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What can an HOA Board do if members question whether the President acted properly?

Susan Tarley answered a question that was published in the March/April 2013 issue of the Common Ground, the Community Association Institute’s Magazine for Community Association Leaders. Here is the question and answer.

Question

Our bylaws state that no reimbursement shall be given for services rendered by any board member unless voted and agreed on amongst the board members. I am a board member, and our association president has submitted bills totaling more than $600 to our management company without board approval and has been paid. A review of the past years minutes indicate no such vote was taken. We feel the president has his own monetary agenda and does not care about our community. I understand we can file a petition with 67% of the unit owners signing to have him removed, but we just want our money. What can we do?

Williamsburg Virginia HOA Lawyers

Board of Directors

Answer

Bylaws we see in Virginia permit board members to be reimbursed only for actual costs or expenses on board approval. You indicated the president is being reimbursed for services rendered. Review your bylaws to determine whether the president can be reimbursed for services and whether there are any limitations on such reimbursement other than board approval.

The board also should establish a policy so that all future requests for reimbursement are handled in the same manner. The policy should establish a process to permit the timely review and decision by the board. The manager should be given firm direction that board approval is required.

The other option you mention is removal of the Board President. You did not indicate whether the association is incorporated. If it is, certain provisions of the Virginia Nonstock Corporation Act may be applicable and should be read in conjunction with the bylaws. Removal is usually reserved for egregious behavior, but you have not mentioned any other specific problems with the president. Therefore it may be premature to pursue this option. There are expenses in doing so and board member removal can become very divisive for community.

An additional option is removing the board member from the office of president. The process to remove an officer is likely reserved to the board. Although this action is still somewhat divisive and should be used only in limited situations, the expense in removing an officer is less than removal of a board member.

Following the initial course of action by asking that the money be returned, establishing a policy for reimbursement, and placing the issue on the board’s meeting agenda are more efficient ways to address the problem. I also would suggest that the board seek education opportunities provided by CAI or by your HOA attorney to include discussion of fiduciary duty, board member responsibilities, the business judgment rule, and conflicts of interest.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

Republished by Blog Post Promoter

Susan Tarley

Susan chairs the firm's common interest community (HOAs and Condos) practice area. She was admitted into the College of Community Association Attorneys (“CCAL”). Susan is one of fewer than 150 attorneys nationwide to be admitted to CCAL, for distinguishing herself through contributions to the evolution or practice of community association law.

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