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Ask the HOA Expert
Q&A |
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Scrutinizing Committee
Minutes Answer: There are only a few things that are confidential: collections on delinquent members (for libel reasons), personnel matters, contracts under negotiation and litigation. Architectural committee business doesn't fall under these categories and, indeed, it's important that their deliberations be open to owner scrutiny to ensure that decisions are consistent and adhering to association guidelines. BACK Board
Modifying Documents Answer: The Board may enact policies that are in keeping with the governing documents but cannot change their meaning. Changing their meaning (amending) requires an appropriate vote of the owners. If the association has the responsibility to maintain roofs, that includes leaks. It makes no sense to do otherwise and is a breach of the association’s maintenance responsibility. If fine amounts are specifically mentioned in the governing documents, only the owners can change it by either amending the fine amount or removing the fine amount entirely and allowing the Board to set the fine level. BACK Question: We have a person who wishes to be legal counsel. Does he have a vote on the Board? Also, we have a homeowner who wants to be on the board but cannot attend meetings. Can the governing documents be amended so he can vote by proxy? Answer: Legal counsel is not a board office. And whether or not you should take this person up on the offer depends on if he has an expertise in HOA law. This is what the board needs and it's better to pay an expert than to take free bad advice. Unless the governing documents allow directors to use proxies, and I've never seen any that did, a director must be present to vote. But practically speaking, you should not elect someone that is cannot attend board meetings. An absent director simply cannot be kept informed of the issues. BACK
Directors & Officers Liability Answer: All HOAs should have two kinds of liability insurance, General and Directors & Officers (D&O). The difference between the two is: General Liability deals with claims for "slip and fall" accidents. D&O deals with liabilities relating to the Board’s managing the HOA in a "prudent or businesslike way." This definition leaves room for a claims of mismanagement for things like the Board's failure to collect monthly assessments or for not properly reserving for repair or replacement of common elements. The Board is also exposed to liability for making or enforcing rules and regulating exterior alterations or additions. HOA directors and officers can be held personally liable for these "errors and omissions" that result in a financial loss to the association, so D&O coverage generally protects the directors and officers against losses and expenses based on an error or omission, negligent act, misstatement or misleading statement, or breach of duty. Do not serve on your HOA’s Board unless this essential insurance is in place. BACK
Holding Closed
Meetings Answer: Your governing documents or state HOA statutes may require open Board meetings. But whether or not open meetings are required, they should be open because secret meetings will only breed suspicion. All association members are entitled to know what goes on. Specific details of sensitive contract negotiations, litigation, collections and personnel matters may be withheld but the rest should be open. All Board meetings should be advertised to the members and enough room to allow a reasonable number. BACK Dissent Voting Answer: If asked to vote on a controversial issue, it is every director's right to dissent and insist that the opposition be recorded in the minutes. This is very important if the vote ends up landing the association in court. The dissenter can point to the record for exoneration. That said, a dissenting director should not undermine the board action by "talking out of class" about it or stirring up the other members. If the question comes up, it's appropriate to say, "I voted against it but the majority voted in favor. If you don't like it, let your thoughts be known to the Board President." BACK Rules Contradicting
CC&Rs Answer: The Board does not have the authority to amend the governing documents or enact rules that contradict them. Amending the documents requires an appropriate vote of the owners which should be specified in the governing documents or your state HOA laws. BACK
Restricting Garage Sales Answer: Security problems at garage sales is very uncommon. Garage sales are as American as apple pie and the Board should find a way to accommodate them. To reduce the impact of multiple sales, why not coordinate a Community Yard/Garage Sale with 10% going to the Social or Reserve Fund? If you got 10‑20 neighbors to participate, it would turn it into a social event and feed the community pot at the same time. It would be a great way for neighbors to meet neighbors. BACK Question: We are in the process of presenting a formal notice to an owner that has failed to pay monthly assessments for over two years. What happens if they refuse to pay? Answer: Why on earth would you wait two years to start collecting this debt? Lack of collection action has encouraged their continued delinquency. While the association may have the right to charge interest and late charges, proper and timely notices must be given or the association may lose its right to collect penalties. Collections should be businesslike, never personal. Let the policy guide your actions, not whether you like or dislike someone personally. I suggest your association enact a comprehensive Collection Policy. We have one in our "Policy Samples" section that the Board can adapt to the association's use. However, before the board adopts any new policy, have it reviewed by an attorney that specializes in HOA law in your state. Get this step done as soon as possible before launching a collection action. BACK Question: Our Board is considering use of email for gaining approval for issues that need quick action which can't wait until the next scheduled Board meeting and for discussion of issues which will be decided in upcoming Board meetings. We plan to formally confirm each of our email decisions in the following Board meeting. However, we're a little uneasy about discussing issues outside of Board meetings. Advice? Answer: Unless a bylaw amendment is approved by the owners that allows such a decision making option, HOA business decisions (except real emergencies) should take place in regularly scheduled Board Meetings. Face to face meetings allow a much broader debate which can be observed by owners. Owners also have the ability to give input to issues before decisions are made. And the process is memorialized in the minutes for all to see. The Board President is authorized to execute Board decisions and email would be a logical way to do that. But e‑mail should not be used for the decision making process itself. BACK
Restricting Children Answer: This provision is illegal under the Fair Housing Act. It's probably left over from the HOA's original filing which I hope was at least 15 or more years ago since the Act was made law in 1988. The association should amend its governing documents before someone decides to sue for killing home sales or diminishing market value with this provision. While you're at it, have a knowledgeable HOA attorney review your governing documents for other illegal provisions. BACK Eliminating Illegal
Provisions Answer: The Board does not have the authority to make Rules & Regulations that contradict the Bylaws and any Rules & Regulations that do are not enforceable. Bylaw amendments must be approved by the appropriate number of members indicated in the bylaws. There have been many changes to HOA law since 1965. You only need to change those things that do not conform to current law. Bylaws should only be amended with the help of an attorney that specializes in HOA law and any Rules that contradict the Bylaws should be repealed. BACK
Rental Surcharges Answer: This policy assumes that renters use more water than owners. I'd like to see the proof of this. Unless there are meters in place that measure water for each unit (they are available) and the bill is apportioned according to verifiable usage, this practice is unfair and illegal. Same answer for the move out charge issue. Unless all residents (owners and renters) are being charged this fee, it is discriminatory and should be stopped. The board has the authority to assess reasonable costs but should never single out a class of resident in doing so. BACK
Humiliating Deadbeats Answer: Every HOA attorney I've talked to says posting names of delinquents begs BIG trouble. The tone of the Shame on You posting suggests a willful refusal to pay. But individual circumstances can vary. How does the Board treat delinquent owners that truly can't pay because they are out of work, going through divorce or some other extenuating circumstance? The delinquency result may be the same but would the Board feel the same about posting those names? If they did, they would truly look mean spirited. If they don't, the policy is unequally applied and the Board would be accused of playing favorites. This is a no win policy. Before you regret it, discontinue this practice. The good news about delinquencies is that, assuming you have a well written collection policy, collection costs can be passed through and collected with interest some day. BACK
Contrary President Answer: Sure. The Board majority has the right to remove him as President. Advise Mr. Dictator he either flies with the majority or his wings will get clipped. BACK Question: We’ve had a few turnovers in our Architectural Restriction Committee in recent years. Some were better than others at enforcing the "minimum standards". Now, some homeowners are threatening lawsuits because they have been denied making alterations that other owners have been approved for. How vulnerable is the Board of Directors to a lawsuit? Answer: Lack of consistent
enforcement can undermine the standards and invite challenge. If some owners
are being granted variances, maybe it’s time to amend the standards rather
than try to justify unequal enforcement. While the Board should have Directors
& Officers Liability Insurance for legal defense if the board is sued, this
might be a hard case to defend. Better to agree on the standards and avoid
court.
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