What are the powers of the Board of Directors (BOD) in the McFarland Farms Property Owners' Association
The BOD has broad authority to manage the Association’s affairs, including:
- Adopting Rules and Regulations: The BOD can adopt and publish rules for Association-owned or controlled areas, such as streets, parks, and recreational facilities (By-Laws, Section 5.08, Cl. 5.081; Section 5.09).
- Setting Annual Charges: The BOD determines the annual charge (minimum $150 per lot) by April 1 each year, based on operational, maintenance, and capital needs (By-Laws, Section 5.08, Cl. 5.082; Articles, Article II).
- Enforcing Covenants and Restrictions: The BOD can enforce charges, easements, restrictions, and covenants, including suspending voting rights and facility access for non-payment or violations (Articles, Article II; Declaration, Paragraph 88).
- Managing Common Areas and Facilities: The BOD oversees maintenance, repair, and operation of common areas, landscape easements, and recreational facilities like swimming pools (Articles, Article II; Declaration, Paragraphs 73-75).
- Financial Management: The BOD can borrow money, pledge assets, and expend funds from assessments (Articles, Article II).
- Appointing Committees: The BOD can create committees from Association members and assign duties (By-Laws, Section 5.10; Articles, Article II).
- Electing and Removing Officers: The BOD elects officers annually and can remove them with or without cause (By-Laws, Sections 6.01-6.03).
- Filling Vacancies: The BOD fills vacancies in its membership or officer positions by majority vote (By-Laws, Sections 5.02, 6.04).
- Suspending Member Privileges: The BOD can suspend voting rights and facility access for non-payment or covenant violations (Articles, Article V; Declaration, Paragraph 88).
- Contracting Services: The BOD can contract for services like management or snow removal, with contracts not exceeding three years (Declaration, Paragraphs 71, 77).
- Amending By-Laws: The BOD can amend the By-Laws with a majority vote (By-Laws, Section 9.01).
- Enforcing Liens: The BOD can initiate legal action to collect unpaid assessments, including foreclosing liens (Articles, Article II; Declaration, Paragraph 86).
- Assuming Development Control Committee Functions: If the Developer discontinues the Development Control Committee, the BOD can assume its role in regulating lot improvements (Declaration, Paragraph 63).
What are the powers of the officers of the Association?
Officers (President, Vice President, Secretary, Treasurer, and optional Assistant Secretary/Assistant Treasurer) have specific roles under BOD oversight:
- President: Manages operations, subject to BOD control, and signs contracts with the Secretary or Assistant Secretary. Must be a Director (By-Laws, Sections 6.05, 8.02).
- Vice President: Performs duties assigned by the BOD or President, acts for the President if absent, and can sign contracts (By-Laws, Sections 6.06, 8.02).
- Secretary: Keeps minutes, member lists, non-financial records, and handles notices; attests to contracts (By-Laws, Sections 6.07, 8.02).
- Treasurer: Manages financial records, funds, deposits, and disbursements; signs checks with another officer (By-Laws, Sections 6.09, 8.01).
- Assistant Secretary/Assistant Treasurer: Perform duties assigned by the BOD or President; Assistant Treasurer can sign checks (By-Laws, Sections 6.08, 6.10, 8.01).
What are not the powers of the Board of Directors?
The BOD’s powers are limited by the governing documents and laws:
- No Assessments on Developer: The BOD cannot levy charges against the Developer or the Association itself (Articles, Article II; Declaration, Paragraph 81).
- No Member Expulsion: The BOD cannot expel members, though it can suspend voting rights and facility access (Articles, Article V; Declaration, Paragraph 88).
- Contract Term Limits: Management contracts cannot exceed three years and must allow termination with 90 days’ notice (Declaration, Paragraph 71).
- No Conflicting Amendments: The BOD cannot propose amendments to the Articles that conflict with restrictive covenants (Articles, Article XI).
- No Initial Control Over Development Committee: Until the Developer relinquishes control, the BOD cannot appoint or remove Development Control Committee members (Declaration, Paragraph 2).
- No Liability for Committee Actions: The BOD is not responsible for defects in plans or work approved by the Development Control Committee (Declaration, Paragraph 61).
- Subordinate Liens: Assessment liens are subordinate to first mortgages, and foreclosure extinguishes prior liens (Declaration, Paragraph 87).
- Quorum Requirements: BOD actions require a majority quorum (three of five Directors) or a majority of existing Directors for vacancies (By-Laws, Section 5.07).
- Member Approval for Special Assessments: Special assessments require member approval at a meeting with a 60% quorum (or 30% at a subsequent meeting) (Declaration, Paragraph 84).
What are not the powers of the officers?
Officers’ powers are limited and subject to BOD oversight:
- No Independent Authority: Officers act under BOD or President direction and cannot set assessments or amend By-Laws (By-Laws, Sections 6.05-6.10).
- President and Secretary Separation: One person cannot hold both offices simultaneously (By-Laws, Section 6.01).
- Limited Financial Authority: Checks require two officer signatures, including the Treasurer or Assistant Treasurer (By-Laws, Section 8.01).
- No Rule-Making: Officers cannot adopt rules for Association property (By-Laws, Section 5.08).
- No Suspension Power: Only the BOD can suspend member privileges (Articles, Article V; Declaration, Paragraph 88).
- No Direct Enforcement: Officers cannot independently initiate legal actions or foreclose liens (Articles, Article II; Declaration, Paragraph 86).
What decisions must the BOD bring to members for approval?
The BOD must seek member approval for the following specific decisions:
- Special Assessments for Capital Improvements or Operating Deficits: The BOD cannot levy special assessments without the assent of a majority of votes cast by members (in person or by proxy) at a meeting called for this purpose. The meeting requires a quorum of 60% of all membership votes (or 30% at a subsequent meeting held within 60 days if the initial quorum is not met) (Declaration, Paragraphs 83-84).
- Election of Directors: Members elect the BOD at the annual meeting in February, with two Directors elected in one year and three in the next for staggered two-year terms (By-Laws, Section 5.01).
- Removal of Directors: Members can remove Directors with or without cause at a special meeting, provided the number of votes cast for removal would suffice to elect the Director(s) at a regular election. A successor must be elected at the same meeting (By-Laws, Section 5.11).
- Amendment of Restrictions: The Covenants and Restrictions run with the land until January 1, 2080, and can be changed (in whole or in part) only by a vote of the owners of a majority of the numbered lots in the Development (Declaration, Paragraph 99).
When and how must members be informed about contracts and agreements?
The governing documents specify limited requirements for informing members about contracts and agreements:
- Professional Management Contracts: The BOD can enter contracts for professional management, but these cannot exceed three years and must allow termination by either party with 90 days’ notice without a fee. The documents do not explicitly require member notification or approval for entering such contracts, suggesting the BOD has discretion to execute them without prior member input (Declaration, Paragraph 71).
- General Contracts: Contracts (other than checks or promissory notes) must be executed by the President or Vice President and attested by the Secretary or Assistant Secretary (By-Laws, Section 8.02). There is no explicit requirement to notify members before entering contracts, unless they involve special assessments (e.g., for significant capital improvements), which require member approval (Declaration, Paragraph 83).
- Notification for Special Assessments Related to Contracts: If a contract involves costs requiring a special assessment (e.g., for capital improvements or operating deficits), members must be notified of a meeting to vote on the assessment. Written notice must be sent 30 to 60 days in advance, specifying the purpose, and a 60% quorum is needed (or 30% at a subsequent meeting) (Declaration, Paragraph 84).
- Member Access to Records: Members can inspect Association books and records (including financial records that may detail contracts) for a proper purpose at reasonable times, which indirectly allows members to review contracts after they are executed (By-Laws, Section 7.01).
- Assessment Certificates: Upon demand, the BOD must provide a certificate stating whether assessments (which may relate to contracts) on a lot have been paid, for a reasonable charge, but this is reactive rather than proactive notification (Declaration, Paragraph 86).
Does an active petition for the removal of a Director affect the BOD’s ability to carry out its duties?
No, an active petition for a Director’s removal does not restrict or prevent the BOD from carrying out its duties, unless the petition leads to a successful removal vote. Key points include:
- No Legal Restriction: The governing documents do not limit BOD powers during a petition process. The BOD retains authority to manage the Association, set assessments, enforce covenants, and enter contracts (By-Laws, Section 5.08; Articles, Article II).
- Continuity of Service: Directors serve until successors are chosen, ensuring continuity (By-Laws, Section 5.01).
- Petition Process: A petition signed by 10% of qualified voting homeowners triggers a special meeting within 30 days. If the BOD fails to issue a notice, a petition-signing member can organize the meeting (By-Laws, Section 4.03). Until a removal vote succeeds, the BOD’s duties are unaffected.
- Quorum and Function: A majority quorum (three of five Directors) is required for most actions, and a petition does not impact this unless multiple Directors are removed (By-Laws, Section 5.07).
- Practical Impact: A petition may create tension, but it does not legally halt BOD actions, including entering contracts or setting assessments.
Does a petition for officer removal affect their duties?
No, the By-Laws do not provide for member petitions to remove officers, as this is a BOD power (By-Laws, Section 6.03). A petition for Director removal could indirectly influence officers if it leads to a new BOD that votes to remove them, but officers continue their duties unless removed by the BOD.
How do voting rights affect removal petitions?
- Class A Members: Lot owners (except the Developer) have one vote per lot. For lots with multiple owners, one owner votes unless others object, requiring a majority agreement (Articles, Article V; By-Laws, Section 4.05; Declaration, Paragraph 69).
- A petition requires 10% of qualified voters to call a meeting, but removal requires a majority of eligible votes cast. (By-Laws, Section 5.11).
Can the BOD or officers ignore a petition for removal?
- Directors: The BOD cannot ignore a valid petition signed by 10% of qualified voters, as it requires a special meeting notice within 30 days. If ignored, a petition-signing member can organize the meeting (By-Laws, Section 4.03).
- Officers: Petitions have no direct effect on officers, as removal is a BOD decision. Members must influence the BOD through Director removal (By-Laws, Section 6.03).
What remedies exist if the BOD or officers fail to perform duties or inform members appropriately?
- Legal Action: Members, the Association, or the Developer can seek legal or equitable remedies for violations of the Restrictions (Declaration, Paragraph 93).
- No Liability for Non-Enforcement: The BOD and Association are not liable for failing to enforce Restrictions (Declaration, Paragraph 93).
- Member Actions: Members can petition for special meetings, inspect records, or vote for new Directors (By-Laws, Sections 4.03, 7.01, 5.01).
Where can I find more information?
Contact the Association’s registered office (filed with the Indiana Secretary of State) or the Secretary for records, meeting notices, or details on BOD and officer responsibilities. Request a certificate on assessment status if needed (Declaration, Paragraph 86).