THE FIGHT AGAINST ABUSIVE BOARDS

by: Jeffrey A. Goldberg

One of the worst situations in the development of community associations is the problem of an abusive board. Not all boards are abusive and perhaps most boards act properly and in good faith. But certainly there are a large number of abusive boards.

We observed that there are two kinds of abusive boards. The entrenched board and the weak board. The entrenched board exercises too much power, while the weak board exercises too little power.

An entrenched board is composed of individuals who are elected and re-elected term after term for many years. Over time, the entrenched board becomes less responsive to the needs and desires of the association members and devotes too much of its attention towards ensuring its own re-election and enjoying special powers and perks associated with being in control and exercising power and authority over one's neighbors. Abuses often occur.

A weak board does not have a stable membership. The directors are elected and removed from office constantly so that there is no one who understands the associations and its problems. It is impossible to implement long-term solutions. The board members are forced to devote their time trying to attract voters and to punish enemies so that they can maximize their chances of re-election so that they can get something done. Abuses often occur.

Not every entrenched or weak board becomes abusive or neglectful of its members. However, it can be safe to say that every abusive board is either weak or entrenched.

How can a unit owner fight back against an abusive board? How can we make a difference to change the board so that it will act responsibly and in the best interests of its members? The solution to this problem can be found, naturally, by going to the heart of why a board becomes abusive and the form that such abuses take.

The Political Solution

The problem and its solution requires an understanding of association politics. We have identified three basic political stages that are found in some degree in every association: apathetic, political, and anarchic. A number of associations cycle through and fluctuate between the apathetic and anarchic stages. A healthy association will avoid these extremes and will attempt to remain in the political stage.

The apathetic stage is characterized by an entrenched board that rarely turns over its membership from year to year. The board's authority increases over time to the point of dictatorial control and the board seems to answer to no one. The unit owners are apathetic and barely pay attention to the activities of the association. If the unit owners are even aware of the board, they are happy and content that someone is taking care of business so that they do not have to become involved or expend any energy. There is very little discussion or dispute among the unit owners and very little political activity. This type of board serves primarily the interests of its own board members. Although they hold an election, typically the entrenched board controls the selection and election of candidates to the board because very few unit owners are involved.

The anarchic stage is quite the opposite of the apathetic stage and many apathetic associations cycle directly back and forth in to and out of this stage. Whenever the dictatorial board becomes too abusive, as it inevitably will, the unit owners awaken, resist, rebel, criticize, and organize. Anarchy reigns in this association. The board becomes weak. It tends to have high turnover, has weak control, and it tries to answers to everyone. All of the unit owners are aware and engaged in political activity. The affairs of the association are in chaos, and the board serves no one's interests. The elections during an anarchic stage find numerous persons on the ballot, many of whom have a personal issue or agenda to push through but are not committed to the stability and health of the organization. The election is hotly contested, the participants are disruptive, and the elected board ends up deadlocked with persons belonging to two or more political camps, neither of whom will accept anything the other one decides. Eventually, over time, a group of board members will consolidate their power and the association cycles back to the dictatorial stage.

The political stage is the balance between the apathetic and anarchic stage, and should be the goal of every healthy association. In this association, there is a large number of unit owners who are aware of the association's affairs, attend board meetings, and keep informed of the board's activities. Although a number of members continue to be apathetic, the best of the unit owners become actively involved. Although there is some dispute over the direction of the affairs of the association, the board is relatively stable and its membership turns over slowly from time to time. New members to the board tend to be elected from the large group of aware and involved unit owners. They are almost always elected because they have distinguished themselves by their actions and participation or by the quality of their ideas. The board remains responsive to the members, stable, and in firm control. The board answers to the unit owners and it serves the best interests of the unit owners.

Based upon the above, it is clear that the solution to the problem of abusive boards is to avoid the extremes of the anarchic and entrenched stages, and try to stabilize the association into a healthy political stage. The answer lies with the unit owners. A number of them must step up and organize with one another in good faith and for the purpose of serving the interests of the entire association. They must carefully research and understand the association's problems, develop solutions, and then educate the other unit owners. Over time, these unit owners will gain more and more credibility and they will inevitably come to replace the abusive board members. When in power, they must exercise care not to become entrenched but rather to encourage an open and fair political process.

The Judicial Solution

We are not so naïve as to believe that an abusive board will simply allow any unit owners to organize and take over. More often than not, the members of an abusive board are bent upon remaining in power. This forms the essence of why they are so abusive. They seek to reward their political allies and punish their enemies.

The casual observer might consider the power and authority of a community association board as somewhat petty. It is true that the more petty the power, the more petty are the individuals who seek to possess it. In our many years of involvement in the area of community associations, it never ceases to amaze us at what lengths some individuals will go simply to control an association.

This means that any group of owners who try to organize to save their association from an abusive board will likely become a target for that abuse. They will be accused of various violations of the covenants, they will be fined, they will receive anonymous phone calls and threatening letters, and they will be denied various services, rights, and privileges of the unit owners. In an election, the board might use questionable tactics and maneuvers to prevent the unit owners from exercising their voting rights.

The greatest abuse committed by abusive boards is filing aggressive lawsuits in order to silence political opponents. This goes on surprisingly often. When this type of abuse occurs, where the unit owners are stripped of the one power that they really have (the right to vote), there is no choice but to aggressively litigate. However, the board has a huge advantage. The board has far more resources than an individual unit owner. The board can afford to pay the legal fees to fight aggressively and the declaration (and the Condominium Property Act) in many instances will provide for an award of attorneys' fees against the unit owner if he or she loses the case. The board can file suit on all kinds of trumped up causes of action and factual allegations that are false and without merit. The unit owner is forced to expend a large amount of money just to defend herself all the time with the threat of having to foot the board's bill in the event it is victorious. Thus, the abusive board just becomes more abusive, and the victims of abuse become discouraged and frustrated, unable to effectively fight back.

Unit owners targeted by an abusive board have little choice but to fight in court. The problem is that few unit owners have the funds needed to put up an effective defense.

The ultimate solution is to remove the barriers to litigation so that aggrieved unit owners can fight back against an abusive board. This solution will have to come from State legislation. There is a crying need for litigation reform in the area of community association law.

We propose two changes to State law: make it easier for unit owners to vote to remove individual board members and allow victorious unit owners to recover their attorneys' fees and costs from the board.

At present, most association bylaws provide for the removal of a board member with the vote of at least two-thirds of the total vote of unit owners. Most associations have a hard enough time getting a 20% quorum for most meetings. It is almost impossible to get 2/3 of an association's membership to participate in anything.

We propose that the law reduce the 2/3 vote requirements to allow the removal of directors by an affirmative vote of a majority of the total vote. This would be much easier than a 2/3 vote but would be significantly more difficult than a vote based upon a mere quorum of owners. Therefore, it would promote stability on the board while providing a pressure valve to allow the unit owners to remove directors during a term.

The second proposed change in the law is to modify those provisions which allow a board to recover attorneys' fees and costs against a violating unit owner be made mutual. Thus, in any lawsuit between the board and a unit owner, the prevailing party will be entitled to recover attorneys' fees from the defeated party. This will embolden and encourage aggrieved unit owners to initiate and defend against suits involving an abusive board, and it will serve as a moderating influence on the board because of the threat of a fee award against the board. Those boards who are legitimately enforcing their covenants need not feel threatened by such reform because they are bringing the actions in good faith and with the law behind them. Only abusive boards would fear this type of reform.

In order for this legislation to become a reality, the unit owners must demand it of their state representatives. The special interests who normally put forth and lobby for association legislation (association trade organizations, attorneys, managers, vendors, etc.) will not necessarily take up this cause because they often serve and benefit from an abusive board (and sometimes they are even entrenched along with them).