Management Articles

Changing of the Guard
Part of the routine of running a homeowner association includes annual election of directors to the Board. In most, some directors step down and others step up to work with the remaining directors whose terms have not yet expired. Staggering terms makes sense so that there is an element of continuity. Seasoned directors bring with them perspective and history that is valuable to decision making. And it eliminates reinventing the wheel on issues that have already been discussed and decided.

But, pigs is pigs and politics are politics. There are occasions when the Board resigns en masse or is voted out by angry homeowners. This is usually prompted by a serious disagreement, allegations of fraud or some other malfeasance. Rumors and rumors of rumors abound. The outgoing Board members often carry a fair amount of resentment and antagonism with them. "Uncooperative" is a given and some engage in subterfuge trying to stir up discontent among their supporters. There is no joy in Mudville.

At times like these, the new Board may be tempted to engage in witch hunting...pinning the blame on somebody for the problems. Witch hunting always finds a witch of some sort and the result is always the same: bad feelings among neighbors. It’s at times like these that the wise Board should weigh the benefits of continued conflict (none) versus making peace and getting back on track (good choice). Besides, burning witches violates the local fire ordinances.

Get the Records. There are some prudent things the new Board should get done quickly. If your HOA is self managed, getting the files and records from the outgoing board is a top priority. They are likely scattered between the President, Secretary and Treasurer but they need to be rounded up. The antagonism factor from past directors may interfere with the transfer ("NO, they’re MY records and you can’t have them", or "I can’t remember where I put them" or, "I tried pot but didn’t inhale") but press on. The records belong to the HOA and, if necessary, legal consequences should be brought to bear. Reminding that withholding records only reinforces suspicions of chicanery may also help in shaking them loose.

Perform an Audit. Once records are transferred, an audit by a CPA should be performed. There are a number of benefits to this:

1. Improprieties will be identified and provide a basis for prosecution, or,
2. The accused will be vindicated, which is good for healing wounds.
3. A line in time will be drawn from which the new Board can plan. Know where you are to know where you are going.
4. Books are reviewed by an outside, knowledgeable and objective professional.
5. The CPA will recommend improvements to the financial record system.
6. Relieves the new Board of past improprieties. Start with a clean slate.

Identify the Mistakes. The previous Board fell from grace for good reason but it’s important that the new Board understand why to avoid the same fate. Some common mistakes include:

Bad communication with the members. Examples include holding closed meetings, failing to distribute meeting minutes or newsletters.

Failure to get member feedback on proposed budgets, special assessments and policies.

Selective enforcement of rules and collection procedures. A big no-no and sure fire way to create animosity.

Domineering attitude. One of the most infuriating attributes a Board can have.

Make a list of where your prior Board failed and agree to do differently in the future.

We’re One of You. It’s a funny thing how some members believe the Board members come from another planet. Directors are subject to the same budget, fees, special assessments, rules and policies as everyone else. It’s important to reiterate that reality when assuming control. It’s also healthy for the Board to chant that mantra when proposing and enforcing policy and all that that entails. If a rule is good, it applies to all. Message to the Members: We are you.

The King is dead! Long live the King! Now you’re in charge. As the new guard, you have a golden opportunity to right the unrightable wrongs. Remember why you got to this place and serve with honor. Don’t let your guard (or members) down. BACK

HOA Wellness Survey
The health of a homeowner association is important to measure from time to time. Fortunately, even poor health is curable but identifying the problem precedes the cure. Here are a series of self-diagnosis questions to help you out:

1. Are all board meetings open to members?   [ ] Yes   [ ] No
2. Are all rules necessary, reasonable, uniformly enforced and include a right of appeal? [ ] Yes   [ ] No
3. Do owners have an opportunity for input before or during board meetings? [ ] Yes   [ ] No
4. Are all meeting minutes made available to members? [ ] Yes   [ ] No
5. Do new owners receive informational packets to get them started on the right foot? [ ] Yes [ ] No
6. Is there an Owner Forum provided at Board Meetings to allow member comment? [ ] Yes [ ] No
7. Does your HOA have and follow a Reserve Study? [ ] Yes [ ] No
8. Does the Board consult with an attorney when proposing to new policies or rules? [ ] Yes   [ ] No
9. If self managed, do you have a reliable system for emergency response? [ ] Yes [ ] No
10. Do you have a sustained volunteer recruitment program?   [ ] Yes   [ ] No
11. Does the Board distribute and follow an Annual Planning Calendar?   [ ] Yes   [ ] No
12. Are regular financial statements reviewed by the Board and then distributed to the members? [ ] Yes [ ] No
13. Are records available for inspection by members?   [ ] Yes   [ ] No
14. Is a newsletter distributed on a regular basis? [ ] Yes   [ ] No
15. Are rules and architectural guidelines that are easily available to the owners? And,   [ ] Yes [ ] No
16. Are they written in a positive tone to encourage compliance rather than dictatorial that promotes defiance? [ ] Yes [ ] No
17. Do you distribute timely notice of rules and policies affecting member lifestyle or responsibilities? [ ] Yes [ ] No
18. Are members kept informed ess of ongoing litigation? [ ] Yes   [ ] No
19. Are members given a chance to comment on proposed rules and policies? [ ] Yes [ ] No
20. Does the HOA have a website to archive vital information and for communication purposes? [ ] Yes [ ] No

This survey could serve as the basis for an excellent Board Planning Retreat. It hits on many things that smooth out HOA business. Or with some creative rewording, it could be turned into a questionnaire to be distributed to the members for comment. Requesting feedback is an important step to promoting volunteers. Dr. HOA says "Heed the prescription and heal thyself!" BACK

Mind Your Speed
Does your HOA suffer from Lead Foot Syndrome (LFS)? LFS causes drivers of all ages to speed recklessly through the neighborhood oblivious to pedestrians, children and pets. They often suffer as well from CITES (Cellphone in the Ear Syndrome) which further increases their oblivion. But either way, there is a real safety problem here.

The Board, in response, may consider more signs or speed bumps to get a handle on this affliction. But signs only have a temporary effect on those that can read and they soon fade into the landscape. Speedbumps work but force all residents to suffer a jarring gauntlet every time they come and go.

But there is a better way through technology. Most city law enforcement have portable traffic speed monitors. Some even capture photos of speeders which are used to issue speeding tickets. They are usually mounted on a trailer or a specially equipped van. They are designed to be moved around to various speeding hotspots. But they aren’t cheap. A recently launched device called SpeedMinder cleverly uses the same idea and packages it in a portable and affordable package.

SpeedMinder is about the size and weight of an appliance dolly. At 25 pounds, it can be easily moved by one person on its built in wheels. It features a radar activated LED display that can be calibrated to the speed limit. As approaching vehicles enter SpeedMinder’s unobstructed view of up to 500 feet, it constantly compares vehicle speed to the legal limit. If vehicle speed is at or below the limit, it shows that speed in a steady green. If the speed exceeds the legal limit, it flashes the speed in red.

The equipment is powered by a rechargeable battery which has a solar panel charging option. A light sensing photocell automatically dims the LED at night to conserve battery power. SpeedMinder records data including traffic count, average speed, number of violations and highest speed. This is valuable information for either informing local police, getting support for more speed deterrents from the city or helping the Board make informed decisions street speed issues.

And the real beauty of this technology is that SpeedMinder does slow the traffic down, just like the big expensive version used by the police. Since it’s portable, it can be moved around to other areas as needed. The price is affordable for virtually any HOA at only $1095. Forget the speed bumps. Forget the speed patrols. Put SpeedMinder in your speed deterrent arsenal.

For more on this lifesaving device, go to www.SpeedMinder.net BACK

Dispelling Manager Myths
Homeowner associations hire managers for two basic reasons: to carry out board policies and to manage the homeowner association's business affairs. Sometimes, however, the manager's role is misunderstood which could bring the manager into conflict with the board or members.

What are the most common myths?

Manager is Available 24/7. HOA managers generally manage many communities and must divide their schedule among them. While the management company usually provides emergency response 24/7, the manager’s time is carefully orchestrated between clients to maximize efficiency and cost effectiveness to the clients.

Manager is Responsible for Contractor Performance. The manager does not have direct control over the contractors. It’s up to the contractor to provide agreed upon services in a timely manner. When the contractor fails, it’s up to the manager to enforce provisions of the contract by whatever means necessary including withholding payment or legal action.

Manager Should Anticipate Maintenance. There is a perception that the manager is omnipresent and should catch maintenance problems as they happen. In reality, the Management Agreement typically calls for periodic property inspections (weekly, monthly or quarterly) which are supplemented by maintenance requests from the Board or homeowners and feedback from maintenance contractors. To control management costs, identifying maintenance problems is a team effort.

Manager Works for the Owners. The management company enters into a written agreement with the Board of Directors which usually authorizes the manager to run HOA business in accordance with the governing documents, approved budget and additional direction provided by the Board or Board President. Owners have no contractual authority and the manager should not take direction directly from an owner.

Manager Takes Direction from Directors. Managers act under the direction of the entire board of directors or the Board President, who generally has authority to speak for the board between board meetings on many, but not all, issues.

Manager is a Referee. Homeowners should not expect managers to arbitrate disputes with their neighbors. Unless the dispute involves a violation of HOA rules or policies, the manager should not be involved.

Manager is an Advocate. Venting frustrations at the manager about a Board action or inaction may make a homeowner feel better, but it's up to the homeowner to make the case directly to the Board. The manager is not hired to be an advocate.

Manager is Responsible for Delinquencies. The manager is responsible to follow the HOA’s Collection Policy or as directed by the Board. Demanding payment doesn’t ensure getting it but the manager is responsible to keep up the pressure by following the Collection Policy which, hopefully, provides for escalating penalties for non-payment (late fees, legal fees, restriction from amenities, curtailing voting rights, etc.).

The manager’s list of duties is long and encompasses many categories of management including Financial, Maintenance and Administration. The manager is a hired contractor that works under direct supervision of the Board and according to conditions of the Management Agreement. The job is complex and each day presents a new series of challenges. De"myth"tifying the job tells you what the manager is not. To understand what a manager is, or could be, see Manager Issues. BACK

6 Elements of Good Rules
When writing rules, boards should use simple concepts and words that any layman can understand. If residents understand the rules, they’re more likely to comply with them. Using complex legal terms intimidates and confuses. For example, few understand (or need to understand) the meaning of "Section 35.641 of the Code of the City Municipality of Pleasantville is hereby incorporated by reference."

The following six elements of good rules will help the board avoid the traps of complexity and misunderstanding.

Element #1: Transparency. Rules should require people to do what they would have done naturally without the rule, after merely thinking about it. When Dwight Eisenhower was President of Columbia University, there was a great deal of study about where to place paved paths through the huge open areas of grass within the campus. He suggested that they merely pave where the grass was worn. If rules require what reasonable people would do anyway, then rules only have to be enforced against the few who aren’t reasonable.

Element #2: Few in number. Good rules should reflect the minimum regulation necessary to provide for the comfort and safety of the residents and the equitable use and enjoyment of facilities. There is no reason to duplicate local ordinances that are enforced by the police.

Element #3: Easy to obey. Residents should understand the need for the rule and comply with it voluntarily because it is in their best interest to do so.

Element #4: Efficient. Good rules accomplish exactly what the board intended them to accomplish. Rules that are either too harsh or broad create undesired reactions like:

Rules are ignored
Board is perceived as dictatorial
Board perceives residents as apathetic
Notices and newsletters adopt a scolding and parenting tone
Generates complaints that rules aren’t uniformly enforced

Element #5: No side effects. Good rules resolve rather than create problems. For example, the board is concerned about member children damaging lawn areas when they play ball. In an attempt to resolve the problem, the board prohibits playing on the lawn. The kids react by playing on the street or on the lawns of adjacent properties which generates more complaints. Consider the likely side effects of a rule when drafting it.

Element # 6: Enforceable. Make sure the board has the ability to enforce a rule. Vague rules like "Loud and boisterous activity should be avoided" leave unanswered questions like "By whom?" "Where?" and "When?". Lawn mowers are loud. Should they be restricted? Does noise from a late Saturday night party create the same problems as noise from a Sunday afternoon wedding reception or barbecue? Not all noise is created equal. But a quiet hours rule of, say, 10 pm to 8 am is reasonable and covers most situations.

To write an effective rule, the board must balance specificity with simplicity and compliance. No rule will meet each criterion equally. When it comes to controlling scofflaws, no amount of wordsmithing will work. But using these six elements as a guide will make effective rules easier to achieve for the majority of cases. As the great Sherlock Holmes observed, "It’s elementary."

Adapted from an article by HindmanSanchez P.C. BACK

Dispelling Board Job Myths
The board of a homeowner association (HOA) has various and sundry tasks which are often not what the board thinks they are. Here are some of the HOA myths and realities:

HOA fees should be kept low. The board is elected to maintain the HOA assets properly. There is a big difference between being a good steward and a tightwad. Tightwads skip routine and necessary maintenance services which erode the value of the homes. It takes money to do it right and the board should spend the money necessary to accomplish the tasks. That means hiring the right people to get the job done, not the cheapest or none at all.

Volunteer boards aren’t held to high standards. Even volunteers are charged with running HOA business in an informed and business like manner. This means taking care of things in a timely manner, planning ahead to anticipate problems, getting and acting on good advice. Is your board acting or reacting?

The HOA is small and so are the needs. Large HOAs have the advantage of volume discounts. The smaller the HOA, the more important proper planning and adequate budgeting are since the cost per owner goes up.

We’re too small for professional management. In areas like financial management and rules enforcement, all HOAs should have professional management. Collecting money from neighbors and controlling their antisocial behavior is bound to cause problems for the person doing it. It’s even worse when you live next door to the offender. There are management professionals that do these tasks 24/7. Why would you want to save a few management bucks and take on such disagreeable tasks for nothing?

The board is elected to do property manage. The board is elected to hire and supervise competent service providers including property managers.

The board job is non-stop and all consuming. It can be if the board is not doing what it was elected to do (see previous myths). If the board is properly organized, management assigned to a professional and other maintenance tasks assigned to hired contractors, the board’s job should usually take only a few hours a month.

The board is entrusted with the most valuable asset most people own, their home. The responsibilities of an HOA board are not unlike those of any Fortune 500 company board. In both cases, there are physical and human assets entrusted to the board’s oversight. Is your board asleep to the true scope of its job? Is so, don’t make the same "myth-takes". BACK

Webs We Weave
"A spider’s engineering odyssey begins at a high point, from which it releases a single silken thread into the breeze. After the fine strands finds something to cling to, the spider moves across adding silk around the gossamer scaffold, which will serve as the support line. The minute architect then secures a second, slack line, end to end, just below the initial strand. Moving to the center of the lower thread, the spider descends, via a third strand, to a bottom attachment point completing a martini-glass shape; this serves as the framework for the web. Next, the remaining spokes are added. The spider then begins spinning the radial lines starting from the center. The finishing touch is the silk which is interlaced between the radial frame threads." Shervin Hess

Like the spider’s web, homeowner association frameworks are intended to provide a system for efficient management of the HOA business. But many operate like a spider on LSD with random and ill conceived processes tied together by urgency or neglect. It’s not pretty.

In truth, managing an HOA is a highly complex undertaking. It involves the intricacies of sophisticated property management system tethered to an understanding of human behavior that would cause a seasoned diplomat’s head to spin. Yet many boards seem oblivious to this and even more surprised when their efforts are criticized by the members. "It’s a thankless job," they’ll say.

Whether the members appreciate it or not should not be the primary objective. The greatest thanks there is effectively protecting and enhancing the HOA assets with thoughtful planning and execution. Take it as patting yourself on the back. When the board properly manages business, good things will happen. Costs will be contained, repairs will be done when needed, rule breakers will be smited when appropriate and residents will live in harmony. There is much cause for celebration here.

Part of weaving this mystical web is for the board to realize that it can’t be done alone. This one is sometimes hard to overcome because a pattern was set years ago by the first board which thought it could be done alone. Or early boards forced to do it due to an inadequate budget with no room for professional management and other experts needed to do it right. But once the current board is totally worn down or worn out, it will occur that maybe there is a better way...hire people that get paid to do it. When the hue and cry arises that it costs too much, the facts usually indicate otherwise. Costs for professional management often amount to $20-$30/month/unit. How much is your time worth?

And what about paying for experts like lawyers, reserve study professionals, engineers, etc.? Since boards rarely have this kind of inside talent, making informed decisions requires spending money for sage counsel and advice. Spending money this way usually saves money by better focusing goals and outcomes. So, include money in the budget for the experts and don’t be afraid to spend it.

An important part of the web is rules. Only add those that are really necessary. Include reasonable fines to make them enforceable and a right of appeal. Sample rules and policies are available to Gold Subscribers of www.Regenesis.net for only $99/year.

The saying goes, "Oh, what a tangled web we weave when we practice to deceive." But when the board purposefully weaves together good management practices, the resulting web is a thing of truly lasting beauty. BACK

15 Things Boards Should Do
1. Incorporate the HOA. Having the HOA incorporated provides substantial legal protections for the board and general members. If yours is not incorporated, run, don’t walk, to the nearest corporate attorney to make it so.
2. Use Parliamentary Procedure. Meetings can become chaotic without some form of meeting protocol. A simplified version of Roberts Rules of Order is commonly used to run efficient meetings.
3. It's Not About Power. Power is not acquired by vote or appointment, but by the ability to communicate, negotiate and empathize. Leave the agenda, hidden or otherwise, at home and serve on the board keeping the HOA’s best interests in mind.
4. Operate like a Business. The homeowner association should be run like a successful corporation. Hire competent people to perform the tasks that need to be done. The board is not expected to do the work itself for several reasons:

Directors are rarely trained in property management, accounting and maintenance.
Directors are unpaid volunteers

5. Maintain the Proper Types and Amounts of Insurance including:

Directors and Officers Insurance. Protects the board against lawsuits.
General Liability Insurance. Covers negligence claims.
Fire & Hazard Insurance. Insures property damage.
Workers Compensation Insurance. If you have employees.
Fidelity Insurance. Insures against embezzlement.

6. Maintain a Safe Location for Records. If you're professionally managed, keep the records in your manager’s office. If you're self managed, records should be kept with the secretary or president.
7. Understand your Fiduciary Duties. The board has the duty to act in the best interests of the HOA, current and future owners and the duty to seek out expert advice when making decisions that exceed its expertise.
8. Consult with Experts. All boards should have an attorney, CPA, insurance agent and reserve study provider to provide advice.
9. Stay on Top of Maintenance and Repairs. Preventive (proactive) maintenance reduces costs and extends the useful lives of common elements.
10. Keep Meetings Open to Members. Every member is a stakeholder in the HOA and is entitled to attend board and special meetings.
11. Hold an Annual Meeting. It is required by the governing documents and necessary to hold elections and vote on issues requiring member vote.
12. Communicate Regularly. Keep the members informed through newsletters, the HOA website, emails, postings, letters and in person.
13. Collect Delinquent Fees. Every HOA should have a collection policy to follow when a member fails to pay. Some essentials to collect include:

Process for filing liens
Right to foreclosure if allowed by state statute
Right to be reimbursed for legal fees
Late fees and interest on past due amounts

14. Amend Documents with Legal Counsel. Amending governing documents is complicated and there is much to consider. It's advisable to consult with a knowledgeable attorney to ensure all is done properly.
15. Be Uniform and Consistent with Rule Enforcement. Include written notification to the offender and the right to appeal.

By Vial Fotheringham LLP at www.HOAdvisor.com BACK

Rules That Rule
Homeowner associations (HOAs) are the fastest growing form of home ownership in America. In metropolitan markets, they can account for over two thirds of all new home construction. As more buyers choose this form or housing, condos and planned communities are becoming a dominant force to be reckoned with. Why? HOAs are quasi-governments that collect mandatory fees to pay for services and enforce architectural standards and rules in the same way that any government can. Like other forms of government, if you choose to live there, opting out of fees and controls is not an option. When buying into an HOA, you automatically agree to be subject to its requirements.

Since homeowner associations in their current form have only been around since the 1960s, they continue to evolve as lifestyles change and their strengths and weaknesses are better understood. The concept of "carefree living" promoted by early developers was largely hype intended to help close sales. As time and experience bore out, HOAs require a lot of care and attention for them to work right. Due to the dynamics of neighbors ruling over neighbors and members being owners, not renters, the challenges are more complex than other forms of property management. In commercial and rental property, for example, a lease or rental agreement can be terminated for non-compliance. Not so in an HOA. Private property rights have a profound impact on how homeowner associations must be run.

Homeowner associations have the unique ability to customize how their business is done. This allows one HOA to do business very differently than virtually every other HOA if the board and members choose to. While most don’t, there are often policies, procedures, rules and regulations that vary somewhat from one HOA to another. These differences can range from minor nuances in parking and pet regulations to major policies on architectural design restrictions. And like other forms of government, what was the policy two years ago may not be the policy today if the board or members vote to change it. Buyer beware.

Regardless of the tone and texture of rules and policies, there are some fundamental principles which all HOAs should follow when enacting and enforcing them. Some of these principles are common sense and others deal with the unique "neighbor" aspect of HOAs:

1. All rules need to be written. In days before the written word, laws were passed on by oral tradition. Since clans were closely knit, this system worked pretty well. But with modern fractured families living global lives, writing has a distinct advantage for keeping newcomers informed. Funny thing is, many HOAs have unwritten rules that offenders don’t discover until they break them. Judges, however, don’t like the idea of unwritten rules and often smite HOAs that have them. So all rules should be written.

2. All rules should be available for inspection. When paper was king, written material was controlled by the board and the management company. Getting it was often cumbersome if the "holder of the paper" was unavailable. With the advent of email and the internet, humankind has been set free of the paper prison. HOAs can now make rules, policies and information available 24/7 by way of an HOA website and email. Newsletters can be emailed in PDF (Portable Document Format) with links to the website. Prospective buyers can also access this information to ensure there is nothing that would create a problem after closing the sale (like, the buyer has an RV and RV parking is not allowed.).

3. All rules should be consistently enforced. If a rule is important, it should apply to everyone, including the board and friends of the board.

4. All rules should be necessary. In a world gone mad with regulation, having a whole new set to adhere to at home is an unnecessary aggravation. If there is a city ordinance to control wandering or defecating pets, the HOA doesn’t need the same rule. Only add the rules the HOA really needs.

5. Never try to out rule scofflaws. Scofflaws love it when the board enacts rules to control them. They thrive on confrontation and rules are the line in the sand over which they must step. Fortunately, scofflaws are rare. If confronted by one, the board should address their special needs by other means.

6. Rules can be broken. Since all humans are unique, one size does not fit all. The board may have its rules challenged in a way that is headed to a judge’s ruling that the board may not like. Since the board is elected to govern, the board has the power to compromise. If faced with the prospect of an expensive court battle or compromise, it is often in the best interest of the HOA to opt for the latter. Courtrooms are nasty places that often only inflame disputes.

7. Run new rules up the flagpole. HOA boards can get myopic about the need for rules. Problems that loom large to a board may be of little importance to the majority of members. The board can make much ado about nothing. Or worse, the board can fan the flames of rebellion by enacting an unpopular rule. (Is that tar I smell?). There is no rule that is so urgent that couldn’t wait for a 30 day member review and comment. Proposed rules circulated to the members generally gain buy-in and compliance, rather than defiance.

8. Provide for a right of appeal. It’s very American to have an excuse. And extenuating circumstances may actually be legitimate. Appeals are not only fair, but expected. The board should never engage in a game of "Gotcha". Look for ways to catch someone doing good.

At the end of the day, HOA rule breakers and enforcers are still neighbors. If the rules don’t recognize this unique dynamic, a battleground will be groomed for future skirmishes between warring neighbors. Rather than plan for battle, groom the rules to help neighbors be better neighbors. BACK

Avoiding a Coup D’etat
One of the most painful experiences a homeowner association board can have is to work hard, try to do the right things and then have the efforts attacked by the members. In some cases, hard working directors have been rewarded by being thrown off the board. This kind of coup d'etat can result in a loss of continuity and valuable leadership resources. But such challenges can be anticipated and a vigilant board can devise a strategy to meet and defeat them when they surface.

Of course, not all coups are bad. Sometimes, a change in leadership is beneficial. But all HOA boards need to be aware of politics and their consequences. Boards sometimes fail to recognize the problems that will most likely lead to coups. Most of the time, it relates to money. There are three money scenarios:

1. The HOA needs money and the members do not want to spend it. Large special assessments come to mind.
2. The board spends money and the members do not like how the money has been spent. This includes things like when the board enters into an expensive contract or spends substantial attorney fees on some rule or architectural control enforcement issue.
3. The board takes or proposes some action which the members do not like. For example, the board chooses the new paint color or proposes an amendment restricting rentals. While these examples do not involve money, the members perceive them as negatively affecting their property values.

When the board addresses issues which fit into one of these categories, it should recognize that they are treading on thin ice and make doubly sure the decision is based on careful analysis and wise counsel.

Foresight determines genius. If the board envisions having to explain decisions to angry members before it happens, it will improve the board’s decision making process. Expecting decisions to be challenged acknowledges political realities. Board decisions will rarely please everyone. Anticipation helps prevent a defensive or panicked response.

Simply being aware of the types of attacks which might be made can minimize their effectiveness. In some cases, this should extend to making the homeowners aware as well through advance communications. Attacks tend to fall into three broad categories:

1. Separate the board from the rest of the members. "You (the board) have acted in a manner contrary to what we (the members) desire." Attacks of this type are made against the entire board and obscure the fact that the board is an elected, representative body. The attack focuses on the board as a suspect group without the skills, intelligence or interest to carry out the true will of the members (at least as articulated by the attacker). For example, a developer defending himself against HOA litigation might write directly to the members advocating that he is reasonable, the members are reasonable and a settlement would surely have been reached by now but for the unreasonable actions of the board.

2. Divide the board by praising some board members and criticizing others. Continuing with the previous example, the developer might try to blunt the success of a strong president by building alliances with others on the board and then arguing that a settlement could be attained if only the president were not in a leadership role. Dissenting directors also employ this tactic.

3. Separate the board from the manager, attorney or other professional giving advice. With this type of attack, the board is praised and the outsider is condemned. An owner might allege that the board is being misled by a consultant or attorney just trying to get business.

The best way for the board to defend against a homeowner challenge is to use good business judgment in making decisions. This means that the problem is carefully studied, that outside experts are brought in where appropriate, that options are weighed using cost-benefit criteria, and that competitive bidding is employed in implementing a solution when appropriate. In short, a board is best able to defend itself by doing its homework and having the facts and figures. The three issues most often raised by members regarding a board decision are why a particular issue had to be addressed, how one solution was chosen over another and how much the solution will cost.

Using an outside expert can be particularly helpful in answering the why and how questions. Experts can justify and support the decisions made by the board. Without experts, the board is left to endlessly debate with the homeowners in laymen's terms whether a particular action is justified. For example, if the issue is repainting, the debate without an expert will likely focus on whether the complex looks like it needs repainting. However, if the expert verifies that the paint has no remaining useful life and that failure to paint now will cause damage to the siding, the debate will focus on the solution: to paint using proper specifications and a high quality product.

Selecting the right expert is critical. Your expert should have credibility including credentials, professionalism, objectivity (no conflict of interest) and ability to communicate clearly to laymen. For example, a painting contractor looking for work is not a credible expert to give an opinion on whether the complex needs repainting. Professionalism includes advanced degrees and years of experience in dealing with the issue. The greater the expertise, the easier for the board to justify its reliance. Most important, however, is the ability of the expert to present his findings in a clear and persuasive manner at a board meeting open to the members so he can defend against a member challenge.

Finally, there is the issue of how many experts to get to address a problem. While economics enter into the number of experts to employ, having a variety of expert opinions complement one another. If the issue is painting siding which is delaminating, for instance, expert opinions from an engineering testing company, paint contractor paid only to give his opinion, paint company representative and siding representative might prove to be of significant value. Finding the right expert for the job is usually a matter where the HOA's manager can play a key role.

Dodging a coup takes planning, using expert advice and good judgment, all the things a good board should doing anyway.

From an article by Seth Weissman of Hyatt & Rhoads, P.C. BACK