Ask the HOA Expert Q&A
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"Used with permission from Regenesis.net"

Disruptive Director
Question: I have served on our HOA’s board for years in various offices and am currently serving as president. We have a new board member that is interruptive, crass and ignores requests to wait his turn to speak. Any advice?

Revising the Annual Budget
Question: Our board is in the process of interviewing property managers and won’t know until after our new fiscal year starts how much it will cost us. Can we amend the budget when we do?

Director Exceeding Authority
Question: We have a homeowner association where one board member is doing everything: making decisions, doing maintenance work, spending money without board approval, etc. Where can we find some literature regarding how to gain control of the board member and the HOA?

Answer: I assume this board member is not the board president. The president generally has authority to do many of the things you describe as long as they conform with the approved budget, established board policy and governing documents. If a simple director is doing these things, it’s up to the board to rein him in. One way to do this if he is spending his own money on HOA business expecting to be reimbursed, is to refuse to reimburse him. He’ll get the message soon enough.

If this director is the president or treasurer and has been writing the checks, that’s an easy one. Officers serve at the pleasure of the board majority. All that is needed is for the board to officially remove him from office. The board can also advise all vendors and suppliers not to accept orders from this individual. The key is that the board needs to take action to curb him, even going so far as to ask him to step off the board if he can’t control himself. (Technically, the board cannot remove a director from the board so he would have to retire voluntarily.)

What this all points to is having a board with enough gumption to act. If your current board members lack gumption, there is little that will change until the board members either grow some backbone or the board line up changes altogether.   BACK

Rat Control
Question: I am the property manager for an HOA. A resident called to tell me that there were rats in his unit and he wants the HOA to pay for an exterminator. The board has advised me that this is not an HOA issue.

Answer: In common wall communities, rat control needs to be an HOA responsibility since if you try to control a pest in one unit, it will likely move next door and the problem is not solved. The only way to control pests in this setting is with a global approach. The HOA should engage a qualified exterminator for this issue and others like yellow jackets, carpenter ants and termites.

That said, the exterminator needs to verify that there isn’t an "attractive nuisance" like unsanitary conditions (trash) or leaking plumbing that is attracting the pest. If it’s determined that a unit owner’s action or neglect has caused the pest problem, the HOA should require reimbursement of pest control costs and correction of the issue that attracted the pest in the first place.   BACK

Proper Reserve Allocation
Question: Our board recently approved an $18/month increase in dues for next year. This comes after substantial increases over the past three years to complete extensive work including roof replacement, painting all buildings and sealing the asphalt. Last year, we started allocating 50% of our annual revenue towards replenishing the reserves. We have a consultant that prepares a reserve study update every year and the decision to allocate this much is based entirely on his recommendations. His projections are conservative considering that every one of the capital improvement projects we recently completed has cost considerably less than what he had projected in prior year reserve studies.

Answer: Reserve studies involve ongoing refinement. Future costs should be based on current costs adjusted by an inflation factor. If you have provided actual costs of painting, roofing and sealcoating, those are the figures that the consultant should use to update the reserve study. Using actual costs is always preferable unless the work was done by volunteers and actual cost does not reflect labor. You should ask your reserve study provider to replace his estimates with actual costs and rerun the projections.

For condominiums or other common wall homeowner associations, it is normal to set aside 25-35% of the annual revenue for reserves on an yearly basis. If your reserves have been depleted by recent work, there was not enough there to begin with. Setting aside 50% of current revenue to build them back up to where they need to be may be entirely reasonable if the reserve study recommendations back it up.   BACK

Investing in the Stock Market
Question: Our homeowner association recently lost $47,000 in reserve funds which the board invested in the stock market. Can the board members be held responsible for mishandling HOA funds or is this part of business as usual?

Answer: Do the governing documents describe what kind of investments the board is authorized to make? Does this board have a written reserves investment policy that allows investing in the stock market? Are the general members aware that the board has been investing in non-insured securities? If none of the above, common sense dictates that the board should not invest reserves in anything where the principal could be lost unless all of the general members have agreed to it.

However, if the board acted on its own without member knowledge and reserve money has truly been lost (gone forever with no hope of recovery not just depressed stock prices), the board should come clean with the members and suffer the consequences. This may include a demand that the board replace the lost reserve funds with their own money. To suppress the truth about the loss would only make matters worse and make the board guilty of concealment. Also, if there is any reserve funds remaining in stocks or mutual funds, it may be time to liquidate them and place the cash in certificates of deposit or other insured investments.   BACK

Owner Refuses Repairs
Question: We are currently repairing recent storm damage to our condominium units. Some owners are refusing to allow the access to the general contractor to install dehumidifiers and to do drywall repair. Can they do that?

Answer: It’s their property so they can deny access except for emergencies. To protect the HOA, a certified letter should be sent to each of these owners clearly explaining that the HOA is prepared to repair and pay the cost unit storm damage.

The letter should state that the unit owner has, to date, refused access for repairs and that unless the unit owner contacts the board within, say, 72 hours to arrange access, all unit repairs and costs will be borne by the unit owner. Make sure to put a copy of the letter in the unit file in case the unit owner should have a change of heart down the road.

If, however, there is a health issue involved, like mold, the HOA should file suit if necessary to get a court order granting access to remediate the health hazard which can impact all units owners.   BACK

Converting Carport to Garage
Question: A unit owner asked for permission to enclose his carport space like a garage. Is that okay?

Answer: There are several concerns:

1. Carports are not built to the same structural standards as garages.
2. Since there are no side walls, carport spaces are narrower than what would be necessary for a garage door.
3. Installing side walls on one carport space would restrict maneuvering for the neighbors.
4. Will there be power and heating issues? If so, how will utilities be provided without the HOA paying for them?

While the desire for additional security and storage is understandable, carports are not designed to become garages and installing one would adversely affect the neighbors and curb appeal. The many downsides point against this kind of precedent.   BACK

Email vs. Mail
Question: Our board is looking for better ways to communicate to the members by establishing a website. If we decide to distribute the board minutes and other information via a website, is that in itself sufficient? Or, does the board have an obligation to continue to use mail?

Answer: Unless there is a requirement in your governing documents or state law to mail communications, using a website and email are marvelous ways to economize and expand HOA communications. Since the majority of your members already have the ability to receive information by email, converting them should be relatively easy and could save significant cost each year. While some are used to getting paper, it’s the message and not the medium that matters. If you can convert 50% of the members to email, you’ve saved half of your mailing costs. Keep beating this drum. Technology and economy are on your side.

Non-Owner Board Member
Question: At a recent annual meeting, a unit owner gave his proxy to his daughter who voted on behalf of her father. However, the daughter was nominated by another unit owner to run for the board and was actually voted in. Our governing documents say that only owners can be board members.

Answer: Since the daughter is not an owner, she was not eligible to run for election or serve on the board. The proxy allowed her to vote on behalf of her father only, nothing more.   BACK

Starting an HOA
Question:  I bought a home in a 27 lot subdivision several years ago. Now, some of the owners are talking about forming an HOA. Do I have to join or obey their rules if I don't? Am I grandfathered in?

Answer: You cannot be forced to join a proposed homeowner association after you have bought already in. Homeowner associations are mandatory membership organizations that exist before you buy in. If you buy property in a pre-existing homeowner association, you are automatically subject to its authority.

If what your neighbors are proposing is a voluntary organization which is usually called a neighborhood association, you can join or not join as you please. If you don’t, the organization has no legal authority over you or your property.   BACK

Serving Passed Term
Question: Our HOA failed to hold an annual meeting or elections for several years. This wasn’t done intentionally. The HOA was involved in a complex and time consuming renovation project and simply couldn’t arrange the meeting schedule (I know, a lame excuse.) Because of this, some directors are currently serving passed their terms. A couple of members have started to complain.

Answer: Not holding the annual meeting is a serious breach of the board’s fiduciary duty and directors whose terms have expired are acting without the legal authority to do so. The board should schedule a annual meeting at the earliest possible date to hold elections which will either re-elect current directors or elect others to replace them.   BACK

Members Viewing Records
Question: We have one unit owner who is requesting copies of the most recent year’s financial records and meeting minutes. He seems to be irate because none of the board meetings were open to the members. We don't feel that it is appropriate to give him copies of this information although he is welcome to go through the records in the office during normal business hours.

Answer: To address the complaints of this member, the board president should discuss the concerns in person. If he refuses to discuss specifics and continues to deliver unreasonable demands, a written response should state that his demands are not reasonable. If he doesn’t like the decisions the board makes, he is free to run for election and get elected if he can drum up the support.

However, as a rule, members are entitled to view HOA records that do not violate other members’ privacy or compromise ongoing litigation, attorney-client privilege or contract negotiations. Arranging a reasonable time to review other records in the office along with charging him for someone’s time to facilitate it and costs of copies is appropriate.

If your board has been holding closed meetings, that should change. The board should perform HOA business transparently. While there may be an occasional need for executive session (behind closed door meeting) to discuss topics like litigation or contract negotiations, board meetings should otherwise be open to the members and held in venues that permit such. Those meetings should be noticed to all members well in advance along with the proposed agenda which allows members to request being part of the agenda. Minutes to the meetings should be distributed to the members within two weeks of the meeting.    BACK

Tree Removal Policy
Question: Our board recently approved a plan to remove hundreds of mature and healthy trees with no input from the residents. No clear explanation has been provided about the need to do this. Many members are up in arms.

Answer: There are good reasons to remove trees but before doing so, the board should be sensitive to the feelings of the members and provide clear and compelling evidence from experts that such is necessary. It is highly advisable to hire a licensed arborist who can provide credibility to a removal plan. If removal is being done for view purposes, it may be possible to achieve satisfactory results with "view"pruning without having to remove the trees.   BACK

Repeated Requests
Question: If a proposal for enclosing unit decks into sunrooms is voted down by the board, can the proposal be brought up again and again at the future board meetings? It seems like this is simply a strategy to wear the board down until it caves in.

Answer: It depends what the repeated proposals entail. If the board initially voted down the sunroom concept in its entirety, it need not entertain the same concept again. If the board voted down the design and material details and not the concept, it is reasonable to revisit the issue although the board should not keep the applicants guessing what might be acceptable.

In a case like this, it is reasonable to hire an architect to provide a standardized design and materials for the board’s approval which can be replicated by other unit owners that have the same desire.

The board controls the meeting agenda and is not obligated to discuss anything that a member has a mind to discuss. If a member persists in beating a dead horse, the board is not obligated to participate.    BACK