Question: We live in a large condominium project, and a number of us are quite concerned about our Board of Directors. We are not permitted to attend their Board meetings, we have tried to get copies of the financial statements without success, and we suspect that at least one of the Board members is getting kick-backs from the various contractors that are hired to do work at the project.
The current Board will continue to serve until next April when there will be an annual meeting and another election. Many of us are interested in having a recall of the Board, but when we have circulated newsletters to other owners, we have been threatened with libel suits by several of the Board members.
What legal rights do we have?
Answer. If it is any consolation to you, I have heard these complaints from unit owners throughout the country. Although the great majority of Board members are honest and dedicated, unfortunately, many Board members of condominiums, cooperatives or homeowner associations are on an ego trip. They want to be called "Mr. or Ms. President." They do not understand that there is a fiduciary responsibility owed by the Board member to the constituents who elected them to office.
You have indicated that your Board meetings are closed to the membership. You should read the law in the jurisdiction where your condominium is located, to determine if there are any specific statutes requiring open meetings. For example, in 1989, the State of Maryland adopted a law which requires open meetings with few exceptions, including a discussion of matters pertaining to employees and personnel, protection of the privacy or reputation of individuals in matters not related to the Council of Owners business, and investigative proceedings concerning possible or actual criminal misconduct. Otherwise, the State of Maryland has made it quite clear that the general public policy is in favor of open meetings.
Even if your state law is silent on this question, you should read your Association documents. You may find some guidance in those basic documents, which could include the Declaration and Bylaws, or the Covenants and Conditions and Restrictions (also known as CC&Rs).
Finally, if you cannot find anything specific to assist you in your own documents, you still have the right to demand that the membership vote that Board meetings be open. This vote could come at the Annual Meeting, or (pursuant to your Bylaws), you could also force a special meeting specifically for that purpose.
If your Association documents are silent on the issue, the Board of Directors must follow the wishes of the majority of the Association.
With respect to your inability to obtain financial information, I feel quite confident that you will find language in your documents giving you the absolute right to inspect and review financial documents of the Association. You should send a demand letter to the Board of Directors, by registered, return receipt mail, and give them ten days in which to make these documents available to you for your review and inspection. If the Board refuses to give you access, you might want to consider filing suit against the Board. You should also talk to a number of other owners in your Association, to see if they will join you in this litigation. Not only will there be strength in numbers, but the legal fees can be divided among more than just yourself.
You have indicated that you are being threatened with a libel suit when you speak up in opposition to your Board of Directors. You have an absolute, constitutional right of free speech. As long as what you are saying is truthful, you should have no fear by communicating your concerns -- and indeed your opinions -- to other members of the Association. If the Board of Directors does not like what you are saying, they have the right to respond with their own newsletter.
But you cannot be threatened or harassed merely because you are exercising your constitutional, democratic right to speak freely and to criticize and comment on the actions (or inactions) of those you have elected to be your Board of Directors.
If the situation is so bad, you might want to consider calling a special election for the purpose of recalling one or all of the Board of Directors. This is not an easy task -- but it is possible. Many owners are apathetic, and indeed fearful of raising their voices in protest. You must mount a major political campaign, not only for the purpose of recalling the existing Board members, but to present your own slate of owners who will serve as substitute directors if you are successful in your recall efforts.
You should invite your neighbors in for coffee or tea to discuss your political campaign. Recruit as many neighbors as possible to be team captains to continue to mount the recall campaign. You cannot do it alone. After all, your Bylaws probably require that you need at least 51% majority vote to recall the Board.
As is the case in federal or statewide elections, you will find that the incumbents will have the stronger hand, since they are currently in office.
It is not an easy job to "throw the rascals out." But, you have made a significant investment in your Association, by virtue of ownership of your property. This investment must be protected, and that is the message you should give all of your owners -- including your current Board of Directors.