Freebies for Board Sow Discontent
Question: We live in a common interest development in Riverside with less than 100 units and an unincorporated homeowners association. The homeowners in my association are unaware that our board has access to the free labor of vendors at our complex. These persons include gardeners, maintenance workers, roofers and plumbers. Even though a board member may pay for the parts, the labor is free to the board member because the workers are there anyway. Many times the vendor wants to influence the board member to extend or obtain a contract.
In one such instance, our board decided to purchase additional plants for the association. All the board members suddenly had new garden boxes filled with flowers. They also received some free home improvements.
The board members told homeowners they paid for their own plants and home improvements, but this is not quite true. The board members got free plants with the original order and additional plants, later, at wholesale prices with no tax. They also did not pay to have these plants put in. We later discovered they received similar freebies for some home improvements. This work was done by the vendors employed by our homeowners association.
Board members did not offer these opportunities to other homeowners and didn’t tell us about their good fortune.
Is there anything we can do about it?
Answer: You are right that these actions “should be” disclosed to all homeowners. However, the Davis-Stirling Act does not require disclosure and provides no penalty for the failure to tell homeowners about it.
When a board recommends entering into or renewing a contract to the homeowners, that board should tell you that they’ve received gifts.
The vendor’s actions are similar to the actions of lobbyists on behalf of legislation. Instead of new plants and improvements, lobbyists contribute to reelection campaigns. The vendors get a renewal of their contract; the clients of the lobbyists get the legislation they want.
Here’s the difference: The vendors have no legal obligation to report gifts to board members or disclose who is getting them. Lobbyists must report the names of their clients, amounts of money received from those clients and must list each bill or activity for which they lobbied.
Under the act, board members are under no legal obligation to disclose to homeowners the gifts they receive in exchange for their votes to renew contracts of vendors like the gardeners. While the board members may not consider these perks to be gifts, it does violate the trust the other homeowners place in them.
The violation of that trust may subject the individual board members to liability. Homeowners in California have no automatic right to review an association’s documents, meaning that proving your case is impossible.
Alone, you can do little except write to the board to register your complaint. An alternative is to send a copy of your complaint to the California attorney general’s office. Action by the attorney general may be enough to short-circuit a board’s questionable conduct.
If you do write the attorney general, be aware that your communication with that office is privileged, meaning you cannot be penalized for exercising this right. If the majority of the homeowners in your complex don’t mind, it doesn’t matter. Only when the majority decide otherwise will circumstances change.
Replacing Bylaws Can Be Cheap or Expensive
Q: At nearly every annual meeting our board has convinced a majority of homeowners that we need to amend the bylaws to “add one more thing.”
Our bylaws now resemble a maze of rules upon rules. We have become mired in so many bylaw amendments that no one understands them anymore. To better understand them, our majority voted to hire an attorney. We were told our alternative was to add yet “more” bylaws as clarification to the already existing ones.
Is there a way that we can make our bylaws void and start all over again? How do we do this?
A: There is a way to start all over again. The “ultimate amendment” to your bylaws is to repeal them and replace them with a new set of bylaws. It’s easy. There are several ways you can do this, ranging from really cheap to very expensive.
Here’s a do-it-yourself method:
If you have a conscientious board member willing to spend the time, your local law library has many volumes on common interest living that contain sample bylaws. You can use these books to draft your own. Research librarians can help you find the right books.
Or, you can try your local law schools. They sometimes offer legal aid clinics, monitored by law professors, providing free advice and help with legal research.
Because these are legal documents, once you have drafted your own, you should hire a lawyer to review them or take the draft back to the legal aid clinic for some assistance. You can save time and money by telling the lawyer where the bylaws originated. It should not take more than an hour for a competent lawyer to review your bylaws and let you know if they are adequate.
If the lawyer suggests changes, depending on what they are, question those recommended changes closely. Ask for the reasons your document is not adequate. Remember that bylaws are the rules by which your association’s board operates.
Once the new bylaws are complete, the homeowners vote on them just as if they were voting on a single amendment.
Your current bylaws should contain the requirements for the vote for amending.
Those provisions of the old bylaws need to be followed as the method for adopting the new ones. As you have discovered, they are not carved in stone and can be amended from time to time, as the need requires.
The very expensive way is to hire the lawyer first. The lawyer then does the same thing your board member did or may simply reuse a set of bylaws previously prepared for some other association client. That can cost your association a lot of money yet may not result in a set of bylaws any better than those you draft for yourself.
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Stephen Glassman is a writer and an attorney in private practice specializing in corporate and business law. Donie Vanitzian has authored articles on American Civil Liberties, has a J.D. and is an arbitrator. Both live in common interest developments and have served on various association boards. Send questions to: Common Interest Living, P.O. Box 451278, Los Angeles, CA 90045 or e-mail: CIDCommon Sense@aol.com.
