Category Archives: Board of Directors

The Book of Rules

Leave a reply

I could not get any information when exactly the “Book of Rules” came into existence.

The Book of Rules ends with a list of amendments and their dates; it also states “Adopted October 17, 2010”

I also could not find out how each issue covered in this “Book of Rules” was established and made into a “Rule”.

My view about this Book of Rules is as follows:

  • It contains some contradictions to the Declaration of Restrictions.
  • It inflicts numerous Restrictions and takes away Owners/Members’ rights, practically amending the Declaration of Restriction, freely at will.

 Part of this “Book of Rules” is a “Book of Restrictions” all put forward by numerous Boards of Directors, without being voted on and accepted by the Owners/Members 2/3 majority vote.

Some of the content of this “Book of Rules” is illegal and unenforceable, and will stay like this, no matter if it is a “good idea”, “justified” or anything else until it is put for a vote to the Owners/Members and get 2/3 majority vote.

This is a very serious and important issue, probably the most important one for each and every Owner/Member in Indian Hammock. It was overlooked for years and needs to be addressed.

Declaration of Restrictions

Leave a reply

The Declaration of Restrictions was created a long time before the smart phone, communication by email and the popular internet.

Yet, it is still the Supreme Law of the Land in Indian Hammock.

The Declaration of Restrictions is exactly what its name says, Restrictions; Taking away some of the Individual Owner/Member’s Rights, in order to create a livable Community.

The Originators and Developers of Indian Hammock put a lot of thought, time and legal minds into the creation of the Declaration of Restrictions.

While taking away some of the Individual Owner/Member Rights, the Declaration protects the Owner/Member by establishing that any future removal of Owner/Individual rights can only be done by a 2/3 majority vote of the club’s Members.

Simply put, no Restrictions, Laws, Rules, Procedures, or whatever someone choses to call them, which take away any of Owner/Member Individual Rights are legal or enforceable, unless they were put for a vote and accepted by 2/3 of the club’s members.

There is only one exception to the above.

There is only one place in the Declaration of Restrictions where the power to make additional restrictions was given to the Board of Directors, and this is only in regard to Motorized Vehicles.

As per Article VII Section 5. “No vehicle of any type may be operated on the property so as to create a nuisance, a hazard or do damage to the common areas. Because of their rapid proliferation and unforeseeable evolution, the board shall make rules regulating the use of, or prohibiting the use of, any type of motorized vehicle.

Nowhere else is there such power given to the Board to create anything that takes away from Owner/Member’s rights; it can only be done by the Club (being the Members) requiring a  2/3 majority vote.

HOA Board’s Fiduciary Duties Under Corporate Law

Leave a reply

The fiduciary duties of HOA Board members mainly arise from state corporate law. Most HOAs are nonprofit corporations, typically formed by filing articles of incorporation in the state where the development is located. Recognizing that a corporation’s board members serve in a position of trust, every state’s corporation law imposes a fiduciary duty on the corporation’s board of directors, requiring them to act in the best interest of the corporation.

Subject to some limitations, this fiduciary duty applies to HOAs even though they are typically nonprofit corporations, and even though HOA board members are usually volunteers.

A Board member’s fiduciary duties involve three basic components: the duty of care, the duty of loyalty and the duty to act within the scope of its authority.

THE DUTY OF CARE

To meet the duty of care, an HOA Board member must make informed decisions, which might require a bit of research before you act or vote on an HOA matter. For example, before finning a homeowner for a rule violation, you must familiarize yourself with the association’s CC&Rs, and the details of the situation, such as by talking with the homeowner. HOA Board members must also act in a prudent and reasonable manner, basically using sound business judgment, and avoiding arbitrary or capricious actions. For example, you can’t fine a homeowner for painting his or her home red just because you don’t like that color, if this is not a violation of association rules.

THE DUTY OF LOYALTY

The duty of loyalty requires that HOA Board members act fairly, in good faith, in the interest of, and for the benefit of, the HOA as a whole, rather than make decisions based on any personal interest or gain. HOA Board members should also avoid acting where there is a conflict of interest. For example, a Board member who is helping select landscapers for the property should not steer contracts for landscaping to family members. Or a Board member who owns a purple house should not participate in a Board vote on whether or not to allow pink and purple homes in the development.

Additionally, an HOA Board member must protect members’ confidentiality, and not divulge information provided in confidence. For example, if a home owner confides in a Board member about his impending home foreclosure in order to arrange a payment plan for HOA dues, the Board member should not disclose the information to a friend or neighbor

THE DUTY TO ACT WITHIN THE SCOPE OF AUTHORITY

This duty requires the HOA Board to perform the duties it’s obligated to carry out, but prohibits the Board from making decisions or acting on matters without the authority to do so.The authority of an HOA comes from its obligations under state laws, as well as the authority granted to it in the development’s governing documents.

To ensure you meet your obligations as a Board member, you must know what duties are required. Review your state law and HOA’s governing documents, specifically the articles of incorporation and bylaws, and your development’s CC&Rs to determine the HOA’s obligations, and the extent of its authority. For example, if the laws or governing documents do not grant your HOA Board the authority to adopt new rules and regulations, any restrictions the HOA adopts about home colors might be invalid.