Rogue Boards and The Wall of Silence

A rogue wave is a wave in the ocean that does not have the same characteristics as a normal ocean wave. Typically they are much larger than a normal wave; occur unpredictably and do not behave like a normal wave. As a result the rogue wave can wreak havoc and destruction on nearby boats and ships.

In much the same manner, when an HOA is governed by a rogue Board of Directors the results can be devastating to those who are subject to the board’s decisions or are otherwise affected by its actions.

The problem of rogue boards is well-known to industry insiders. However, it is a subject that is not often discussed publicly due to the industry’s longstanding policy of white-washing any negative press about HOAs; perhaps in fear that prospective home buyers might choose not to purchase a home in an HOA if they fully understood the potentially negative ramifications of owning a home in a privately governed community.

Unfortunately the rogue board is a reality  that cannot and should not be ignored by anyone who is contemplating the purchase of a home in an HOA, much less by those already living in one.

Here at the CIDA REPORT™ we occasionally receive an inquiry from a concerned homeowner asking what they can do to dislodge a rogue board. The answer is not a simple one…

Due to lax or non-existent laws governing the conduct of HOA Boards in most states there is often little recourse for the beleaguered homeowner other than to retain an attorney to assist in trying to remove the rogue element from the Board of Directors. Given the cost of a good attorney these days this can be an expensive undertaking that is certain to be stressful and time-consuming for homeowners who are seeking to remove the malcontents from their HOA board.

In many cases homeowners who are prepared to spend money on legal counsel may have a hard time finding a good attorney that are willing to represent them; while some attorneys have a standing policy of not representing homeowners in disputes with their HOA Board. Similarly, the attitude of many regulators is that, “there is nothing we can do to help” when distressed homeowner/s seek help from local or state officials.

This “wall of silence” is a well-constructed defense mechanism that provides an effective shield for developers; local municipalities and the HOA management industry, from consumer protection laws and regulatory efforts at the federal and state level; all of whom have a vested interest in having homeowners purchases homes in HOAs and to then pay their dues and keep that big mouths shut!

An encounter with a rogue board can be a frustrating experience to say the least and often times it can end up having far worse consequences if the efforts to unseat the rogue element fail to gain traction and the Board remains in power. By now you may be asking what exactly is a rogue board and how does such a thing come to be in the first place? These are good questions to which the answers are many.

In a broad sense a rogue Board of Directors is one that ignores the generally accepted protocols for governing the HOA and in so doing will often violate state laws (such as they are) as well as the rules established by the Association’s own governing documents for how the organization is supposed to be governed.

The motivations of a rogue board can range from outright larceny to behaviors that are much less malevolent, but equally as destructive to the organization. Under the worst of circumstances a rogue board may cross the line and commit criminal acts by misappropriating Association funds; awarding lucrative contracts to business cronies or by accepting kick-backs or bribes for steering association business in the direction of a particular firm.

In more pedestrian circumstances the actions of a rogue board may include behavior that does not conform to the guidelines established by the governing documents; disregard for state laws that govern the conduct of the board and/or the operation of the HOA; showing favoritism to certain individuals when enforcing HOA rules or other behavior that is not consistent with the industry’s co-called “Best Practices” standards.

In either case a rogue board can and does present a real problem for the homeowners who are subjected to this form of petty dictatorship. Not only can it make living in the community an unappealing proposition, but a rogue board can have an adverse impact on property values if the problem is widely known to exist within the larger community beyond the HOA itself.