When Board Members Go Rogue

Sometimes, board members don’t follow the rules. A board member might speak out of turn at meetings or dominate the floor; might take actions without consulting other board members or in direct conflict with a board decision; or might even hide or steal association records or funds. Sometimes a board member puts his or her personal agenda ahead of the needs and priorities of the association. These types of situations involve what we refer to as “rogue” board members. What can be done about them?

One way to curtail rogue behavior at board meetings is to have rules, and stick to them. Robert’s Rules of Order is the “gold standard” for a set of rules that works in meetings of all types of organizations, and many COAs and HOAs use it. Or, your community can adopt or create a different set of rules. You can read our blog post Robert’s Rules of Order for more information about having a set of rules and why they are a great tool to keep order in meetings. But in addition to agreeing to abide by the rules, the board needs to be firm in enforcing them, or they will not help. The board’s President (who is responsible for running the meetings) must be prepared to speak up and make sure everyone follows the rules.

It is also important that all board members understand that they must act on behalf of the association in their role as a director, and not in their own (or anyone else’s) personal interest. Every board member needs to be aware that they have a legal obligation to their association, and that they can face litigation and even personal liability if they seriously neglect their duties through rogue behavior. It might be a good idea to have your board meet with your association’s attorney to get a clear understanding of their rights and obligations under the applicable laws.

When all else fails, the association’s members can act to remove a rogue director. RCW 64.34.308(8) provides that the unit owners of a New Act condo can remove any board member (unless appointed by the declarant) with or without cause by a two-thirds vote. (There is no similar provision in the Old Act, but if an Old Act condo is incorporated as a nonprofit, see RCW 24.03.103 or RCW 24.06.130.) RCW 64.38.025(5) provides that the owners in an HOA may, by a majority vote, remove a director with or without cause.

Rogue board members aren’t just exasperating; they can also cause serious legal problems for a community. Improper board actions can cause financial harm to the association, create numerous kinds of liability for the association, or even lead to a lawsuit against the board itself.  If you are dealing with “rogue” board member(s) in your association, take action and consider consulting with an attorney to understand your options.

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2 Responses to When Board Members Go Rogue
  1. Alana Andersen
    June 3, 2013 | 4:27 pm

    What recourse does one have when a faction of the Board follows the Rogue President and the property manager follows then excludes the other members from any information? Is there an RCW that states what responsibilities the property manager has to follow and is there a watchdog group that they can be reported to?

    Thank you

  2. Valerie Farris Oman
    June 18, 2013 | 4:56 pm

    Your question, if we may read between the lines, really has two parts: (1) are there any laws or regulatory bodies that govern what community association managers can/must do and (2) how do you deal with a rogue board member who may be acting outside of this authority?

    (1) There is no regulatory body or statute in Washington that regulates the activities of community association managers. Their actions, and their authority, are governed by the management contract with the association, any board resolutions/decisions on point, and perhaps by the “course of dealing” between the manager and the board of directors. “Property managers” may be real estate professionals governed by state agencies which regulate that industry, but property managers and community association managers are not one and the same.

    (2) If a board member is acting outside of his authority as a board member, you might have an argument that his actions are “ultra vires” which could subject that board member to personal liability for any damages resulting from those action. However, even if you are able to prove the board member acted outside his authority, that does not absolve the association from liability to any third parties who reasonably relied on the board member’s perceived authority. So, for example, if the “rogue” board member signed a 12 month landscaping contract or a $1 million construction contract, if the other party reasonably relied on the board member’s apparent authority, the association would most likely be bound by the terms of that contract.

    If you have concerns that serious issues may arise as a result of the “rogue” board member and/or manager issues your association is facing, you should seek the advice of an attorney experienced in community association law to assist you going forward. This link will take you to a list of such attorneys via the Community Association’s Institute website.

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When Board Members Go Rogue

Sometimes, board members don’t follow the rules. A board member might speak out of turn at meetings or dominate the floor; might take actions without consulting other board members or in direct conflict with a board decision; or might even hide or steal association records or funds. Sometimes a board member puts his or her personal agenda ahead of the needs and priorities of the association. These types of situations involve what we refer to as “rogue” board members. What can be done about them?

One way to curtail rogue behavior at board meetings is to have rules, and stick to them. Robert’s Rules of Order is the “gold standard” for a set of rules that works in meetings of all types of organizations, and many COAs and HOAs use it. Or, your community can adopt or create a different set of rules. You can read our blog post Robert’s Rules of Order for more information about having a set of rules and why they are a great tool to keep order in meetings. But in addition to agreeing to abide by the rules, the board needs to be firm in enforcing them, or they will not help. The board’s President (who is responsible for running the meetings) must be prepared to speak up and make sure everyone follows the rules.

It is also important that all board members understand that they must act on behalf of the association in their role as a director, and not in their own (or anyone else’s) personal interest. Every board member needs to be aware that they have a legal obligation to their association, and that they can face litigation and even personal liability if they seriously neglect their duties through rogue behavior. It might be a good idea to have your board meet with your association’s attorney to get a clear understanding of their rights and obligations under the applicable laws.

When all else fails, the association’s members can act to remove a rogue director. RCW 64.34.308(8) provides that the unit owners of a New Act condo can remove any board member (unless appointed by the declarant) with or without cause by a two-thirds vote. (There is no similar provision in the Old Act, but if an Old Act condo is incorporated as a nonprofit, see RCW 24.03.103 or RCW 24.06.130.) RCW 64.38.025(5) provides that the owners in an HOA may, by a majority vote, remove a director with or without cause.

Rogue board members aren’t just exasperating; they can also cause serious legal problems for a community. Improper board actions can cause financial harm to the association, create numerous kinds of liability for the association, or even lead to a lawsuit against the board itself.  If you are dealing with “rogue” board member(s) in your association, take action and consider consulting with an attorney to understand your options.

Share and Enjoy:
  • Print
  • Digg
  • StumbleUpon
  • del.icio.us
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
2 Responses to When Board Members Go Rogue
  1. Alana Andersen
    June 3, 2013 | 4:27 pm

    What recourse does one have when a faction of the Board follows the Rogue President and the property manager follows then excludes the other members from any information? Is there an RCW that states what responsibilities the property manager has to follow and is there a watchdog group that they can be reported to?

    Thank you

  2. Valerie Farris Oman
    June 18, 2013 | 4:56 pm

    Your question, if we may read between the lines, really has two parts: (1) are there any laws or regulatory bodies that govern what community association managers can/must do and (2) how do you deal with a rogue board member who may be acting outside of this authority?

    (1) There is no regulatory body or statute in Washington that regulates the activities of community association managers. Their actions, and their authority, are governed by the management contract with the association, any board resolutions/decisions on point, and perhaps by the “course of dealing” between the manager and the board of directors. “Property managers” may be real estate professionals governed by state agencies which regulate that industry, but property managers and community association managers are not one and the same.

    (2) If a board member is acting outside of his authority as a board member, you might have an argument that his actions are “ultra vires” which could subject that board member to personal liability for any damages resulting from those action. However, even if you are able to prove the board member acted outside his authority, that does not absolve the association from liability to any third parties who reasonably relied on the board member’s perceived authority. So, for example, if the “rogue” board member signed a 12 month landscaping contract or a $1 million construction contract, if the other party reasonably relied on the board member’s apparent authority, the association would most likely be bound by the terms of that contract.

    If you have concerns that serious issues may arise as a result of the “rogue” board member and/or manager issues your association is facing, you should seek the advice of an attorney experienced in community association law to assist you going forward. This link will take you to a list of such attorneys via the Community Association’s Institute website.

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Trackback URL http://www.condolawgroup.com/2012/11/05/when-board-members-go-rogue/trackback/