Implications
Even if the board is found guilty of inappropriate behavior, the homeowners can be assessed to pay their legal fees.
For example, the Minnesota Nonprofit Corporation Act authorizes directors and members with voting rights to bring an action or petition a court for relief under certain circumstances. It should be noted, however, that because associations are funded by owners, costs incurred by a board to defend a lawsuit initiated by its owners may be assessed back to the owners. Further, under the MCIOA, the court may award attorney’s fees and costs to the prevailing party. As such, if the association prevails, the opposing owner or owners may be responsible for the association’s fees and their own.
For example, the Minnesota Nonprofit Corporation Act authorizes directors and members with voting rights to bring an action or petition a court for relief under certain circumstances. It should be noted, however, that because associations are funded by owners, costs incurred by a board to defend a lawsuit initiated by its owners may be assessed back to the owners. Further, under the MCIOA, the court may award attorney’s fees and costs to the prevailing party. As such, if the association prevails, the opposing owner or owners may be responsible for the association’s fees and their own.
Access to Documents
I am supposed to be legally entitled to receive copies of all of the organizational documents and in theory be able to ask the court of a judgement if they don’t provide them. There is nothing in the law that gives a timeframe on when they are to turn over the documents. For example, they can stall for as long as they want. However, there is also nothing in the statute that prevents them from turning around and assessing me for the judgement.
Minnesota law requires associations to keep certain records and make them available for inspection by any unit owner or their agent (Minn. Stat. § 515B.3- 118). Required records include membership records; meeting records; financial records; association contracts, leases, and agreements; and material correspondence.
I am supposed to be legally entitled to receive copies of all of the organizational documents and in theory be able to ask the court of a judgement if they don’t provide them. There is nothing in the law that gives a timeframe on when they are to turn over the documents. For example, they can stall for as long as they want. However, there is also nothing in the statute that prevents them from turning around and assessing me for the judgement.
Minnesota law requires associations to keep certain records and make them available for inspection by any unit owner or their agent (Minn. Stat. § 515B.3- 118). Required records include membership records; meeting records; financial records; association contracts, leases, and agreements; and material correspondence.
Minnesota statute allows an association to initiate a foreclosure action on a unit for not paying a fine, special assessment, or late fee.
It doesn’t require the board to justify or even ensure the expense is appropriate. It also doesn’t set limits on what can initiate a foreclosure action.
For example, I applied for assistance for my dues under the CARES Act funding. First Service Residential got the payment, but sat on it. It resulted in me incurring a late fee, not because of them not being paid, but because in how they handled the payment. Their collection department initially refused to remove the fee, even though they acknowledged they sat on the check. My board didn’t advocate for me – they can’t because homeowners are not allowed to contact them without going through the management company, who has declared their right to decide what does and doesn’t go to the board.
Minnesota statute would allow them to initiate a foreclosure action over a late fee that wasn’t my fault it happened.
It doesn’t require the board to justify or even ensure the expense is appropriate. It also doesn’t set limits on what can initiate a foreclosure action.
For example, I applied for assistance for my dues under the CARES Act funding. First Service Residential got the payment, but sat on it. It resulted in me incurring a late fee, not because of them not being paid, but because in how they handled the payment. Their collection department initially refused to remove the fee, even though they acknowledged they sat on the check. My board didn’t advocate for me – they can’t because homeowners are not allowed to contact them without going through the management company, who has declared their right to decide what does and doesn’t go to the board.
Minnesota statute would allow them to initiate a foreclosure action over a late fee that wasn’t my fault it happened.
Governing Documents
While the association’s governing documents will specify the board’s exact powers, the board generally has powers to administer the CIC, including the powers specified in Minn. Stat. § 515B.3-102. These powers include making, amending, or revoking rules and regulations for the CIC and its units, which includes regulating the use of the common areas and units, the appearance of the CIC, and the allowance of animals.
Organizations that do not have bylaws must legally default to Minnesota Statute 317A, known as the Nonprofit Corporation Act. Amending Bylaws? If your organization amends its bylaws, you are NOT required to file the amended bylaws with the Minnesota Secretary of State's Office. Incorporation & Bylaws (minnesotanonprofits.org)
If your articles change, you have to file with the state, but not if the bylaws are changed.
While the association’s governing documents will specify the board’s exact powers, the board generally has powers to administer the CIC, including the powers specified in Minn. Stat. § 515B.3-102. These powers include making, amending, or revoking rules and regulations for the CIC and its units, which includes regulating the use of the common areas and units, the appearance of the CIC, and the allowance of animals.
- Minnesota statue doesn’t prohibit the board from making/enacting changes at any time without notifying or including the members.
- There are no standards within the law that even require those changes to make sense.
- Minnesota statue gives the board discretionary powers to determine which ones they will follow and which ones they won’t without any consequences.
Organizations that do not have bylaws must legally default to Minnesota Statute 317A, known as the Nonprofit Corporation Act. Amending Bylaws? If your organization amends its bylaws, you are NOT required to file the amended bylaws with the Minnesota Secretary of State's Office. Incorporation & Bylaws (minnesotanonprofits.org)
If your articles change, you have to file with the state, but not if the bylaws are changed.
515B.3-103 BOARD OF DIRECTORS, OFFICERS AND DECLARANT CONTROL
Nothing in this subsection imposes a duty on the board to provide special facilities for meetings. The failure to give notice as required by this subsection shall not invalidate the board meeting or any action taken at the meeting. The minutes of any part of a meeting that is closed under this subsection may be kept confidential at the discretion of the board.
According to the way this is written, they can say they are having a board meeting to meet the legal requirements of having one, but they don’t have to provide space for anyone to attend. Also, it’s acceptable if they don’t follow the bylaws when it comes to giving notice. They bylaws only matter for when it comes to the homeowner, not for how the board conducts their business.
This part of the statute also doesn’t require meeting minutes to be complete or an accurate account of the meeting, even when the meeting is supposedly an “open meeting.” Yet, at the same time, meeting minutes are supposed to be legal documents.
Nothing in this subsection imposes a duty on the board to provide special facilities for meetings. The failure to give notice as required by this subsection shall not invalidate the board meeting or any action taken at the meeting. The minutes of any part of a meeting that is closed under this subsection may be kept confidential at the discretion of the board.
According to the way this is written, they can say they are having a board meeting to meet the legal requirements of having one, but they don’t have to provide space for anyone to attend. Also, it’s acceptable if they don’t follow the bylaws when it comes to giving notice. They bylaws only matter for when it comes to the homeowner, not for how the board conducts their business.
This part of the statute also doesn’t require meeting minutes to be complete or an accurate account of the meeting, even when the meeting is supposedly an “open meeting.” Yet, at the same time, meeting minutes are supposed to be legal documents.
Management companies are supposed to be "neutral"
Minnesota statute talks about how management companies are supposed to be a “neutral party”, but doesn’t provide a definition of what that means.
For example, in our case FSR is the sole signer on our checking account and they have a $1,500 per month “discretionary fund” for which they don’t need board approval to spend. What other contractor gets free money like that and why do they need discretionary funds in the first place? We aren’t allowed to talk to the board without going through them, and their name is on all of the correspondence that goes out to the homeowners.
In two years, home owners have had to put up more money out of pocket 5 times, but we still have a contractor who takes this money on top of all of the other fees they collect.
Minnesota statute talks about how management companies are supposed to be a “neutral party”, but doesn’t provide a definition of what that means.
For example, in our case FSR is the sole signer on our checking account and they have a $1,500 per month “discretionary fund” for which they don’t need board approval to spend. What other contractor gets free money like that and why do they need discretionary funds in the first place? We aren’t allowed to talk to the board without going through them, and their name is on all of the correspondence that goes out to the homeowners.
In two years, home owners have had to put up more money out of pocket 5 times, but we still have a contractor who takes this money on top of all of the other fees they collect.
Associations are generally responsible for maintaining, repairing, and replacing common elements and are required to maintain property and liability insurance “to the extent reasonably available” (Minn. Stat. §§ 515B.3-107, -113
The “reasonably available” part of the statute creates a financial risk for the homeowners. Why would you require something and then say, “oops never mind” at the end of the sentence.
This goes to the competency of the board, the financial security of the association as well as the board’s legal requirement of “duty of care” and “fiduciary responsibility” to the nonprofit organization. You have to have liability insurance to drive a car. Why would it be optional to run a business involving thousands of dollars?
The “reasonably available” part of the statute creates a financial risk for the homeowners. Why would you require something and then say, “oops never mind” at the end of the sentence.
This goes to the competency of the board, the financial security of the association as well as the board’s legal requirement of “duty of care” and “fiduciary responsibility” to the nonprofit organization. You have to have liability insurance to drive a car. Why would it be optional to run a business involving thousands of dollars?