Question:
I’m looking for advice on a situation we’re facing with our condo HOA in Iowa. Our condominium consists of 16 units owned by 8 different owners. One owner holds 9 units, while the remaining 7 units are owned by 5 other individuals. Among these owners, only three have been actively participating in the HOA board.
During previous elections, the owner of the 9 units and two other owners (who held proxies for the remaining non-participating owners) formed the board without major issues. However, in this year’s election, the owner of the 9 units transferred 1% ownership of two of his units to two of his tenants. This allowed those tenants to qualify as unit owners, making them eligible to be on the board. As a result, he secured full control of the HOA board by having himself and his two tenants elected, effectively pushing out the other two real owners.
Now, with full board control, he can make any decisions without opposition. We believe this maneuver was done to consolidate power and override the interests of the other owners.
Our question is: Is there any legal or procedural way to challenge or reverse this election, given that it was achieved through fractional ownership transfers?
Any advice on Iowa HOA laws, legal actions, or procedural steps we could take would be greatly appreciated.
– Ebi
Answer:
Hi Ebi,
The key question is whether the governing documents define ownership in a way that prevents strategic fractional transfers to create voting advantages. Some HOAs have provisions limiting voting rights to primary owners or restricting board eligibility to those with a minimum ownership percentage. If your bylaws do not explicitly prohibit this tactic, you may need to argue that the transfers were done in bad faith to manipulate the election, violating the board’s fiduciary duty to act in the best interest of all members.
Another approach is to request a legal review to determine if the transfers violate corporate governance laws, particularly if they were done solely to influence board control rather than for legitimate ownership purposes. If the new board is making decisions that harm other owners, you could explore legal action, such as filing a lawsuit for breach of fiduciary duty or seeking an injunction against certain board actions.
Additionally, if a recall process is outlined in your governing documents, gathering enough support from other owners to remove the board could be an option.
Disclaimer: We are not lawyers. The information provided on this website does not constitute legal advice.
