Ms. Sheri Johnson,

You asked, at the last Board of Directors meeting, about the Boards authority to initiate legal action on behalf of the Association without a prior membership vote/approval. First, the authority comes from ARS 10-3302.1 which states that the corporation has the authority to sue. ARS Title 10 is the law(s) that covers all corporations and is superior to ARS Title 33 and our CC&Rs/Bylaws (the Association is a registered non profit corporation). Next our CC&Rs, Rule 2.5, states that the Board “shall conduct all affairs and exercise the powers of the Association”, except “those matters requiring the vote of the members”.  If you search through both the CC&Rs and the Bylaws you will not find any requirement that the membership vote on legal matters. There are a number of specific instances when a membership vote is required i.e. election of Board of Directors, amendment to the CC&R/Bylaws, raising the dues etc, however no such requirement is stated regarding legal action(s). Bylaws, Article III Section 1.B, states that the powers of the Board  are to “conduct, manage and control the affairs of the Association”. Also Bylaws Article III Section 1.I states that the Board has the power to “contract for and pay maintenance, materials, supplies and services relating to the operation ... including legal and accounting services. As you can see, the Board is given broad powers to conduct the affairs/business of the Association, unless there is a specific requirement stated in either the CC&Rs or the Bylaws that a membership vote is required. Again there is no requirement that the Board seek a membership vote to initiate a legal action on behalf of the Association. Finally your question was related specifically to the purchase of the motorgrader. Considering the circumstances of the motorgrader purchase, it is the Boards opinion that to not pursue legal action would constitute at worst malfeasance and at least misfeasance if it fails to attempt the retrieval of as much of the Associations money as possible.

 

I am asking that this reply to your question be put on the Association’s web site as it is valid and pertinent to current business also I am sure that you are not the only one to ask this question. Thank you for the opportunity to bring this to the members attention.

 

David West, Secretary Highroads Property Owners Association