Phantom board takes payments but no leading role
Question: I live in a small, amenity-free complex with nine condos. Owners complained it was an inconvenience having an association and being forced to pay extra money for paperwork and board-related stuff, so they said phooey to it and now no one cares.
Our CC&Rs; call for five board members, but no one knows how to contact the “board,” if there is one. We used to have a three-member board, but scuttlebutt says there’s only a two-member board. One person claiming he’s the board secretary said they “would only have a meeting when something came up, but nothing has come up.”
My fixed income is scant and it’s stressful worrying about who’s writing the association’s checks. Since before April 2003, not one board meeting or election has been held. No maintenance of the complex takes place, no minutes are distributed, and while there’s a post office box to send assessment payments, I don’t know what happens to my money after that.
It’s unclear where owners should address complaints or correspondence, as there is no specific location to drop off or send letters other than the P.O. box. I used to write to the board president directly, but two years ago she moved and left a note saying, “Address all concerns to the management company.”
We don’t get copies of a budget, expenditures or insurance policies, and we do not have an overnight mailing address for assessment payments. We pay what we’re told but have no idea how the amount came to be. Management refuses to answer questions or give me a receipt for my payments, saying, “Use your canceled check.” I don’t always pay by check so I don’t know what I’m supposed to use for a receipt.
I thought we’re supposed to have at least one board meeting a year but don’t know if that’s true. If it is, who forces the board to have a meeting? My children fear I’m wasting my money here and urge me to sell and move. Are they right?
Answer: Generally, the legal references you will need to take appropriate action are as follows:
The association board must hold regular meetings as prescribed in the bylaws with notice communicated to all titleholders. According to California Administrative Code section 2792.20, the meeting should be conducted at least monthly though the bylaws may prescribe meetings as infrequently as every six months if business to be transacted by the governing body does not justify more frequent meetings. Required under Corporations Code section 7510(b) is that a meeting be conducted at least once each year for the purpose of electing directors and to transact any other proper business, which may be brought before the meeting.
“Meeting,” defined in Civil Code section 1363.05(f), includes any congregation of a majority of board members at the same time and place to hear, discuss or deliberate upon any item of business scheduled to be heard by the board. Unless otherwise provided in the articles or in the bylaws, and as set forth in Corporations Code section 7211(a)(1), the chairperson, president, any vice president, secretary or any two board directors may call meetings of the board.
Pursuant to Civil Code section 1363.05(d), minutes from association board of directors meetings shall be available to members within 30 days of the meeting.
Civil Code section 1365(e)(4) allows any titleholder to request and obtain copies of all association insurance policies. This is important because any lapse in coverage exposes each titleholder to potential liability or financial ruin should a disaster befall the association.
Civil Code section 1365.2(a)(1) provides that the association shall make accounting books and records, including minutes of association proceedings, available for inspection and copying by members; subsection (e) imposes a civil penalty up to $500 and the awarding of reasonable costs and expenses if a court finds the association unreasonably withheld access.
Every time an owner makes a payment, Civil Code section 1367.1(b) states the owner may request a receipt and the association shall provide it. The receipt shall indicate the date of payment and the person who received it. Requesting this receipt is imperative because an owner is not liable for charges, interest and costs of collection, if it is established that the assessment was paid properly on time per Civil Code sections 1367.1 and 1365.1(b).
The association is required to provide homeowners with a mailing address for overnight payment of assessments pursuant to Civil Code section 1367.1(b).
Write a concise letter to the board demanding each item by citing the appropriate code section. Give the board 10 days to reply. Because there are few units, if you do not know who the board members are, send the demand to every owner in the complex. Send the letter again by certified mail, return receipt requested, to the management company’s owner and the alleged board members. If there is no response, send copies of your documentation to the Attorney General, P.O. Box 944255, Sacramento, CA 94244-2550, asking that office to intervene.
Titleholders can convene a meeting for the purpose of filling vacant positions or removing the board -- whomever they are. If only two board members were the sole decision makers, actions undertaken by them may be illegal, exposing individual titleholders or those board members to potential liability. Here, the risks of ownership appear to outweigh the benefits and avoiding potential liability is a legitimate reason to sell.
Questions can be sent to P.O. Box 11843 Marina del Rey, CA 90295 or e-mailed to noexit@mindspring.com.
