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Ask the HOA Expert
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Developer Controls Board Answer: The governing documents dictate what voting rights the developer has. In multiple phase developments, the developer may indeed have the voting majority for a long time. Hopefully, you are communicating disagreement when appropriate. While the developer may be in control for now, if he doesn’t deal fairly with the members, it will come back to haunt him when he loses controlling interest. What goes around, comes around. BACK Pool Temperature Question: Do you have any information on the optimum water temperature for enclosed swimming pools? Ours is usually 85 degrees F and there seems to be few complaints. Answer: Pool temperature is a personal preference and the more folks using the pool, the more opinions you'll get. But you’ve answered your own question. Moving pool temperature up and down to please different people just won’t work. Let the majority rule. BACKAmending CC&Rs Question: Is it very difficult to change the governing documents? What’s the process? Answer: If you are thinking about amending your governing documents, you should consult with an attorney specializing in HOA law. There are state and federal laws to consider as well as practical applications that need to be harmonized. Once the amendment(s) are approved, they usually need to be recorded with the state. The attorney can assist with this as well. BACK
Special Manager Charges Answer: If the management contract is based on performing "normal and routine" duties (and most are), yes, this would be consider a special billable project. BACKHOA vs. Condo Question: What is the difference between a homeowner association and a condominium? Answer: Generally speaking, a condominium owner owns the unit interior only, use of limited common area (if any) plus an undivided interest in all land, buildings and other common elements (like clubhouse, pool, tennis courts, etc.) A homeowner association owner generally owns the house inside and out, use of limited common area (if any) and the land beneath and around it if it's a house on its own lot plus an undivided interest in all commonly held property (land, clubhouse, pool, tennis courts, etc.) A condominium association maintains all grounds and building exteriors (clubhouse in and out), common hallways, parking garages and other common facilities. In a homeowner association, the owner takes care of his own unit/house inside and out and may have some grounds to maintain if it's a house. The association takes care of the rest of the common property. BACK
Board Amend Bylaws? Answer: The Board is authorized to enact policies that are in keeping with the governing documents. The Board may not enact a policy that contradicts the governing documents. If the Board proposes to amend or add to the Bylaws, it usually requires a "super" majority (2/3 to 3/4) of the members to approve it and may take 100% depending on the subject matter (like changing the allocation of homeowner fees). Bylaws should never be amended without the assistance of an attorney who specializes in homeowner association law in your state. BACK
Record Inspection by Members Answer: Most HOA records should be made available for examination as you describe. Collection records are private and should not be released to the members. Same goes for current litigation records, contracts under negotiation and information that is attorney/client privileged. Copies should carry a reasonable charge like 10¢ each to cover material and labor costs. This usually limits the "I want copies of everything demand". BACK
Unit Closing Conflicts Answer: This is a common problem. Most closing agents usually know which properties belong in HOAs and are supposed to contact the HOA for this information. But there is no reliable contact information or it gets overlooked. If the HOA has a properly filed lien, the title insurance company will pick it up and require payment prior to closing. If there is no lien, there is no reliable way to ensure payment other than the seller's honesty. Of course, that doesn't mean the new owner is off the hook for dues owed by the former owner. Title is taken subject to all rights and obligations and if the seller leaves a bill owing, the HOA can demand payment from the new owner. BACK
Enforcing Rules On Renters Answer: The HOA only has legal authority over the property owner and the property owner is responsible for the renter's actions. Start notifying and fining the owner and corrective action usually soon follows. BACK
Allocating Elevator Repair Costs Answer: Unless the governing documents specifically allocate elevator expenses and repairs to certain units, the costs are spread among all unit owners and that can't be changed unless 100% of all owners agree to it. BACK
Common Area Expansion Answer: What you describe constitutes expansion into or modification of the common area. The Board has no authority to expand owner use of common area. Any redefinition or reconfiguration of common area must be approved by an appropriate majority of owners which may be 100%. However, what is done is done. The Board should deny further such encroachments into common area. Whenever the Board grants a legal modification, like carpeting an existing patio, the approval should be done in writing and include the condition that all maintenance and repairs are the owner's responsibility as well as any damage caused to common area resulting from those modifications. BACK
Unenforceable Rules Answer: There is a basic premise in making HOA rules to never make a rule that is unenforceable. This one has "unenforceable" written all over it. Uncontrolled animals roam and some of the problem may be from non-resident animals. Does the Board really intend to do DNA testing on all the offenders? Unless there is a flagrant and documented disregard for the pet cleanup rule, this is a rule that should never be. Deal with repeat offenders and leave the rest alone. A simple "Pet owners should clean up after their pets in the common area" rule is enough. Last but not least, all rules should be circulated to the members for comment prior to enactment. This way, the residents are put on notice and given a chance to advise if the board has gone too far. BACK
Hiring Members as Contractors Answer: The resident manager does not qualify as an independent contractor unless he is doing similar work for other clients, has a registered business name, Federal Tax ID, etc. I suspect that he is doing none of these things. What you describe is a common ploy to avoid paying taxes, unemployment, social security and other required withholding. Unless this individual qualifies as a legitimate contractor according to the IRS's standards, the HOA should treat him as an employee along with all proper withholding. To do otherwise, puts the HOA in jeopardy of an IRS audit, fines and penalties. And if the manager is hurt on the job, he could claim disability and medical benefits against the HOA. This situation should cease immediately. Finally, resident managers often receive housing and utilities as part of the benefits package because they are required to live on site. Tax regulations allow such job related benefits. But monthly HOA dues are not requirements of the job. To keep the accounting straight, this owner should tender monthly dues payment just like any other owner. BACK
Distributing Private Records Answer: The Board is not required to provide copies of records, only to make certain records reasonably available, privacy issues an exception. Architectural and landscaping issues really aren't privacy issues since the outcome could impact market value of neighboring homes. Arrange a time during normal business hours when records can be reviewed but not removed from the premises. BACK
Noisy Neighbor Answer: Since the neighbor has made reasonable attempts to deal with an inconsiderate neighbor, it's time for the Board to take aggressive action. There should be a fine policy in place for noise violations which identifies Quiet Hours (10 pm to 8 am is the norm). The fine should be enough to get attention, like $50 the 1st offense, $100 the 2nd , $200 the 3rd. Before fining, however, have a heart to heart with the offender explaining the problem in specific terms and the need to comply with quiet hours. Try to get compliance without resorting to fines if you can. Once aggressive action starts the neighbors will most likely be alienated from one another and reconciliation will be difficult. You might also suggest mediation as a way of having a neutral third party negotiate a compromise without either party losing face. Most cities and counties offer mediation services to HOAs. If cajoling, mediation and fines don't do the trick, the HOA may need to get a court injunction against the offender. With an injunction, local law enforcement is authorized to intervene. This is, of course, a last and drastic resort. BACK
Cable TV Wiring Answer: Generally, the Board should have a written policy restricting or prohibiting cable, phone and dish installations that are attached to the buildings for the very reasons you point out. At the very least, these installations should be out of view. Cable TV wiring can usually be run in crawlspaces or attics to minimize exterior cable. It is more labor intensive but the end result is the building exterior looks cleaner and with fewer holes in the siding that could leak water. Satellite dishes should not be attached to the siding or roof unless these are the only locations where good signal is achievable. Erecting various out of sight 15-20' pole locations on the property allows the service providers places to hang their equipment without resorting to building installations. BACK
Breaching a Common
Wall Answer: The common wall restriction is intended to address fire safety and structural integrity. Breaching a fire wall could pose a threat to a neighboring unit. If both units are owned by the same person, the fire safety issue is moot. However, it is possible that some time in the future, the owner might want to sell one unit off. At that time, requiring that the fire wall be restored is essential. Whenever a common element is affected in this way, it makes sense to have a qualified architect or engineer produce plans and specifications that address structural considerations and fire safety issues. The plan should include appropriate building permits and a requirement that only licensed contractors may perform the work. If the board receives a request with supporting documentation and agrees it’s acceptable, there should be an agreement drawn up by an attorney describing the alterations and the requirement that the unit owner accepts all responsibility to mitigate any damage it might cause and to effect all repairs relating to it now and in the future. That document should be made part of the unit’s public record for the benefit of future owners and lenders. The unit owner should pay for all legal fees. BACK
Ala Carte Management Answer: Elected boards were never intended to self manage the HOA and are seldom trained in property management. Unless your governing documents require a vote of the members to approve the budget, the board has the authority to approve hiring a management company. It is highly recommended that professional HOA management be hired to handle at least the financial aspect which is so critically important. Overseeing repairs and contractors also figure large as does rule enforcement. Management is charged with obtaining competitive pricing on services so can often pay for itself in that way alone. When the big picture is considered, you will be pleasantly surprised how cost effective professional management is. BACK
Cutting
Trees Close to Buildings Answer: Jousting over legal issues with lawyers is dicey because you are playing in their field and they don’t have to hire a lawyer to play. If this is headed for a courtroom showdown, retreat or compromise may be the better part of valor. But even if this lawyer is not the kind to pull rank or unfair advantage, there are still some valid points in his defense. These particular trees are a bigger than normal fire hazard. Trees in general should be located at least 30 feet from the structure, particularly if they are more flammable like pine trees. It would be prudent to get a licensed arborist to review of the trees in question. If the arborist believes they are a danger, they should be removed. If the arborist says they are safe, go with it and share the report with the owner in question. The board is not responsible for acts of God, only for handling business in a prudent manner. Use experts to your advantage. BACK
Using Reserves for Operating Expenses Answer: State laws vary on this topic. Most are silent altogether. The governing documents may or may not have something to say about it. But it usually comes down to common sense. If the HOA has a real reserve fund, only reserve related expenses should be paid for from reserves. If the HOA runs an operating budget deficit, the board should raise a special assessment to fund the deficit, not rob from reserves. If the reason for the deficit is likely to recur, subsequent year operating budgets need to be increased so it doesn't happen again. BACK
Works Sessions Answer: It is not uncommon for a budget committee (which may be composed of board members) to meet several times to hash through a draft budget which is later presented at a board meeting for approval. At the board meeting, the draft budget should be presented along with comments about significant changes and additions so the minutes can reflect those changes. In particular, large or unusual line items should be noted for the record. The committee should explain the reasons for the changes. Other items of business should be discussed only at a board meeting open to the members with exception of a few topics appropriate for behind-closed-door "executive session" like discussion of litigation with the attorney, contract negotiations and employee issues. You are correct
about the board misusing work sessions to transact business. Remind the board
that operating in the open is not only right and required by law but will
reduce challenges and questions. Open meetings sometime take a bit more
time but in the long run will actually save of time by gaining member support
rather than ire. BACK
AWOL Board Member Answer: The board president needs to have a heart to heart with him. When he ran for office, he agreed to serve the interests of the HOA members. He clearly is not fulfilling his obligation. Either he now is willing or he is not. If he is, great! He can do that by attending future meetings regularly and by making informed decisions. If he is not willing, he should voluntarily step down so the board can appoint someone that is. If he refuses to step down, there is little that can be done unless an appropriate number of owners (according to the governing documents) votes to remove him. But most slackers, when properly challenged, will step down voluntarily. BACK
Funding Reserves 100% Answer: There are two compelling reasons why reserves should be 100% funded each and every year: fairness and fiduciary duty. Consider the example of a 30 year roof that costs $300,000 to replace. Fully funding the roof reserve requires $10,000 per year ($300,000 ÷ 30 Years). In other words, as 1/30th of the roof is used up, 1/30th of its replacement cost should be set aside in reserves. If less than 1/30th of the cost is reserved each year, the shortage will have to made up by future owners. It is normal for a certain percentage of ownerships to turnover each year. So, the owner roster in Year 1 will likely be different in Year 5, Year 15 and Year 30. The farther in the future a repair event takes place, the more likely different owners in the future will be asked to pay for what prior owners failed to pay. Those future owners are simply not financially responsible for paying for roof reserves prior to their ownership. Secondly, the board has a fiduciary duty to protect the interests of all owners, current and future. Underfunding reserves now is contrary to the interests of future owners. If the board transfers current owner obligations to future owners, it has failed its fiduciary duty and exposes itself to legal liability. BACK
Undoing an Architectural
Violation Answer: It’s easy for architectural and design requirements to get buried in the governing documents which few read or remember even if they have read them. Does the board regularly remind owners of design standards through a website, newsletters and postings? If so, the case can be made that this owner simply chose to ignore the requirements. If not, it’s easy to understand why a homeowner would think "my home is my castle and I decide how I want it to look". Architectural standards established by the developer are not cast in stone. In fact, many developments are locked in a color and materials code that was hoped to trigger sales and profits for the developer. But tastes change. As new colors and materials come into vogue, it makes sense for the board to establish different standards or allow deviations within reason. In this particular case, the simplest approach is for the board to inform the owner of the governing documents standard and request replacement with the standard. The owner may comply without question. However, it is more likely that the owner will protest loudly that he didn’t know and shouldn’t be penalized. The "didn’t know" defense is more or less valid depending on how aggressively the board has enforced standards in the past. If the owner resists changing, the ultimate decision by the board is based on how aggressive the owner is determined to be to defend his position (like going to court over it). The HOA is rarely well served going to court since it is usually either a Win-Lose, Lose-Win or Lose-Lose outcome. The board should make a decision that is in the best interests of the HOA. That decision may be to allow the roof to stay. This decision won’t satisfy everyone but may be the most practical one. Moreover, the board could press to remove inflexible standards from the governing documents. In the long term, that would allow the HOA to change with the times when it makes sense to do so. BACK
On the Fly Board Meetings Answer: Both special meetings and emergency meetings can indeed be called between normally scheduled board meetings. There is no requirement that the management company be present although it's generally desirable that the manager be there to advise the board. All board meetings require minutes be taken as a record of decisions made. The biggest sticking point in this particular situation is that without a quorum, no legal business can be transacted. BACK
Defining Single Occupancy Answer: Having the board try to pass judgment on each living situation is a waste of time and possibly illegal under the federal Fair Housing Act. The real issue is not family status but how residents impact the neighbors and common area. In that regard, the board has the authority to enforce reasonable rules and standards that apply equally to both owner and renters. It should stick to rules enforcement not relationship scrutiny. BACK
Is Robert's Rules Necessary? Answer: If state statute or your governing documents require use of Robert's Rules, the board needs to use them in the board and member meetings. Otherwise, agreeing to something as you describe is okay. However, a simplified version of Robert's Rules is highly recommended to keep the meeting organized and to ensure a balanced and meaningful discussion with a purposeful outcome. Without it, meetings can easily become bull sessions with little accomplished. BACK
Landlord
Using Clubhouse/Pool Answer: When a unit is rented, HOA amenity use rights are transferred to the renter. However, the board could make an exception when it comes to renting the clubhouse since it generates revenue for the HOA. BACK
Directors
Contacting Contractors Answer: From a practical and operational standpoint, random directors should not be contacting and giving direction to vendors when you have hired a management company to do this. The vendors generally want to do their job right and it gets confusing when they receive contradictory or multiple instructions from different authorities. The board should either assign a director to that task, allow the manager to handle it or assign a board member to communicate landscape issues to the manager for execution. BACK
Snow Removal
Budgeting Answer: If this is the first time in 20 years that snow removal has been necessary, it’s unlikely it will be necessary next year. However, to be on the safe side, it is perfectly okay to establish a Snow Removal reserve. Set up a five year reserve fund based on the $3600 recently spent and reserve $720/year. BACK
Collecting Proxies Door
to Door Answer: Proxies can be given by an owner to anyone, even someone that is not a member of the HOA. It is not uncommon for attorneys and relatives to be appointed. So, yes, an owner could go door to door and ask that each owner appoint him as their representative. If this person amasses many such proxies, his voting power may by itself control elections and other votes. That said, it is not illegal. BACK
Directors
Serving on Committees Answer: HOA volunteers like committee members are usually protected by Directors and Officers liability insurance as long as they are following the committee charter (job description) approved by the board. Most committees are advisory only. This means that they make recommendations to the board and the board makes the final decision. The ARC, however, can be empowered by the board to make architectural and design decisions and, thus, be a target of litigation. Covering all HOA volunteers for liability purposes is very important. But not all Directors and Officers insurance policies are created equal. It is important to confirm with the insurance carrier exactly what the coverage includes. Ask and get written response to these questions:
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