We heard a fair amount of discussion about Cedar Run's Bylaws early on when Robert Sher took control of Cedar Run. We didn't hear much about them after that, except for one of Sher's letters where he claims that there 'were no bylaws' before he came along.....He goes on to say that, thanks to him, we do now have Bylaws and everything is now legal and proper. The main purpose of this blog entry is to educate homeowners about Bylaws....What are they?? What are they for??? Why the heck should we care?!?! The other purpose is to provide you with the facts and details surrounding Robert Sher's statements (and more so his silence) about our bylaws. As the saying goes...'The devil is in the details'.
Bylaws defined
Bylaws, along with Declarations and Articles of Incorporation are an association's 'governing documents'. They establish how the association and board are organized as well as set rules for homeowners, directors, property managers, developers, or anyone involved with that association. They explain both the rights and responsibilities of the above parties.
Anything that State law doesn't address, the governing docs typically cover. If there is a conflict between the governing docs and the State law, State law always prevails. For example, if the bylaws say that the association must give five days of notice to call a Special Meeting of the members, but the State Laws says you must give a minimum of ten days notice, ten it is!
The governing docs, specifically the Bylaws, are also important because they place limits on the power of a board, officer, property manager, etc. They specify how a director can be removed, how elections are handled, and set terms for directors. They state how often meetings must be held, when budgets must be established, how many directors must be present to vote on certain items (aka 'quorum'). They also explain how the Bylaws themselves can be amended if enough homeowners want a change to the rules. Just like amendments to government constitutions, a super-majority is usually required to amend Bylaws.
One final general note about governing documents, they must be recorded at a County Recorder of Deeds in order to be legal (this is important later)
Cedar Run's Bylaws
To clarify, we are talking about the Master Board, aka Cedar Run Homeowners' Corporation whenever we mention Bylaws in the rest of this blog post. Phase Bylaws are important, but we will specifically refer to them as phase bylaws when we bring them up.
Cedar Run Homeowner's Corp was established in 1972 by the developer, Tekton Corp. All of Cedar Run's governing docs were written by Tekton's attorneys and recorded at the county. Tekton's offices were located somewhere in Dupage County. Although Cedar Run is located in Cook County, Tekton recorded these initial governing docs for the Master Board and Phase 1 in Dupage County. This was still legal, but it has made it that much more difficult for anyone to locate these governing docs over the years. After that, all subsequent phases had their governing docs recorded in Cook County.
Despite all this confusion, the bottom line is that we have Bylaws. We've had them since 1972, and those same Bylaws are still legally binding.
Why the heck should we care?!?
The real question we should ask is 'Why would Robert Sher care?' Sher initially pointed to these same Bylaws when he campaigned to take over the board. He pointed to an article that forbids any director from being paid for his/her services. John Zink was being paid to do groundskeeping & maintenance, and Sheri Greenberg received a small amount of money for managing clubhouse rental, and they were both directors. Sher claimed that they violated the Bylaws, and that they were acting illegally. (The counter-argument is that they were not paid for their director duties but paid for other services they provided....the courts agreed, but that's a subject for another blog entry)
Ironically, it's the part that forbids payment of directors that Sher wanted to eliminate first as part of his plan for the new board. He figured he could pay himself and Jack Shaw a healthy salary to manage Cedar Run and trickle some money down to the board so they would support him forever. To do this, the Bylaws had to go. Sher made multiple attempts to legally justify invalidating our Bylaws.
Attempt #1:
Sher writes a letter to the Secretary of HUD, asking if the Bylaws could be changed to allow the payment of directors. He states that these directors will be paid based on how much they 'save' for the community. To clarify, the letter to HUD was made to appear that is was from Denny Alfaro, but it was Sher that wrote it and Alfaro just signed it at Sher's request.
Result:
Absolutely nothing!! The Secretary of HUD cannot grant you permission to amend your bylaws without following the rules within your bylaws or following applicable state law.
Attempt #2:
Sher claims that the Bylaws were never recorded at the county, and therefore are not legal.
Result:
Wrong again...they were recorded in Dupage County....annoying and confusing, but still legal.
Attempt #3:
The Dupage document is just the Articles of Incorporation. No Bylaws were ever recorded.
Result:
Wrong again....The Bylaws are an 'Exhibit' within the Articles of Incorporation. Some associations record their Bylaws as a separate document from their other governing docs, but it is not required.
Attempt #4
Blame it on Bloomberg!!!! Sher points to the fact that attorney Steven Bloomberg registered a new corporation for the Master Board with the Secretary of State in 2002 instead of renewing the old corporation that dissolved in 1999. He didn't record NEW Bylaws for this NEW Corporation, and therefore Cedar Run has no Bylaws.
Result:
(in Sher's mind, but not legally speaking) Bingo!!! Bylaws don't exist, and Sher can write new ones any way he wants them!!!
The truth about the new entity registered in 2002 is that it was the wrong thing to do. The Cedar Run Concerned Homeowners have criticized Mr. Bloomberg for making this error, as it simply adds complication to an already complicated situation. However, this event has nothing to do with our Bylaws. Because of Bloomberg's action in 2002, Cedar Run had operated as an 'Unicorporated Association' from 1999-2012. But the Bylaws were always in effect all along.
So what happened next?
Now that Sher felt he successfully justified throwing out the Bylaws, it was time to write new ones. Forget about sending copies to every homeowner and calling a special meeting where they can vote to ratify new bylaws.....why not just have the faithful directors sign them?? On December 5th, 2012 with only five directors' signatures, (one Sher's wife, two others on the payroll) , the new Bylaws were signed into 'law', and they've been in full effect ever since (again in Sher's mind, but not legally speaking).
So to answer the question many homeowners have asked about the management contract term that the board has with with Sher/Shaw (aka the oversight committee)..... It's as long as Robert and Jack want it to be, according to these Bylaws. Sher and Shaw plan to sit back and collect our money until they are simply tired of doing so......pretty sweet deal for them, isn't it??
Case & point...With all the unchecked power Sher has via this created oversight committee, plus the secret meetings, disenfranchising of voters (homeowners), failure to hold elections, failure to provide a budget.....etc. etc. etc.........These bogus Bylaws prove that Sher's board is nothing more than a Dictatorship, masquerading as a Democracy.
But the good news is.....
None of the above is legal!!! Zip, Zero, Zilch!! While State law trumps almost all of it, the simple fact that our real Bylaws (from 1972) are still in effect is a double slam-dunk. (The bogus Bylaws were also never recorded, making it a triple slam-dunk!) To amend our bylaws, Sher would have needed to call a special election to vote on any proposed changes, and a 2/3 majority would be required.
Instead, Robert Sher chose to invent new bylaws and sign them into effect without any homeowner involvement whatsoever......Transparency??? Checks & balances??? Judge for yourself.
Even Anne Shaw, who's name is shown as the author (see image below) of this Bylaw document, knows they are not legal. More than a month after this document was signed, Ms. Shaw filed a lawsuit against the phases, referring to our real bylaws (from 1972) as evidence. Why would she refer to 'non-existent' Bylaws?? If Sher's bylaws are legal and proper, why not use them to bolster your lawsuit???
So the next time Sher to rants about recovering your 'lost shares' in the corporation or making us legal by giving us bylaws we never had.....You'll know that it's all smoke & mirrors.
Bylaws defined
Bylaws, along with Declarations and Articles of Incorporation are an association's 'governing documents'. They establish how the association and board are organized as well as set rules for homeowners, directors, property managers, developers, or anyone involved with that association. They explain both the rights and responsibilities of the above parties.
Anything that State law doesn't address, the governing docs typically cover. If there is a conflict between the governing docs and the State law, State law always prevails. For example, if the bylaws say that the association must give five days of notice to call a Special Meeting of the members, but the State Laws says you must give a minimum of ten days notice, ten it is!
The governing docs, specifically the Bylaws, are also important because they place limits on the power of a board, officer, property manager, etc. They specify how a director can be removed, how elections are handled, and set terms for directors. They state how often meetings must be held, when budgets must be established, how many directors must be present to vote on certain items (aka 'quorum'). They also explain how the Bylaws themselves can be amended if enough homeowners want a change to the rules. Just like amendments to government constitutions, a super-majority is usually required to amend Bylaws.
One final general note about governing documents, they must be recorded at a County Recorder of Deeds in order to be legal (this is important later)
Cedar Run's Bylaws
To clarify, we are talking about the Master Board, aka Cedar Run Homeowners' Corporation whenever we mention Bylaws in the rest of this blog post. Phase Bylaws are important, but we will specifically refer to them as phase bylaws when we bring them up.
Cedar Run Homeowner's Corp was established in 1972 by the developer, Tekton Corp. All of Cedar Run's governing docs were written by Tekton's attorneys and recorded at the county. Tekton's offices were located somewhere in Dupage County. Although Cedar Run is located in Cook County, Tekton recorded these initial governing docs for the Master Board and Phase 1 in Dupage County. This was still legal, but it has made it that much more difficult for anyone to locate these governing docs over the years. After that, all subsequent phases had their governing docs recorded in Cook County.
Despite all this confusion, the bottom line is that we have Bylaws. We've had them since 1972, and those same Bylaws are still legally binding.
Why the heck should we care?!?
The real question we should ask is 'Why would Robert Sher care?' Sher initially pointed to these same Bylaws when he campaigned to take over the board. He pointed to an article that forbids any director from being paid for his/her services. John Zink was being paid to do groundskeeping & maintenance, and Sheri Greenberg received a small amount of money for managing clubhouse rental, and they were both directors. Sher claimed that they violated the Bylaws, and that they were acting illegally. (The counter-argument is that they were not paid for their director duties but paid for other services they provided....the courts agreed, but that's a subject for another blog entry)
Ironically, it's the part that forbids payment of directors that Sher wanted to eliminate first as part of his plan for the new board. He figured he could pay himself and Jack Shaw a healthy salary to manage Cedar Run and trickle some money down to the board so they would support him forever. To do this, the Bylaws had to go. Sher made multiple attempts to legally justify invalidating our Bylaws.
Attempt #1:
Sher writes a letter to the Secretary of HUD, asking if the Bylaws could be changed to allow the payment of directors. He states that these directors will be paid based on how much they 'save' for the community. To clarify, the letter to HUD was made to appear that is was from Denny Alfaro, but it was Sher that wrote it and Alfaro just signed it at Sher's request.
Result:
Absolutely nothing!! The Secretary of HUD cannot grant you permission to amend your bylaws without following the rules within your bylaws or following applicable state law.
Attempt #2:
Sher claims that the Bylaws were never recorded at the county, and therefore are not legal.
Result:
Wrong again...they were recorded in Dupage County....annoying and confusing, but still legal.
Attempt #3:
The Dupage document is just the Articles of Incorporation. No Bylaws were ever recorded.
Result:
Wrong again....The Bylaws are an 'Exhibit' within the Articles of Incorporation. Some associations record their Bylaws as a separate document from their other governing docs, but it is not required.
Attempt #4
Blame it on Bloomberg!!!! Sher points to the fact that attorney Steven Bloomberg registered a new corporation for the Master Board with the Secretary of State in 2002 instead of renewing the old corporation that dissolved in 1999. He didn't record NEW Bylaws for this NEW Corporation, and therefore Cedar Run has no Bylaws.
Result:
(in Sher's mind, but not legally speaking) Bingo!!! Bylaws don't exist, and Sher can write new ones any way he wants them!!!
The truth about the new entity registered in 2002 is that it was the wrong thing to do. The Cedar Run Concerned Homeowners have criticized Mr. Bloomberg for making this error, as it simply adds complication to an already complicated situation. However, this event has nothing to do with our Bylaws. Because of Bloomberg's action in 2002, Cedar Run had operated as an 'Unicorporated Association' from 1999-2012. But the Bylaws were always in effect all along.
So what happened next?
Now that Sher felt he successfully justified throwing out the Bylaws, it was time to write new ones. Forget about sending copies to every homeowner and calling a special meeting where they can vote to ratify new bylaws.....why not just have the faithful directors sign them?? On December 5th, 2012 with only five directors' signatures, (one Sher's wife, two others on the payroll) , the new Bylaws were signed into 'law', and they've been in full effect ever since (again in Sher's mind, but not legally speaking).
What's in these 'new' Bylaws?
Have a look for yourself. Feel free to compare them to our real Bylaws. We realize that reading through each document would put anyone to sleep. So our volunteers have reviewed both documents and created list of some of the drastic, outlandish rules in Sher's Bylaws.
- Master board reduced to seven directors (from eleven). Why? Because by December 2012, four of Sher's hand-picked directors had already resigned. Why hold an election to replace them when you could just eliminate their position in the Bylaws? Plus, it's a heck of a lot easier to manipulate seven people as opposed to eleven, is it not ?
- 40% of homeowners needed to call a special election. Our real bylaws say 25%. Sher didn't want his board removed using the same process that got them elected....a tad hypocritical, isn't it?
- All proxy ballots must be certified by a CPA and turned in for review one week prior to an election. Sher wants to make it virtually impossible for anyone to collect votes by proxy. Not only is it hypocritical, but it's against the law to put such ridiculous conditions on proxy voting.
- ....and if a director is removed by a homeowner vote, the BOARD chooses their replacement.....NOT THE HOMEOWNERS!!
- All officers have a five year term, and the board can appoint a replacement if someone resigns. State law and our real bylaws require that anyone appointed to fill a vacancy on the board must be up for re-election at the next annual meeting. Sher's bylaws say the replacement will serve the unexpired term. So if someone resigns, Sher will just hand pick a replacement.
- Any director can be paid if a majority of the board approves. The Treasurer IS A PAID POSITION, and the treasurer can bill up to 20 hours per week. Once again, remember that our TRUE Bylaws forbids paying any director for their services.
- The Board can use homeowners' funds to purchase Heath Insurance for themselves!! Isn't it ironic that Sher dropped the umbrella policy that included Fire Insurance for our buildings, but he sees no problem spending our money to buy Health Insurance for his wife and blindly faithful directors???
- Renters are officially referred to as 'Transient Occupants'. Investor owners must have their tenants screened by the oversight committee, and allow the oversight committee inspect their unit every two years. Investor owner must also PAY FOR SECURITY DEVICES for neighboring homeowners (to allegedly protect the neighbors from their tenants?).
- Oversight committee is paid (big surprise!) and can hire a staff that will also be paid with homeowner funds. Board can't hire a contractor unless the oversight committee approves of the contractor (shouldn't it be the other way around?). Oversight comittee members must have certain credentials (which incidentally are credentials that Shaw and Sher have). Anyone without these credentials can only serve for one year unless Sher agrees to renew them.
- Oversight Committee cannot be abolished....EVER!. Members of the committee can only be removed if the budget is exceeded (pretty tough when you don't have a budget) AND the directors unanimously vote to remove.....Yep, Sher is virtually un-fireable according to these bylaws. (so much for checks & balances).
So to answer the question many homeowners have asked about the management contract term that the board has with with Sher/Shaw (aka the oversight committee)..... It's as long as Robert and Jack want it to be, according to these Bylaws. Sher and Shaw plan to sit back and collect our money until they are simply tired of doing so......pretty sweet deal for them, isn't it??
Case & point...With all the unchecked power Sher has via this created oversight committee, plus the secret meetings, disenfranchising of voters (homeowners), failure to hold elections, failure to provide a budget.....etc. etc. etc.........These bogus Bylaws prove that Sher's board is nothing more than a Dictatorship, masquerading as a Democracy.
But the good news is.....
None of the above is legal!!! Zip, Zero, Zilch!! While State law trumps almost all of it, the simple fact that our real Bylaws (from 1972) are still in effect is a double slam-dunk. (The bogus Bylaws were also never recorded, making it a triple slam-dunk!) To amend our bylaws, Sher would have needed to call a special election to vote on any proposed changes, and a 2/3 majority would be required.
Instead, Robert Sher chose to invent new bylaws and sign them into effect without any homeowner involvement whatsoever......Transparency??? Checks & balances??? Judge for yourself.
Even Anne Shaw, who's name is shown as the author (see image below) of this Bylaw document, knows they are not legal. More than a month after this document was signed, Ms. Shaw filed a lawsuit against the phases, referring to our real bylaws (from 1972) as evidence. Why would she refer to 'non-existent' Bylaws?? If Sher's bylaws are legal and proper, why not use them to bolster your lawsuit???
So the next time Sher to rants about recovering your 'lost shares' in the corporation or making us legal by giving us bylaws we never had.....You'll know that it's all smoke & mirrors.
As always, your questions & comments are welcome at restoreCR@gmail.com. We greatly appreciate the outpouring of support we've received so far!
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