Published on: May 22, 2007
Meetings of community association boards are rarely enjoyable; given the option, most people would usually rather be doing something else. But the board meeting I attended recently was particularly unpleasant. The room was crowded, the atmosphere was tense, and the owners, who were shouting, listening, or both, clearly weren’t happy. Neither were the board members, who were targets both of the owners’ anger and of a petition to remove the trustees from office.
As recently as five years ago, such removal actions were virtually unheard of. But these days, it seems, condominium attorneys are fielding calls regularly from home owners, who want to know how to recall their board, and from board members who want to know how to fend off those moves. It’s not that trustees as a class have suddenly become less competent or that owners have become more rebellious (although there is an element of the latter at play); rather, it is that many community associations are confronting similar problems relating to their age and stage — buildings that need major capital improvements, reserve funds that are inadequate or non-existent, creating the need for hefty special assessments, increases in common area fees, or both.
Owners rarely welcome cost increases in the best of times, but expenditures that would be tolerable, though unpopular, when property values are rising can ignite a firestorm when values are flat or beginning to decline, as is the case in many parts of the country today. And that explains many of the battles we’re seeing in homeowner associations today. Owners, confronted with cost increases they don’t like and don’t think they can afford, are responding by deciding to “throw the rascals out,” the rascals, in this case, being the trustees who have determined that the expenditures are needed.
Shooting the Messenger
There are some situations in which trustees should be recalled – because they are stealing money, for example, or failing to do their jobs. But these situations are rare. In most cases, recall petitions represent a classic example of “shooting the messenger.” Removing trustees because they say the association’s buildings need renovations won’t repair the buildings; it will simply require a different group of trustees to confront the same problem.
Not only are many recall initiatives unjustified or misdirected, they are also often improper. In their rush to remove trustees whose decisions they don’t like, dissident owners frequently fail to follow the removal procedures specified in the association’s bylaws. Those requirements may differ in some details, but governing documents typically call for a two-step process in which a specified number of owners (typically around 30 percent in Massachusetts) must sign a petition requesting a special meeting, at which a majority of the owners (sometimes more than 51 percent) must vote to recall the board.
Owners in a community I represent tried to take a more direct route. They circulated a petition, collected signatures representing a majority of the owners, and recorded the petition in the Registry of Deeds, proclaiming that the trustees had thus been removed. That won’t work. Owners can’t remove trustees simply by collecting a bunch of signatures (some of which may not be valid) and proclaiming the deed is done. Although there are not a lot of court decisions dealing with the removal of community association trustees, the courts that have addressed the issue directly or indirectly have held that owners must follow the applicable removal procedures, and must follow them precisely.
Following the Rules
In a 1992 decision, a New York appeals court rescinded the removal of a condominium board, citing several problems with the recall process the dissident owners used. Although they had called a special meeting, as the community’s bylaws required, the notice did not specify that the purpose of the meeting was to recall the board. Additionally, while owners attending the meeting voted to elect new board members, they did not vote to remove the old ones, and many of the ballots cast were collected before the meeting and before the trustees had an opportunity to respond to the complaints about them – another requirement of this association’s removal process.
In a decision last year (Ells v. Broder), the New York Supreme Court similarly blocked the removal of a trustee from the board of a non-profit institute, citing the “common law right for a director whose removal is sought to have notice and an opportunity to defend against any wrong-doing asserted.”
A Massachusetts Superior Court also emphasized the importance of dotting all the i’s and crossing all the t’s in a recall, when it granted a temporary injunction sought by members of a condominium board the owners had voted to remove. The problem: Removing all the trustees simultaneously violated a by-law provision requiring that there be at least three trustees in office at all times. Owners in this case had also failed to obtain the required signatures of 30 percent of the owners requesting a special meeting, and the notice of that meeting failed to specify the date, place, and time at which it was to be held, as the by-laws also required.
“If the unit owners wish to remove the trustees and elect new trustees, they may do so,” the court said, “as long as they follow the procedures” specified in the governing documents.
These procedures are designed to ensure that the removal process is orderly – or as orderly as it can be – and that it reflects the wishes of a majority of owners, not just a few unhappy residents.
Abuses and Omissions
Dissident owners have been known to provide inaccurate or misleading information and use high-pressure tactics to pursue a recall — ringing doorbells late at night, refusing to leave until owners agreed to sign, and sometimes forging signatures. I’ve heard people who signed petitions complain later that the owners seeking signatures said the goal was to demand a reduction in fees or a reversal of a special assessment, without mentioning that their aim was to recall the board.
Such abuses are not uncommon, and they represent one reason the recall meeting, at which owners explain why they are angry about a decision and the trustees explain why they made it, is so important.
I advise boards to call a special meeting voluntarily as soon as they learn that a recall petition is being circulated, before dissidents have collected the required signatures. There is no advantage in resisting the meeting and there are advantages to being proactive and initiating the meeting rather than responding to a demand to hold one. More often than not, these meetings, which begin with a recall roar, end with a sputter reminiscent of the old Saturday Night Live line – “Never mind” — as owners hear, sometimes for the first time, the reasoning behind an unpopular decision.
Communicating with Owners
Lack of communication is almost always a contributing factor – -and sometimes a major contributing factor — to recall petitions. Trustees may have spent months reviewing proposals, consulting experts, and debating options before making their decision. They know why renovations are essential and why an assessment is unavoidable. But they don’t always share that information with owners, and an information void creates fertile ground in which anger and recall petitions can grow. The more advance notice owners have about a controversial decision and the more information they have about it, the less likely they are to erupt when it comes.
Sometimes the problem is not that boards aren’t communicating with owners, but that owners aren’t listing to what the boards say. There is not much trustees can do about that except to err on the side of providing too much information rather than risk providing too little. Send memos, discuss the pending decision in newsletters, post notices and reminders on the association Web site and on bulletin boards, urge owners to attend board meetings at which the issues are being discussed. Owners may ignore every communication the board sends, but at least trustees will know they tried to inform the community and can point to all of these unread communications when owners complain that they did not know what was going on.
Although reason usually prevails at recall meetings, that isn’t always the case. The meeting I described at the outset actually ended with a vote to recall that board. Maybe the new trustees will find the less costly solutions they have promised, but I wouldn’t bet on it. In most recall scenarios, the new board ends up making substantially the same decisions as the old board and for the same reasons, if nothing else, giving the ousted trustees an opportunity to say, “I told you so.”
Sometimes the consequences are far more serious. In one community, dissatisfied owners replaced the existing board with trustees who immediately rescinded the special assessment the old board had approved to provide funding for anticipated repairs. Two years later, the association had to undertake a major roofing project. Lacking the necessary funding (because they had canceled the special assessment intended to pay for it), the board hired a less qualified contractor willing to do the work for less. Midway through the project, it became obvious that this contractor was making a mess of the job, so the board fired him, telling him to cover the roof with a tarp before he left. The contractor didn’t do that correctly either. The tarp came loose in a ferocious storm and the resulting flooding destroyed 12 units.
This is obviously an extreme example; disaster does not follow automatically when a board is recalled. But removing the board isn’t likely to solve a community’s problems, either, and may well end up making them worse.