As of Friday, February 13, 2015, the Cedar Run Homeowners' Corporation (aka "Master Board") has been officially in receivership. Under the leadership of Robert Sher and Jack Shaw, who have blatantly disregarded the rule of law, the HOC board has effectively been stripped of all powers.
What is Receivership?
Receivership, in the case of community associations, occurs when a court assigns a third party (aka a 'receiver') to assume control over that association. This happens when an association has effectively become un-governable under its current board of directors and structure. Most often, receivership is ordered when an association is essentially broke (i.e. expenses aren't being paid), and a judge must order a receiver to take control of its finances and bring the association back to financial solvency.
However, receivership can also be ordered when an association's legal problems run so deep, that they cannot be solved with the current board in power. This is what we are dealing with in Cedar Run.
The receiver has been charged with three general tasks:
- Run the HOC legally and in compliance with our governing documents until a proper election takes place.
- Assist a CPA firm, as necessary, to perform a full audit of the financials from 2011 to present.
- Prepare and administer the election of an entirely new board, currently scheduled for May 2015.
The list of unlawful things that the Sher group has done since taking power is virtually endless, and we won't even bother listing or discussing them now. However, the fact that Sher has operated for so long without a single election is what started a series of events that landed us in receivership. That, compounded by the bogus Bylaws that Sher pointed to as justification for his refusal to hold elections, has ultimately led to his (and the board's) ouster.
Just about every other unlawful act from the Sher group has stemmed from these 'Bylaws' and Sher's refusal to hold elections.
1. Bogus Bylaws
There are countless reasons why these bylaws are blatantly illegal....again, we will leave that topic alone for now (if you've read the court transcripts, you've seen what the judge thinks of them). These bylaws were essentially a manifesto that showed exactly how Sher wanted to run the association. The judge declared them invalid and saw them as clear proof that the current board could not operate legally and properly.
We will revisit the specific illegalities of these Bogus Bylaws in a future blog post. For now, feel free to read an older blog post entitled 'Bylaws, The Untold Story' for some history on the topic.
2. No Elections
The one safeguard that a community has against their association's Board of Directors is the ability to vote them out if they are displeased. Whether it's failure to follow state laws and/or governing documents, mismanagement, unpopular rules/policies, or any other reason homeowners are displeased, annual elections and special elections allow them to change the way their board operates.
Sher eliminated the one true power that homeowners have to dictate how their association is run. Isn't it ironic that he did this, all while claiming to be a populist and an advocate of the people? Did homeowners ever ask to have their voting rights revoked?
Had the Sher group handled the elections properly, we would have had annual meetings (elections) in May of 2013 and May of 2014. All director positions on the HOC board except for one (specifically Barbara Shaw's) would have been up for reelection between these two annual meetings. You can clearly understand why Sher did not want these elections to happen.
So, What Now??
- Per the court order, the HOC board and Oversight Committee have been stripped of all powers. (see page 2, paragraph 1, lines (a) through (f) of the court order)
- They cannot contact or address homeowners in any kind of official way.....no mailings, posting, Q & A sessions, etc.
- They cannot issue checks, enter or cancel contracts, or manage vendors and/or contractors.
- They cannot conduct board meetings or homeowner meetings.
- All financial records have been seized (or are in the process of being seized) and turned over to the accounting firm for their audit.
- Robert Sher and the HOC board have been banned from using the clubhouse. Only the receiver and any staff that the receiver permits can conduct business in the clubhouse.
- Homeowners should receive a letter from HHSG (Heil, Heil, Smart & Golee, aka the receiver/manager) very soon:
- This letter will explain who they are and what their role is with Cedar Run
- It will likely reiterate portions of the court order and explain that the Sher group is no longer in power.
- It will likely include new assessment payment instructions and a new payment address.
If Sher, any of the board members, or anyone else tells you something different, they may be violating the court order, and we'd love to hear about it.
- Continue paying your HOC assessments
- Even if we receive new payment instructions from the receiver, your March 2015 payment will still be accepted if you had already sent it to the old payment address.
- Continue paying your Phase assessments
- Nothing in the court order or receivership arrangement affects your phase association payment. To avoid late charges, continue paying your phase dues as you have in the past.
- Read the receiver's letter carefully
- There will be other important information in the receiver's letter aside from payment information. It is important that homeowners fully understand the situation in Cedar Run. We will post a summary of this information on the blog, but we still recommend reading the letter yourself and calling HHSG (the receiver) with any questions.
This coming May (or whenever the election finally takes place), Cedar Run homeowners will have a clear choice...
- Do we repeat the same 'Robert Sher Experiment' that ultimately brought us into receivership?
- Or do we move on and try to manage our property responsibly and legally??