Port Germein Progress Association is challenging its critics to seek a position on its executive at the next opportunity.
This comes after "concerned citizen" Bob Boundy questioned the conduct of the association's annual general meeting.
Mr Boundy claimed the president and treasurer were elected as office-bearers despite having jobs with the association's caravan park.
He said it was against the association's constitution.
"The appointment of Sandy Wauchope as president should be null and void despite her resigning in about eight weeks' time as manager of the caravan park," he said. "It is technically wrong."
He said only one person had nominated for each vacancy on the committee.
"What is going on here? People don't realise what is happening," he said.
"There should have been a meeting of association members when it was decided to borrow $112,000 to buy the town's former school last year."
He said the group's constitution was read out as was the associations' Act.
The association's assistant secretary, Sue Perovic, said that the officer-bearers were allowed to work at the town's caravan park.
"There have been non-stop attacks at the annual general meeting," she said. "Sandy Wauchope offered to step down if someone wanted to be president, but no-one did.
"The president and treasurer are being paid for a service, not for being office-bearers.
"We have spoken to the consumer affairs department and had legal advice and we are guided by them."
In response to criticism about a lack of a special meeting to approve the school loan, she said 80 had attended the "first meeting".
"It is a democracy and we will always go with the majority," she said.
"There were five against it and Mr Boundy was one of them.
"If they don't like what we are doing - don't knock it, stand for a position."
Other residents including Karen Phyland have criticised the operation of the progress association.
There are simmering tensions in the quiet seaside town.