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CalAttorney2
CalAttorney2, Lawyer
Category: Real Estate Law
Satisfied Customers: 10244
Experience:  I am a civil litigation attorney with experience representing HOAs, homeowners, businesses and others in real estate matters.
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My HoA is controlled by a consortium of owners who appear to

Customer Question

My HoA is controlled by a consortium of owners who appear to have majority ownership of the building. They currently are the 3 board members that sit on the board. There are 30 units in my building.
The owners are 5 investors - 3 active, 2 passive.
- 1 partner owns 2 units (let's use the name Mike to represent him). The units are in his name.
- Mike's wife owns 1 unit in her name.
- Mike and his partner, say William, own another 2 units via an LLC - ABC Investments.
- Mike and William manage 5 other units for another partner called Harry via an LLC that they manage - EDF. The address of the EDF LLC is the same address as the ABC Investments LLC.
- Mike and William also appear to manage another 1 unit for another investor called Ira.
- Mike's emplo*****, *****, works n his real estate development company and owns another 1 unit in his name.
So for all things that have to happen with the building they have 12 votes on one side. They also have 3 votes of owner that appear to vote for them, making them the majority.
The issue I would like to ask is that out of all those owners/LLCs/investors, which are allowed to vote for the property management company?
As of right now, the property management company is owned by Mike + William and is charging high fees to the owners.
Q. Is an property owner allowed to vote for the company that manages the property which is owned as a corporate by him?
Q. Is his wife allowed to vote for his property management corporation which is in his name?
Q. Is his ABC LLC allowed to vote his corporation?
Q. Are the apts that he "actively" manages allowed to vote for his HoA property management corporation? e.g. EDF LLC? I
a. If he is a partner in that LLC, can the units vote for his property management company?
b. If he's not a partner, can those units vote for his property management company?
Q. Is his employee allowed to vote for him?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  CalAttorney2 replied 1 year ago.

Dear Customer,

Thank you for using our forum. My name is ***** ***** I look forward to assisting you today.

I am sorry to learn of your situation, what you describe is the position of being a "minority owner" in your HOA, where the other owners have a controlling block vote.

The way in which they leverage their vote (meaning how many votes per unit, which owners are entitled to vote, and how LLC or Corp. entities vote) for board membership on your board of directors is going to be set by your governing documents. (In most associations, there will be a one unit - one vote rule, so each unit is entitled to a single vote).

These votes elect board members (they are not votes specifically for management companies, which is important because the protection you have as a minority member comes from protections against "breaches of fiduciary duty" by the board).

The board has the right and obligation to perform certain duties, including selection and retention of management companies. It is permissible to hire a company that is owned or controlled by a board member, but if they are not performing their duties adequately, or if they are charging greater than market rate, the minority members can bring a "breach of fiduciary duty" claim against the board (the board is wasting association assets).