Management Articles

Committee Mining
Committees are a frequently untapped goldmine available to the HOA Board. Besides benefitting the Board by spreading the work around, committees are an excellent training ground for future Board members. Folks that may be reluctant or too timid to step up to a Board position often feel right at home on a committee with limited or focused responsibilities.

Committees come in all shapes, sizes and functions and may be temporary or long term, as the need dictates. They are only limited by the Board’s imagination. A committee can assume a variety of roles, such as:

Research & Development. Complex tasks can be assigned to a special committee which can research the task and advise various courses of action to the Board. This includes large renovation projects, proposed amendments to the governing documents and local zoning or crime issues.

Task Execution. Committees like Rules Enforcement and Architectural Restriction can hand out citations and review appeals.

Oversight. Committees like Landscape/Grounds and Pool oversee the contractor’s performance and improve the quality of service.

Cost Control. The Maintenance Committee can prescreen requests from owners to ensure they are indeed the HOA’s responsibility and, if so, prioritize them and group them for better cost efficiency. The Budget Committee refines costs based on study of the past and anticipated future expenses.

Socialization. An oft overlooked function is planning social events to help neighbors meet neighbors. The events don’t necessarily need to be party oriented. The Annual Meeting can become the Social Event of the Year with food and entertainment. Spring Planting Parties don’t have to be all work. Reward the volunteers with catered food, beverages and T-shirts. The Social Committee can help build real community and lasting friendships.

Security. Turn that noisy neighbor into the Neighborhood Watch Chair who can monitor suspicious activity or recommend better security techniques.

To facilitate committees, the Board should provide the proper resources. Some need funding but most just need clear marching orders and limits of authority. The Board should never abrogate its final authority over HOA matters to a committee. That means committee power should always be limited and if a committee is making judgment calls, like Rules Enforcement, there should always be the right of appeal to the Board.

All committees need a plan of action and goals. Part of the plan should include reporting to the Board at regularly scheduled meetings. That report should include recommendations for Board approval. These reports provide a good way for the Board to assess the ongoing need or effectiveness of a committee. If little is being done, it might be time to retire a committee or find a new chair.

Some committees need to meet regularly, some sporadically and others rarely, if at all. It all has to do with the goals laid out by the Board. The Board should select each committee chair carefully as someone who has the time for the job and inclination for leadership.

Here’s a novel idea: Allow renters to join committees. Many want to be good neighbors and to serve. At least ask. You might be surprised at the response and it might encourage owners to step up.

One of the best ways to promote committees is by praise and recognition. It is the currency of care in HOAs which brings a huge return. Recognizing effort and superior performance is #1 on every Job Satisfaction Survey. It works the same way in an HOA. Thank you notes, accolades in the newsletter, plaques and Certificates of Merit go a long way.

Mining your committee options will produce a wealth of riches for the community. Committees lead to better information, greater harmony, new friendships, enhanced trust, involved neighbors and less work for the Board...all good and no bad. This is the Mother Lode. Grab your picks and shovels and start digging! BACK

Measuring Manager Performance
\When homeowner associations engage professional management, there is a general expectation of the manager handling business professionally. As time passes, those general expectations can become specific concerns when performance is questioned for things like:

Complaints about manager attitude
Maintenance isn’t completed on time
Maintenance quality lacking
Site inspections infrequent
Phone calls aren’t returned
Collections are unresolved

The Management Agreement should be detailed enough so that both the Board and Manager understand what is expected. An Agreement that is too vague will ultimately set the stage for conflict and dissatisfaction for both parties. The Board has a right to expect professional performance for the services contracted and the Manager is entitled to limit the scope of work so the job is manageable. There is plenty to do with routine tasks and managers that aren’t careful about the kinds of services offered will soon be overwhelmed. For both party’s best interests, clearly identifying those tasks that need to be done is imperative for a lasting and gratifying relationship.

The scope of work varies substantially from HOA to HOA based on the amount of ongoing maintenance, meetings, phone calls, correspondence and other demands. The management cost paid by the HOA is directly related to the scope of work. Some HOAs help control costs by engaging volunteer committees to do some of the work like maintenance and contractor quality checks, work order screening, changing light bulbs and trash patrol. Those committees communicate with the manager as needed to advise of issues the manager needs to follow up on.

Many HOA management companies provide in-house handyman services since it’s too difficult to find outside contractors interested in doing small jobs. By having maintenance employees that do this kind of work, the HOA pays only for the hours it needs and doesn’t have to subsidize a full time employee. Maintenance personnel should be trained and experienced to operate without supervision. If the quality of work is substandard or the time it takes to get the job done too long, this is definitely a cause for concern. The Maintenance/Grounds Committee should perform quality checks at the time of service to determine if the problem is widespread or isolated to an individual.

HOA managers are invaluable for dealing with difficult tasks like collections and rules enforcement. In those circumstances, it’s likely that some of the people being leaned (or liened) on won’t like it and may complain to the Board about the manager. As long as the manager is following established policy and is respectful in the execution, getting complaints runs with the territory.

If the manager is being overbearing or rude, that’s another issue. But the Board needs to be careful to understand the basis of complaints received. The Board should support the manager in dealing with difficult tasks but never endorse unprofessional behavior. So, are the complaints widespread or isolated? If most residents are up in arms, there probably is something to be concerned about.

One common area of manager performance is how soon maintenance gets done. The manager's job is to manage HOA maintenance efficiently and cost effectively. This requires small jobs to be accumulated and turnaround time may be several weeks or longer. Most HOAs can't afford to do otherwise. So other than emergencies, residents should understand repair requests could take some weeks to accomplish, more if special materials are required.

Does your Board get frustrated with delayed newsletters, correspondence, financial statements and other administrative business? Frequency of newsletters and financial statements should be calendared while other business needs more flexibility. For example, it’s not unusual for lenders and title companies to place an urgent demand for information the day of a home closing. The manager is not responsible for this poor planning and can’t necessarily drop everything to respond. The Board needs to consider the manager’s workload in assigning special tasks as well. Most managers want to please but there are only so many hours in the day to get things done. If, however, the manager is committing to a deadline and not performing, there is a problem that needs to be resolved.

Visiting the manager's office to get a handle on how records and files are maintained can be enlightening. Inquire how, when and who does filing. If the office is in disarray, it could account for the manager’s inability to get work turned around. If the manager can't locate information quickly, tasks can drag on or not get done at all. Unorganized people don’t generally become organized easily. If the systems aren’t already in place to process work efficiently, it’s best to find a company that has them and knows how to use them.

Personality conflicts can interfere with good communication even when the manager is competent. Most companies have several managers and you may be able to solve the problems by changing managers within the same company rather than changing companies.

If frustration level with manager performance is growing or reaching critical mass, issues of concern should be documented in writing with specific examples to back them up. There should be a specific expectation associated with each issue and a time frame for correction. The manager should be allowed to meet with the Board to discuss the issues and reach a compromise if possible. All HOA managers and management companies have strengths and weaknesses so moving to another company may not solve your problem and actually result in a worse situation.

The Board and manager should always work as a team. The Board adopts rules, enacts policy and approves the budget. The manager executes the Board’s plan in conjunction with the governing documents and state and federal law. Communication should be clear and frequent. Dealing with small performance issues will prevent them from escalating to crisis proportions.

For a checklist of HOA management tasks and a Sample Management Agreement, see "Manager Issues". BACK

Seven Deadly Sins
What are some of the ineffective, inefficient, and sometimes even illegal things the Board of Directors can do to mess up their HOA's, manager's, and own lives? Consider the following seven deadliest sins that will prevent a Board from entering the Pearly Gates of HOA heaven:

#1 Managing the Management Company
Boards often feel compelled to micro-manage the Management Company. This is, at best, counter-productive and, at worst, financially wasteful. The Board’s role is to set policy; the manager’s role is to execute the policy. Advice: Pick a good management company and let them do the job.

#2 Following Personal Agendas
Board members, like all of us, can let their egos get the best of them. A Board member may not let go of an unrealistic campaign promise made, or perhaps has a personal axe to grind, and this overshadows the best interests of the community. Advice: Keep the best interests of the association at the forefront of all board action.

#3 Holding Ineffective Meetings
Sometimes, board meetings seem little more than social gatherings, complete with gossip sidebars. Boards re-review their own work by examining the minutes of the last meeting, or read their board packets at the meeting, or spend time discussing issues that are not on the meeting's agenda. Advice: Prepare, in advance, for meetings; adhere to a well-planned agenda and budget sufficient time for important agenda items.

#4 Paying a Little, Expecting a Lot
Sometimes associations contract with the lowest bid vendor and then expect and insist on the same service or product that the highest bid vendor promised. The extra management cost of supervising the lowest bid vendor to ensure the job is done properly is often not worth it. Advice: Expect a lot? If so, expect to pay more.

#5 Acting Out
Policy-making inspired by anger, discrimination, or revenge creates more problems than it solves. Boards, on occasion, develop and implement new policies simply to silence a complaining homeowner or to punish an unpopular neighbor. The long term effect can be difficult in enforcing these and other association rules because they were not reasonably developed nor uniformly applied. Advice: Adopt policies with a view to the best interests of the association not out of emotional reaction.

#6 Disregarding Potential Liability
Unfortunately, it is not uncommon for one or more members of the Board to exhibit, verbally or through official action, discriminatory behavior. Anti-discrimination laws apply to associations, and the liability for such conduct is potentially extensive. Advice: Keep discriminatory attitudes and actions out of the boardroom.

#7 Ignoring Volunteer Contributions
Many associations have volunteer homeowners that serve on association committees or handle miscellaneous matters on behalf of the association. Boards sometimes ignore the efforts of such people; this behavior discourages volunteerism and likely reduces the available pool of future Board members. Advice: Acknowledge the efforts of all volunteer homeowners.

So, now that you know the Seven Deadly Sins and their cures, go and sin no more.

Based on "The Dumb Things Boards Do" by Julie Adamen of Adamen Inc. BACK

The Status Woe
A family reunion gathered for the holidays. After the usual hugs and kisses, many migrated to the traditional gathering place, the kitchen, to supervise the great feast preparations. The hostess began the ritual of preparing a ham. After scoring and festooning it with cloves, she proceeded to cut about 2" off the short end and placed it in a cast iron skillet. One of the younger ones thought this curious and asked why she cut off the end? She replied, "That’s the way mom used to do it, right mom?" Her mom nodded. "Then why do you do that?" the young one persisted. "My mother taught me to do it that way, right Mother?" The matriarch nodded. "I did it because my skillet was too small."

There is a tendency for traditions and habits to take hold and be repeated without question. This is often the case with homeowner association boards. Rules are enacted with good intent. Budgets are squeezed with the idea that less is better. The board self manages the HOA believing money is saved. These traditions are passed on and eventually become the way things are done. Like a barge, trying to change direction gets to be very difficult. Tradition becomes the status quo.

However, many such traditions work to the detriment of the HOA’s basic purpose, to preserve property values and enhance livability. The governing documents charge the board with directing HOA business. This does not mean the board is expected to do the work of a professional manager. It means, the board is elected to hire competent professionals like managers, landscapers, attorneys, reserve study providers, CPAs etc. to provide needed services. Further, board members are not trained in property management, are unpaid volunteers and have a conflict of interest. Drilling further down on these point:

A. Untrained. HOA management is one of the most complex forms of real estate management there is. Besides the financial, maintenance and administrative duties, there is an intense relational aspect. Members are not renters that can be evicted for violations or non-payment. They are stakeholders of equal standing with the board members. Handling business with equals is very different than a landlord-tenant relationship. It takes tact, diplomacy and patience. Good diplomats are rare even in the non-HOA world.

B. Unpaid Volunteers. Board member volunteers are prohibited from collecting compensation for board duties. And developers commonly under-estimate the HOA budget to keep the fee structure low and to encourage sales. This means the cost of professional management is often left out of the fee structure forcing the board to either self-manage or face the politics of raising the fees to cover the cost. When faced with the options, many boards go the self management route thinking it is expected of them, not that difficult or too expensive to do otherwise.

Think about the "too expensive" argument. For an average size HOA, professional management costs $15-25 per door (industry terminology) depending on the scope of management. So for a 50 unit condo, this means $750-$1250/month to have a professional manager handle the finances, maintenance, rules enforcement, meeting coordination, communications, emergency response and many other tasks. Non-board members wail that $750-$1250 is a lot of money. The key to this wailing is that it comes from folks that aren’t doing any of the work. At $15-$25/door, the cost of professional management is a bargain. Why would a board member take on a complicated and unpaid job on behalf of the other members to save himself $15-$25/month?

C. Conflict of Interest. Staying neutral on rules enforcement and collections is extremely difficult for board members. Dealing with an offender can easily sway good judgment depending on whether it is a friend or enemy. Living next door to the offender makes it even more difficult since face to face meetings are likely and most people like to avoid confrontation.

From time to time, even board members can get crosswise with the HOA. It is at these times, board members need to be extra careful not to expect special treatment like having fines or late fees waived, exceptions made for parking, etc. Because of their privileged position, board members should be particularly careful to live by the same standards expected of other members. This includes recusing themselves from board votes that benefit themselves.

When boards self manage, they inevitably run up against two basic reasons that they shouldn’t: (1) No board member should have to enforce rules on their neighbor and, (2) No board member should have to enforce collections on their neighbor. No matter how congenial an HOA is, at one point or another, some member will get crosswise with HOA rules or money owed to the HOA. At this point, self managing boards struggle with effect enforcement or, worse, engage in selective enforcement. There be dragons there.

The Rules. Rules are like locks...they only keep your friends out. So rule breakers tend to be folks that don’t like rules. Lists of rules tend to grow like federal regulations. But more is not better. We are buried in rules. People generally understand what they need to do to get along with their neighbors. Adding a list of Thou Shalt Not Rules is redundant and insulting. Besides, those that break rules usually could care less about the rules. So, if your HOA has a long list of rules that are basically common sense, general knowledge or enforced by the police, consider culling them down to essential rules that do not fit this definition. And for the rules you must have, make sure to have an enforceable penalty and appeal process. Rules without consequences are worthless. Rules without an appeal provision are draconian and bound to be challenged successfully.

Open Meetings. Does your board meet in secret or by email or telephone, thereby shutting off scrutiny by general members? Members are entitled to know what the board is up to so board meetings, with a few exceptions, should be noticed in advance and open to the members. That means the meetings are held in guest friendly locations. Exceptions to the open meeting rule include highly sensitive issues like contract negotiations, discussion about litigation, personnel and collection issues. Adopting an open meeting philosophy rewards the board with improved credibility. If the board has nothing to hide, all is well with most members and few will actually attend the meeting. Keeping meetings secret or inaccessible encourages mistrust. If your board is guilty, change to open meetings immediately.

Dated Architectural Design. Architectural design rules are intended to maintain quality construction, materials and aesthetic look that underscore value, livability and highest home resale values. But what was red hot in the 1980s is not in the 21^st Century. Tastes change. Failure to keep pace reduces buyer appeal and lowers resale prices. So, periodically, design criteria needs to be reexamined with a critical and professional eye including:

A. Paint. Paint color tastes change about every 5-10 years. Get input from area paint supplier color consultants for the latest and hottest colors. The service is free. Lean toward lighter colors since they are more durable.

B. Roofing. Consider new roofing alternatives and colors. For example, modern composite asphalt shingles come in many colors, designs and useful lives. They weather well at an affordable price. Lean toward lighter colors which reflect sun and heat that shorten the useful life. There are other roofing types like metal and clay tiles that are well suited to different climates and settings. Wood shingles, while attractive, are maintenance intensive and subject to fire and pest damage (In other words, phase them out).

C. Siding. Wood composite siding produced primarily by Georgia Pacific, Louisiana Pacific and Masonite proved to be disastrous in wet climates since they delaminated, absorbed water and rotted. Architectural wood laminate panels also experience short term failure in wet climates. High quality cedar siding and T-111 plywood siding hold up well when properly maintained with high quality paint or stain. The darling of the siding industry, however, is cementitious siding (like James Hardie brand) which is composed of Portland cement, sand and wood fibers as binders. It is fire and pest proof and holds paint well. Vinyl siding sounds appealing since it does not require paint but has proven problematic since it sun-fades and doesn’t protect against water intrusion as well as other sidings. Finally, rainscreen systems provide a spacing between the siding and building so that moisture that intrudes has a way to drain away. Bottom line, siding has experienced many innovations in the last 20 years that should be seriously considered as the new architectural standard.

D. Decking. Recycled decking products continue to evolve and improve. While originally touted as "lifetime" products, experience so far indicates they are about as durable as high quality redwood or cedar and do not have the load bearing strength of wood. Still, recycled decking is worth considering from a green perspective and particularly if a long warranty comes with the product.

E. Lighting. Lighting has changed considerably from the 1990s with the advent of compact fluorescent bulbs and LED (Light Emitting Diode) lighting. These alternatives produce comparable or better lighting to incandescent, longer useful life and substantially reduce energy consumption.

F. Landscaping. In the 1970s, lawn was king, the more the better. But with lifestyle changes, increased cost of land/water and landscaping alternatives, the focus has been on drought tolerant pest resistant landscapes that use native species and less groomed lawns. This can substantially reduce an HOA’s landscape costs over time.

In the final analysis, is your HOA stuck in time and living a status "woe" that stagnates discussion, community harmony and home values? Consider the cost and make the move to modernize. Say "whoa" to the woe. BACK

4 Leadership Lessons
In a scene from the movie Lincoln, Mary Todd Lincoln tells her husband: "No one is loved as much as you by the people. Don't waste that power." While the movie focuses on the passing of the 13th Amendment abolishing slavery, it also gives a lot of insight to Lincoln's strong leadership skills - those things that have made him so admired.

While you may not be leading revolutionary change in the country, here are four leadership lessons from our 16th president on how to lead revolutionary change at your business.

1. Say no to "Yes Men". At a time in history when the United States was at war with itself, Lincoln surprisingly chose to fill his cabinet with a team of his rivals. These were men he considered to be the best and brightest minds in the country. And they were unafraid to challenge Lincoln and assert their opposition. A self-confident man, Lincoln welcomed strong opinions as it provoked thoughtful debate as well as inner reflection. It proved to be an important tactic during his presidency.

Rick Lepsinger of OnPoint Consulting agrees: "Don't hire in your own image," he says. "Get comfortable with conflict and learn how to manage differences productively." He suggests that leaders not allow conflicts to fester, but bring them to the surface as soon as possible. He also recommends avoiding the overuse of compromise, looking instead for common ground and alternatives.

2. Be decisive. While it's helpful to get more than one opinion, strong leaders know when and how to make decisions. Cabinet members could have argued forever, but Lincoln had the ability to know when he had all of the information he needed. Walking away to seek solitude, he was able to determine the best solution and make a decision without wavering. Good leaders clarify their decision criteria, says Lepsinger, identifying musts and wants, and using that as a guide to compare options. "Assess the risk of each option as well as the benefits," he says. "These practices will increase confidence that you've selected the alternative that is the best balance of risk and reward."

3. Look for inspiration in unlikely places. As a member of Congress, Lincoln studied mathematics to gain wisdom in reasoning. In the movie, Lincoln shares some of this wisdom with two young clerks at the telegraph office: "Euclid's first common notion is this: 'Things which are equal to the same thing are equal to each other.'" Lepsinger says leaders are continuous learners and look outside their industry for ideas and innovation.

4. Connect with people on a personal level. We know "Honest Abe" was fair, but Lincoln was also known for his jokes and storytelling. It's how he broke the ice and blazed a trail to common ground. Lincoln also made himself accessible. As President of the United States, he kept regular office hours and citizens were allowed to see him. "It's not how smart you are - strong personal relationships and high levels of trust are the foundation of effective leadership," says Lepsinger. "[Good leaders] demonstrate empathy, take an interest in others and find out details about them."

Lincoln’s leadership style has survived the test of time because it is built on hard experience and fueled by passion for what is good and right. BACK

Rental Restriction Policy
Restricting the number of rentals in a homeowner associations is often desirable to protect mortgage financing options. When the number of rentals exceeds about 1/3 of the total, some lenders restrict lending because the character of the property changes from owner occupied to investment property. Investment property loans are higher risk and investors are historically less willing to invest money in maintenance and repairs. This jeopardizes a lender's collateral and increases the odds of loan default. Federal Housing Administration (FHA) loans for condominiums now have a 49% rental restriction level.

When contemplating a rental restriction policy, closely examine the HOA's governing documents for existing restrictions. Generally, one of the following applies:

No Rental Restrictions. If the governing documents contain no rental restrictions, then owners have the right to rent their property. To change this, an amendment to the governing documents is required that either imposes rental restrictions or allows the board to make rental restriction rules or regulations.

Minimum Rental Period. This restriction is usually intended to prevent short term rentals except at resort locations. To expand that authority, an amendment to the governing documents is the required.

Rental Restrictions. There are specific restrictions in the governing documents allowing the board to make reasonable rules and regulations regarding rental issues.

Dealing with renters. The HOA has no authority to either enforce rules or to levy fines directly on tenants. This is the responsibility of the landlord owner. But levying fines against nonresident owners for violations of their tenants doesn't quickly remedy a problem. For this reason, the board should have a rental policy that states:

1. Breaches by the tenant of the governing documents or rules is a breach of the Owner's rental agreement. This requirement would allow the Owner to evict a tenant if appropriate.

2. Owners are required to take corrective action against a tenant, up to and including eviction, in case of a violation.

3. Owners are required to provide their tenants the homeowner association governing documents and rules as a condition of renting. The statement "Tenant has received copies of, read, understood and will comply with the HOA’s rules and regulations" must be included in the Rental Agreement.

Since restricting or prohibiting rentals affects an owner's fundamental property rights, a Rental Restriction Policy should be enacted only as an amendment to the governing documents. The board should not do this on its own. Such a proposed policy should be reviewed by an attorney specializing in homeowner association law.

Sample Rental Restriction Policies are available to Gold Subscribers. BACK

HOA Leader Skills
Homeowner associations need competent leaders to thrive. While a congenial board is helpful, it’s important that the board have a strong leader to coordinate, plan and, well, lead.

So what defines a good leader in the first place? Leadership is not just about accumulation of knowledge and information. It’s about achieving as many of these life skills as possible:

Honesty. Sincerity, transparency and candor in all actions.
Competency. Actions are based on reasoned thinking.
Ethics & Integrity. Practices sound moral principles.
Forward-Looking. Envision what they want and how to get it.
Humility. Acts like a servant by elevating others.
Inspiring. Displays confidence by showing mental, physical and spiritual strength.
Informed. Reads and studies to gain better understanding.
Seeks Challenges. Not content to simply react, a leader seeks out challenging assignments.
Compassionate. Displays empathy to the feelings, values, interests and well-being of others.
Perseverance. Sticks to a goal regardless of obstacles.
Confidence. Calm under pressure.
Decisive. Not afraid to make a decision and stick to it.
Flexibility. Be willing to change course when facts dictate.
Imaginative. Shows creativity when faced with complex problems.
Communicator. Communication is both strategic and inspirational. Clear and frequent communication keeps the board goal focused.

No one is born with these traits. All are learned through life experiences. Often the best teacher is failure. Failure helps develop humility which opens the doors to learning many of the other life skills. Having some of them is great. Having them all is a lifetime achievement. Look for those that have lived life and learned its lessons without being crushed in spirit. BACK

Poisoned Well
From time to time, the board faces the unpleasant task of encouraging a director to step down from the board for good reason. The causes can be many but common ones are failing to attend meetings, disruptive behavior, inciting riots among the members, repeated rules infractions, failing to pay assessments or undermining the board authority.

Since directors are not paid, taking action against such a director may be justified because:

A. no one will volunteer to take his place.
B. He’s just that way and we should live with it or,
C. Fear of confrontation.

But a poisoned well needs fresh water, the sooner, the better. Prolonging the problem may cause another worthy director to get frustrated and resign.

So, if you have a problem director, first determine if the problem is fatal or curable with priority on "curable". Directors don’t grow on trees and it’s often easier to rehabilitate than replace. And replacements often have their own downsides. Take this approach:

Be Direct. Speak to the person in person. No letters, Post Its, e-mails or voice mails. Make an appointment at a neutral location for coffee or lunch. Discuss the problems and get a commitment to change.

Inquire. Determine if there are forces affecting performance. Look for things that are correctable. Missed meetings may be a simple schedule conflict which the board can bend on. Or it may be marital problems that aren’t easily resolved. What "it" is determines the course of correction. But the goal should always be to find a way for the director to continue serving.

Edification. Disruptive or contentious directors are not always aware of their interference. Edifying the offender may be usable news. Some people are blunt, loud, intimidating and not really intending to offend. Help them understand from an outside observer’s point of view the problems such behavior causes.

Accountability. Some bad behavior is planned and intended to impose will. Identify it and hold the offender accountable. Make the point that self serving behavior doesn’t meet the standard of a "fiduciary" acting in the best interests of other. Put it in those terms and you might change behavior.

Get Commitment. If you manage to come to an understanding about making things right again, ask for a specific commitment to make the change permanent. If that commitment is made, express your thanks that an agreeable compromise was reached that allowed the director to continue on as a productive member.

In most cases, this interview and sorting out process will lead to resolution. You will likely have a penitent director committed to doing better. But some will not. If you have Johnny Rebel on your hands, ask for a resignation and thank him for his service. Recognize his efforts in the next newsletter and the board meeting minutes. This will demonstrate respect and will go a long way toward diffusing possible retribution by the outgoing director. If Johnny is bound and determine to stand his ground and fight, you may need to weather the storm until election time and endorse a more reasonable candidate or rally enough member support to unseat him now.

While the board has the responsibility to hold its own accountable, it should be done with grace and compassion. A neighbor is on trial and while that neighbor may not work out as a director, he is entitled to respect as a community member. BACK

Can't I Disagree?
Homeowner association boards sometime discuss issues that are contentious and divisive. Disagreement is to be expected when serving as a director of the board. But the way disagreement is viewed and handled can greatly affect the board's effectiveness and cohesion.

Voting "no" is not disloyal. Directors are expected to think independently and are free to vote against a particular motion. Majority votes are just as binding as unanimous votes. While there are some votes upon which the board should seek unanimity because of the importance of the decision, trying to attain unanimity on all motions creates the impression that disagreement is bad and discourages directors from voting their personal views.

The motion went against my views, now what? After arguing a position and the majority of the board votes against you, what is the next step? Even though you may think the board has made a mistake, your responsibility as a director is to support and carry out the board's decision. The board is a team and decides as a team.

Think of it as a canoe being paddled by the board. Before launching off across the lake, the paddlers should decide which landmark they will paddle towards. If one paddler prefers a different landmark, should he simply paddle off in that direction? If he does, it will create a lot problems for the other paddlers and probably capsize the canoe. The Lesson: support the team or get ready to swim.

Make a record. If you think the issue at hand is very important, demand a roll call vote and get your vote recorded in the minutes. That will allow you to document your position. Further, you may consider sending a confidential memorandum to the board and management, reiterating your concerns and the reasons for your opposition to the majority position.

The board is making a big mistake. Don't I have a duty to take this to the members and seek a reversal of the decision? In short, no, your duty is quite the opposite. Don’t confuse your personal views with your fiduciary duty. Your fiduciary duty is not to force the other directors to see it your way.

What if I cannot agree to support the board's decision? If you cannot agree to help paddle the canoe, then get out of the boat. Sabotaging or trying to overturn the board's decision would be a violation of your duties as a director. If the board is so wrong-headed that you cannot abide by its decision, then resign and leave the board. If you are no longer a director, you are no longer bound by the duty to support the decision and then can say what you wish.

Don't I have free speech? Yes, as a private citizen you do have freedom of speech. But as a director of the board, you must preserve confidences and not publicly criticize the board's decisions.

Fiduciary duty is not what you think it is but what the law says it is. One of the most basic fiduciary duties is the duty of loyalty. When the board enacts rules or policies through a vote, a director working to undo that action is disloyal to the board. Many well-meaning people claim it is their duty to fight against wrong. As an individual, that is your right, but not if you are director of the HOA board.

By Kelly G. Richardson, Esq. CCAL - Richardson Harman Ober PC BACK