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Ask the HOA Expert
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Allocating Expense by Bedrooms Answer: Occasionally, developers propose an expense allocation like the one you describe. It’s easier to calculate but clearly overlooks disparity in size and value. When there is substantial difference in square footage, the norm is to allocate expenses according to a unit’s square footage as a percentage of the total units square footage. In that case, the expense share may range, for example, from 2% to 5% depending on unit size. When developers ignore the unit size issue, the inequity usually becomes apparent after turnover. Then, those that feel they are carrying a bigger share than they should lobby to "fix it". The problem is that fixing it requires consent from every unit owner, those that will pay more and those that will pay less. The principle of 100% consent applies specifically to HOA expense allocation. In this regard, individual owners have the protection against a majority foisting its financial will on the minority whenever it sees fit. It's different when it comes to a rule that applies to everyone, like No Pets. A majority could vote to eliminate pets but the same rule would apply to everyone. If a majority of the owners were allowed to change the expense allocation formula without this 100% requirement, theoretically 51% of the owners could pass an amendment that would force 49% of the owners pay 100% of the expenses. This can't possibly be right or equitable. So expense allocation is one area that absolutely requires 100% consent of those affected. While it's theoretically possible to achieve if 100% are willing, people are people and there is usually someone that refuses to budge. Bottom line (listen up developers), the expense allocation formula needs to be fair from the get-go. After turnover, it’s too late to change. BACK
Resident Newsletters Answer: Having a regular newsletter is not just a good idea, it’s a basic good management practice. To encourage readership, the newsletter should be worth reading and provide information that all members need to know. If certain members don't choose to read it, that's up to them. The HOA should not withhold information because of it. The Board Secretary generally previews the newsletter for content and accuracy. This doesn’t take much time for a two to four page newsletter (more than ample for most HOAs). Newsletters do no need to be long and involved, just timely and relevant. There is boilerplate information that can be repeated each issue (like key contacts) and pre-written articles that can be used to make a point. In fact there are hundreds of articles in the Regenesis.net Article Archive that are designed exactly for that purpose. BACK
Paroled Sex Offenders Answer: While the answer to that question varies from location to location, national statistics do bear out that recidivism is a big problem with sex offenders, as it is with other criminal behavior. And percentages are meaningless when you, or someone you know (especially a child) is the victim of this crime. All sex offenses are not created equal. Some involve underage consent while others the truly vile and unspeakable. The Board should investigate the facts before unduly damaging a resident's character. That said, for the Board to keep silent about a known sex offender could be viewed as complicity. State laws allow disclosure and the Board should do so along state prescribed guidelines. BACK
Manager Pandering Answer: The Board President has primary authority over the manager and should speak to the manager directly and plainly about this problem. Most managers are only trying to please or do their job. It may be a simple misunderstanding. If, however, there is conscious subterfuge and unwillingness to change, the matter should be addressed directly with the management company owner. If change isn’t forthcoming, the President should recommend to the Board that there be a change in management company. On the other hand, if the manager is kowtowing politically to Board President who is abusing her authority, the remaining directors need to have a heart to heart with the President. All officers serve at the pleasure of the Board. If one is exceeding authority, the Board can remove and replace that person with another director who won’t. BACK
Define
CC&Rs Answer: CC&Rs stands for "Covenants, Conditions & Restrictions". CC&Rs include the Declaration, Bylaws, Rules, Regulations, Policies and Resolutions. As far as standing up in court, no one can absolutely predict the outcome of a judge or jury decision. But the HOA has a responsibility to make sure all rules, regulations and policies are in writing, distributed to all owners and residents and easily accessible when needed (website recommended for 24/7 access). If the HOA's rules are fair and uniformly enforced, most judges will rule for with the Board.
Spending Controls Answer: Your HOA sounds like it has had a long history of directors spending money as they saw fit. Your well intentioned controls were predictably not well received by the Old Guard. The first question that comes to mind is: Has the old routine caused budget overruns? If yes, you have a sound basis for your controls. If no, you may be making much ado about nothing. That said, it is not common for random directors to routinely spend the HOA's money. In self managed HOAs, the President and Treasurer generally handle payments, occasionally reimbursing a director for an HOA expense that can't wait for the normal payment process. Ideally, if you have a hired manager, all expenditures should be routed through the manager. It is much easier to hold an employee or contract manager accountable than a fellow director. Your biggest obstacle isn't opposition to good financial management practices, but perception that such is not needed. Getting a barge to change course takes time. Continue to press for change. The Board has a fiduciary duty to run HOA business in a business-like way. BACK
Bad Management Match Answer: You need to read the governing documents to see what authority the Board has to raise special assessments. Even if the Board has authority to do so, proper and reasonable notice must be given to the members and time to raise the cash. If a special assessment requires approval of the members, a member meeting needs to be called with advanced written notice. The meeting must have a legal quorum and a legal majority vote as defined by the governing documents. You may be able to pull this off by mail in ballot if your governing documents allow it. But none of this could possibly take place within 48 hours. The Board needs to make immediate and adequate payment arrangements for the water bill, perhaps by getting a short term loan from the bank (and quick). Or, you might be able to get the water department to leave the water on if money is on the way (special assessment or loan). But they will, no doubt, want to see the written evidence (letter from bank, copy of special assessment notice, etc.). The bigger question is, if this HOA has allowed things to get so bad that basic utilities can’t get paid, what other fires are you going to find that they want you to put out? This crisis didn't happen overnight and the Board likely has others waiting in the wings. Unless you are getting paid extra to deal with these special circumstances, you need to seriously evaluate whether this is an account worth your time. BACK
Hiring Members Answer: It is generally a very bad idea to hire a member to act as manager. It has been tried many times and I have never seen it work well. There are a number of reasons: 1. They rarely have the experience and
credentials to do the job. The board should look outside the community for a professional that carries the proper credentials. BACK
Changing a Dated Look Answer: While maintaining standards is important, over time those standards should consider new, improved or contemporary materials, designs and colors. To stay stuck in the past causes home values to fall. The committee is not appointed to block change but to guide the process to a reasonable outcome. The board should appoint committee members with a balanced views. Committee decisions should always allow for appeal to the board who also should represent a balanced view. BACK Auditing the Vote Question: We have always had the management company count the votes for the election of officers. To prevent any hint of conflict of interest, we are having the count audited by our accountant. How do other HOAs do it? Answer: Have several HOA members that are not running for office do the vote count. Retain the proxies, ballots and tally sheet until the next election. The accountant is overkill. BACK Email Communications Answer: The issue of the board using email generally involves how it is being used. Communicating by email on routine HOA business and settled policy is not prohibited any more than picking up the phone or exchanging information in the parking lot. The board needs to communicate to direct normal business. Such communications, however, may sometimes wander into topics that should be discussed in open meetings. The board needs to be aware when that line has been crossed. This is particularly true of controversial issues like spending significant money outside the approved operating budget or reserve study. The members have the right to audit such discussions and it simply isn’t possible outside a physical meeting. That said, email is a terrific way to communicate meeting minutes, newsletters and other information to the members. Speed up communications, their frequency and reduce costs. Win-win-win. BACK Naming Names Question: At the last board meeting, some members requested the names of people who have not yet paid their HOA fees. The board announced the names of past due accounts. Is this correct protocol? Answer: No. Besides the humiliation and libel aspect, there may be extenuating circumstances like a death, disability or unemployment. Not all delinquencies are created equal. And at the end of the day, HOAs are made up of neighbors and the board should be sensitive and careful whose names it smears. To be safe, discuss amounts owing but not the names of those that owe them. BACK
Email & Internet Answer: There are few HOA dwellers that don’t use email nowadays. While the board needs to be careful not to transact anything but emergency and preapproved business by email, other HOA matters are ripe for electronic distribution. Meeting minutes, meeting notices, newsletters, maintenance schedules, etc. can and should be emailed. If some still cling to paper communications, they should be accommodated but for the other 99%, it’s definitely the way to go. As with paper communications, make sure that all HOA emails come from an "official" source like the manager or the board president and the email bears that authority clearly. An HOA website is a no brainer these days. There are numerous companies that provide customizable websites that can be maintained by HOA volunteers that cost only a couple hundred dollars a year. For a list of information and documents that should be posted on an HOA website and website provider companies, go to www.Regenesis.net BACK
Sign, Flag & Decoration
Policy Statue = homeowner decorations Answer: The main purpose of sign restrictions is to limit the number, size, number, theme and longevity of them. Yard decorations (like statues) are not signs. The issue with yard decorations is usually how garish or tasteless they are (gnomes, pink flamingos, whirligigs). Holiday decorations can certainly be garish as well but they tend to be short lived, like political signs. Flags can come in many forms but the US flag has federal protections. Others are subject to board rules. It’s best to have a sign, flag and yard decoration philosophy rather than an extensive list of acceptable or unacceptable items. The philosophy should stress curb appeal and good taste. Since we all know that some lack good taste, the board may need to intervene on a case by case basis. The board may also need to compromise when confronted by an intractable resident rather than squander precious emotional and financial resources trying to enforce the rules. There is a sample sign policy in the Policy Samples section. BACK
Amplified Music Answer: You have the right to listen to music. The HOA has the right to control the volume of that music so it doesn't disturb others' right to not listen to music. BACK
Open Meeting Debate Discussions among the board members in arriving at a decision should be confidential. If I am going to serve on a private corporate board, I want the ability to speak my mind in discussing issues and formulating a decision. I am not running for the city council or state legislature when I agree to serve on a HOA board. The reason that HOAs are created is to provide a private corporate alternative to governmental bodies. The additional flexibility of private, voluntary association is one of the fundamental reasons for creating an HOA. Just as a board meeting of a private college is not open to faculty and students and donors, and just as the board meetings of private clubs are not open to the members, the meetings of an HOA may be closed if the board so chooses. Rant over. Answer: Open HOA board meetings are, in fact, required by law in many states, although yours may be an exception. And while closed meetings may be the norm for colleges and golf clubs, it is not the norm for government. And HOAs are certainly governing bodies in the same since as city, state and federal governments. More importantly, they govern the property of shareholder members who hold their property and property rights very dear. This relationship makes the need for open meetings critical. That said, HOA members rarely attend board meetings unless to petition the board. So having an open meeting policy is more symbolic than anything. But it's that willingness to keep the door open that helps keep the peace. At any given time, some member may get crosswise with the board. If they are not allowed in to see how things are run, the problems will only be exacerbated. Discontented members tend to stir up their neighbors by spreading rumors, fear, outrage and generally make the board's job more difficult. If the board has a policy of operating in the open, it takes a lot of starch out of those particular sheets. HOA governance is very different because of issue of neighbors governing neighbors. Fortune 500 boards can operate behind closed doors because the shareholders are far away, although major shareholders can and do attend Fortune 500 board meetings. HOA members have the biggest investment they own and their lifestyle on the line. So there is a BIG difference here and one that a smart board should heed. While maybe not required by law, common sense says do it. BACK
Marijuana Grow & Sell Answer: Most states still have laws against growing, distributing and selling marijuana and there are federal laws that restrict what you describe in virtually all states. There are exceptions to the rule in some states when it involves a medical purpose approved by a doctor. Like tobacco smoke, marijuana smoke is almost impossible to contain within a unit. Like tobacco smoke, if a neighbor’s health is affected, the board needs to act. The right to engage in activities that negatively affect the neighbors, legal or not, must be contained to the unit. If they cannot be, the activity must cease. BACK
Member Directory Kid Names Answer: Actually, nobody should be included in a member directory without their written permission. Children could be included but the parents should give written permission. BACK
Making Rules on the Fly Answer: You have the right to know what the rules are. The board does not have the authority to make rules on the fly. If they are not formally enacted rules, you can ignore them as you can't adhere to what you know nothing about. Inform the board in writing to that effect. Rules need to be reasonable, necessary and in keeping with the governing documents. And the board needs to follow an orderly process for enacting any rule. All rules should include preview and input from all owners. While owner review is not mandatory, it's well advised to prevent owner resistance that is bound to happen when they are not included in the process. The board that does not follow these guidelines is buying into trouble. BACK
Using Common Area for
Storage Rooms Answer: As long as the proposed space is common and available for this purpose, the board has the authority to make the change. Storage lockers constructed of chainlink fencing are relatively inexpensive to install and afford a reasonable measure of security. BACK
Withholding HOA Fees Answer: Members are entitled to review the finances. So, the board should produce and distribute regular financial statements to all members for review or offer to make them available upon request. Those financial statements should reflect how money has been spent in a clear fashion together with additional notes if there are unexplained, unusual or larger than normal expenses. Also, you have the right as a member of the HOA to examine all financial records. You should not withhold your fees just because you have unanswered questions. This tactic could be used by any owner for any reason, good or bad, and compromise the HOA's ability to pay its bills. But continue to press for the information you are entitled to. If the board continues to obstruct, it's time to elect others to the board that understand how business should be run. Sounds like you might be a good candidate. BACK
Board Bails Out Answer: "Don't worry about tomorrow because tomorrow will worry about itself". From a practical point of view, volunteers usually shy away because of fear of the unknown. The board job was not designed to be difficult or time consuming but it can be if you have some difficult owners who don't pay or won't obey rules. Getting professional management is a good move because it will reduce the amount of time the board needs to deal with things. Time involvement is a major obstacle to getting volunteers. Once management is hired, the board should need to meet no more than four times a year. In between board meetings, let the manager run the show according to the budget and governing documents. From time to time, the manager will have a question that should be directed to the president. The president has the authority to make decisions between board meeting as long as the decisions don’t conflict with the governing documents or board policy. Having a qualified manager with adequate authority to manage will substantially reduce the board’s day to day involvement and encourage volunteers. BACK
Charging for Copies Answer: It takes time and money to make copies and the HOA is entitled to recoup reasonable costs. However, many HOAs post governing documents and other need to know information on the HOA’s website which allows 24/7 self-help at no charge. BACK Dog
Issues Answer: Every HOA has a "nuisance" provision as part of the governing documents. Nuisances come in all shapes and sizes. In this case, barking dogs and failure to clean up after them is a nuisance that affects the neighbors. But pets are so pervasive, every HOA should have a Pet Policy which defines the basic issues and consequences for violation. There is a sample Pet Policy available to Gold Subscribers of www.Regenesis.net. Once the Pet Policy have been adopted by the board, a formal letter should be sent immediately to violators outlining the breaches and details (what and when), the penalty (fines), action needed to correct (for example, must clean up, dogs cannot be allowed to bark endlessly, etc.), consequences for failure to correct (like fines, removal of dogs from property and procedure for appeal). Send it certified and post the door so you know for sure it has been received. If the letter fails to gain compliance, initiate the consequences. If the consequences fail to inspire correction, have the HOA’s attorney file an action with the court to get an injunction. Your rules procedure should allow passing through attorney and legal fees. BACK
Gathering of Directors Answer: Attorneys deal in theory that sometimes does not play well in real life. A board retreat is an example of a non-board meeting as long as HOA business items are not discussed and approved. Work sessions (like a budget meetings) can also be legitimate non-board meetings. Executive sessions are used to discuss specific matters like contract negotiation, litigation and personnel matters. The board must be careful to use retreats, work sessions or executive sessions appropriately and not to avoid doing business at board meetings open to the members. In HOAs where there is a high degree of suspicion, any gathering of the board would be viewed as a meeting. It's best not to enrage the hostiles. Invite them to everything. Usually they won't come but if they do, the board will have nothing to hide anyway. BACK
Conducting Business by Email Answer: State statutes and governing documents vary on this issue. But email meetings effectively shut out members from the decision making process. Members are entitled to attend meetings and listen to the discussions. While your board may trade information by email, decisions should be formalized at a meeting open to all members. If the committee doesn't make decisons, as in the case of an Architectural Restriction Committee or Rules Enforcement Committee, it's okay to exchange information by email. Otherwise, meetings should be held so the members can speak to the committee as a group. BACK
Retroactive Rule Enforcement Answer: The board can request that old violations come into compliance but unless the owner is willing to comply, it will be an uphill battle. Five years is a long time and most courts would likely view it as silent consent by the board or a prescriptive easement (length of time legitimized the illegal installation). The case is stronger if the installation is unsightly, dilapidated or causing damage to buildings or grounds. The board should prioritize the violations according to severity and deal aggressively with the most blatant. If the owner resists, the board will need to decide whether legal action is prudent or cost effective. Less offensive violations can be dealt with by getting the offender to sign a recordable document that identifies the property and the violation and states the offending installation must be removed when the property is sold. Most owners view this as getting their way while the board can inform other members the installation is temporary. And when the offending owner sells, prospective buyers will be notified of the violation by way of their title insurance policy disclosures. BACK
Collecting Past Due Fees Answer: The board should enact a formal Collection Policy outlining how these things are handled. There is a sample in the Policy Samples section of www.Regenesis.net. The Collection Policy should include using an attorney to collect the debt if efforts by the board are ineffective. You should only use an attorney that specializes in HOA law and this kind of collection. Collections are often difficult for self managed HOAs since collecting money from neighbors is no fun. HOAs, regardless of size, should consider using an HOA management company to handle at least finances and collections. BACK
Alternative Parliamentary
Procedure Answer: As long as the procedure adopted conforms to the governing documents and state statute, an abbreviated version of Robert's Rules is appropriate as long as it does not stifle debate. The full body of Robert's Rules was intended for trained parliamentarians and large groups like Congress. Insisting that all of Robert's Rules be followed is nitpicking and would surely be used to intimidate the Chair on some issue of little importance. BACK
Selective Rule Enforcement 2 Answer: Not all rules are created equal. As a practical matter, rules issues rarely get into court because of cost, time and emotional effort involved. But when a matter gets into court, anything can happen. So it's always in the board's best interest to enforce all rules consistently so it won't give the judge an excuse to rule against the HOA. If the board fails to enforce a particular rule like parking in driveways for an extended period of time or is extremely inconsistent about it, a violator might rightly protest being held accountable to that rule but not another rule. One problem is that different boards sometimes enforce rules differently. If a particular board feels strongly that enforcing a particular rule that has long gone unenforced is a good thing, the matter should be discussed, ideally, in the annual homeowner meeting and at minimum in a newsletter that clearly informs all owners of the issue and the board's intention to enforce it. Catching folks by surprise is bad policy. On the other hand, if a rule hasn't been enforced consistently, maybe it isn't needed at all. It's okay to take it formally off the books. Don't just have rules for rules sake. There are enough to follow already. BACK
Policing Pets Answer: They have been warned. Have the mess cleaned up and bill them for the expense. BACK |
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