE ‼️
  • Im wantung to know if its illegal for hoa to shut my gate card off giving me no access to my home. Cant go get water. Csnt go to store. All because i hauled in a vehicle in with my truck
  • I am a Resident in a Condo association. The lights in the hallways went out and the Board has not replaced them, creating a danger for the elderly-80-90 year old Residents. At a Meeting, I rose to complain on behalf of the elderly. The Board's friends starting hollering at me to sit down and verbally abused me (an almost 90 year old resident), to the point where I became so upset, I left the meeting, not able to conclude what I wanted to say. My Freedom of Speech was being denied me and all the Board Members just sat and let it all happen. What is my remedy, if any, I wonder!!!!
  • I live in a gated community and the manager seem to be controlling the Board when the Board is her boss. She fill the vacant board seats with out an election and the new home owners don't even know that we suppose to have an election at some point. The Board allow the manager to continue with Board meetings via zoom this way she can control the complaints made by the home owners . In order to log in to the meetings the managers office must email you a code inorder to log into the meetings. If she don't want you to log in she simply don't sent you a code. Every thing is open. The pool, the play park, bingo and the gyn. She lied when the home owners asked why was the speed limit changed from 35 mph to 25 although their are no houses in this area she said that the Township changed the speed limit. The Township have no say so over our speed limit because this is private property.
  • Our board members are trying to get rid of all of us who have lived here, so they can buy up all the condo units. They tow us illegally. They break every rule that we have to follow, I have pictures and proof, but our HOA does nothing at all.
  • I have written before in October 2020…. I haven’t gotten any response form anyone. Our clubhouse is still locked and we as owners have no access to it. I asked the Attorney of the condominium board why we as owners can not use our clubhouse. When it says in our bylaws that all owners are entitled to use the facilities. His answer will it’s been that why for the last 20years. Does that make it right. When at one time it was opened to all owners for the first 20 years and now it’s locked. With no explanation. Help Please