Ask the HOA Expert

Disclosing Special Assessment
Question: Our condominium association is currently obtaining bids on roofing, siding, painting and are looking at a special assessment of upwards of $5,000-10,000 per unit owner due to inadequate reserve funding habits in the past. What obligation, if any, does the Association have to disclose this information to prospective buyers, especially in view of the fact that the assessment has not been officially levied?

Answer: While special assessment discussions may not have yet gelled into actual special assessments, it is certainly something that should be disclosed to prospective buyers by the seller even if it's only a general statement like, "The Board is talking about approving a special assessment for (fill in the blank)". To say nothing about it as if it didn't exist is deceit. The special assessment WILL take place sometime in the near future. Buyers should be forewarned to a reasonable degree. BACK

Removing Abandoned Property
Question: We have a limited space storage room that has nine abandoned bicycles in it. How should we handle the matter?

Answer: Notify all owners in writing that bike owners have 30 days to claim their bike. All unclaimed bikes can be sold or donated to charity. If bike storage space is limited, the HOA should charge a reasonable storage fee, like $10 month, added to the regular assessment so the bookkeeper isn't burdened with separate invoicing.

Have each bike storage renter sign a rental agreement which clearly identifies the bicycle by type, make and color, making each owner responsible for theft. Keep a list of those that want bike storage and make it available on first come, first serve basis.

The HOA should not rent storage space directly to renters since it has no authority over renters. Renters should arrange it through the unit owner on their behalf. That way, the HOA collects from the landlord who then gets reimbursed from the tenant. With this system, those that enjoy special benefits pay for them, the HOA can gather in an additional revenue and bikes no longer will be abandoned since rent is being paid for the storage. BACK

Enforcing Fire Safety
Question: It was discovered last year that many of our condos have defective furnaces. We required all units to have an inspection by a licensed heating professional. Many owners replaced their furnaces but we still have a number of owners who have refused to either have the furnace inspected or when it was found defective, refused to replace the furnace. The furnaces are a potential fire hazard. Do you have any suggestions?

Answer: The HOA has the right to demand furnace replacement where there is a documented fire safety issue. Help them say "Yes" if you can rather than force them. The HOA can offer an incentive to the holdouts by facilitating multiple installations by a heating contractor to obtain a discount. Each owner would, of course, reimburse their portion of the expense. If, however, some owners still refuse, a demand letter should be delivered to each stating that the association is prepared to force the issue legally. Set a deadline for compliance of, say, 30 days after which the matter will be turned over to an attorney for further action. Explain that all legal costs will be added to their account. BACK

Developer Improprieties
Question: Our developer still controls the HOA and wrote provisions in the governing documents which allow him to not pay monthly fees on undeveloped lots until houses are built, sold and closed. Because of this, the clubhouse and pool does not have adequate money to operate. The developer is loaning us money to make up the shortfall without our approval. It seems like the developer should contribute money or pay dues on the undeveloped lots to help cover these expenses…at least until there are enough homes to cover the costs. What do you think?

Answer: Running a clubhouse and pool operation is predicated on a certain number of owners contributing to the operation. If there aren't yet enough paying members to pay for it, it should remain closed. But for sales purposes, the developer wants the clubhouse and pool to be operational. If the operation benefits the developer too, (and it does) he should pay his share of the costs.

The developer doesn’t have the right to loan money to the HOA without member approval. If he set up the documents in such a way to allow him to skate on paying his share, he should not now try to foist operation costs to a minority of owners. Either the facilities should remain closed or the developer should pay his share of the expenses during the sales phase. BACK

Handicap Access
Question: We are an age restricted retirement homeowner association. A prospective buyer inquired about handicap access. All of our facilities are handicap ready except for our swimming pool. Is there any requirement that we have our pool accessible to the handicapped?

Answer: Homeowner associations are not required to provide handicap access, just to make "reasonable accommodations" for those residents that require such. That means if a resident requires a ramp to a unit entry, the Board should approve the installation with the resident paying for it. The Board can, however, require reasonable aesthetic considerations be included with such installations. Reassigning parking places (if owned by the HOA), is another reasonable accommodation.

Modifying a pool wouldn't be cheap and it's unlikely that the resident would want to pay for it. But there is nothing wrong with an owner developing the costs and specifications to do it and then gathering signatures from owners who are in favor of spending the money. If the required majority endorse the idea, why not do it? BACK

Getting Back on Track
Question: Our HOA is trying to get on track after years of self management and neglect. Lots of people were well intended but hadn’t a clue of what being a board member really meant. Any advice on getting pointed in the right direction?

Answer: One of the first things to get done is a reserve study so that the scope and cost of your current and future repairs can be fully understood. (See Reserve Planning for more on this subject.) Consider hiring a homeowner association management company to handle your business. There is simply too much going for unpaid and untrained volunteers, even if they have the best of intentions. And no one should have to enforce rules on or collect money from their neighbors. (See Manager Issues for things to consider when hiring a professional manager).

Above all, be patient but persistent. Change comes slowly to some. Years of management by neglect is a hard mind set to change. Encourage more flexible minds to run for the Board. BACK

Fire & Health Enforcement
Question: We have a homeowner that has boxes and papers stacked against her patio door and windows. They are very unsightly from the outside and mildewed which is a health concern for the neighbors. It also poses a possible fire hazard. Can the Board require a homeowner to clean up the inside of their unit?

Answer: The Board indeed can require clean up of a unit or home that is a health, fire or safety hazard. Ask the adjacent neighbors to first broach the subject with the offender. If this doesn’t prompt action, ask them to write the Board a letter describing the problem and what they tried to do about it.

With those letters, the Board can turn up the heat by giving the offender a ten day deadline to clean up. After ten days, say "other legal remedies will be explored if necessary". This usually will do the trick. If not, call the Fire and Health Departments and ask them to do an inspection. If all else fails, get the HOA lawyer involved. One way or another, the easy or the hard way, the job will get done. BACK

Board Nepotism
Question: Our Board President’s wife is paid for cleaning the clubhouse and the President owns a landscape company which is performing landscape services for our homeowner association. Are there any concerns we should have with this arrangement?

Answer: Yes, you should have plenty to be concerned about. Directors are elected volunteers who serve for no pay. A director's wife earning money from the HOA essentially flows money back to the benefit of the director. So, no family members should be employed by the HOA since there is a conflict of interest. (On a side note, it's generally not a good idea to hire any member of the HOA. If it doesn't work out, a neighbor (and possibly friend) will have to be fired and there are bound to be bad feelings. The motivation for hiring an insider is to save the HOA money. But this often results in improper withholding, making cash payments and other illegal dodges that exposes the HOA members to liability. Anyone working for the HOA should be a legitimate employee or contractor.)

Hiring the President’s landscape company is a blatant conflict of interest. If the Board truly feels this company is the best to do the work, the President should step down from the Board and act solely as a contractor. To do otherwise is contrary to the fiduciary responsibility owed to the members. The Board is elected to protect the interests of all members. Hiring spouses and self-enrichment from contracts does not self that charge. BACK

Rules Issues
Question: We are reviewing our Rules & Regulations for possible revisions:
1. What is the HOA’s responsibility for repair and maintenance of the garage interior?
2. Should garages be used for storage which does not leave room to park cars?
3. Should owners be allowed to store ladders, refrigerators and other curiosities on their patios?
4. Should auto repair be permitted inside and/or outside the garage?
5. Should homeowners be asked to approve each revision before it is adopted or to approve the document as a whole?

Answers:
1. The HOA is not responsible for interior repairs to garages (or units) unless the governing documents say so or damage was caused by structural problems that are the HOA’s responsibility.
2. Many HOAs restrict garage storage if it displaces vehicles. For aesthetic reasons and since guest parking is usually limited, I recommend you do the same.
3. For aesthetic reasons, typically only patio furniture, barbeques and related decorations are allowed. All other storage should be confined to the unit or garage.
4. Minor repairs like oil changes are okay but major overhauls should be confined to the garage.
5. The Board is authorized to enact rules and regulations that are in keeping with the governing document. Rules of the kind you mention can be enacted by the Board although they should be circulated to the members for comment before doing so. If the proposed rule contradicts the governing documents, the members must vote to amend the governing documents. BACK

Manager Exceeding Authority
Question: My neighbor and I have shared a fence for eight years. Our new manager summarily had it removed stating "it did not comply with the governing documents". Don’t we have rights?

Answer: Even if the Manager was technically correct about the fence violation, removing a long standing structure without notification and right of appeal is unconscionable. Since the fence had been there for years, you probably have a prescriptive easement and a right to keep it. Eight years is a pretty strong defense. I suggest that you go directly to the Board about the issue. Besides demanding that the fence be rebuilt, I suggest that you voice concerns about the Manager's judgment. Maybe there are other cases of Manager bulldozing which need to be addressed. Depending on how the Board reacts dictates your next course of action. If the Board restores the fence and sanctions the Manager, hurray! If not, it may indicate a "regime change" is needed. That’s where you come in. Either run for the Board or vote in those that are more reasonable. BACK

Manager Workload
Question: Our manager just quit citing that he manages 27 associations and that ours is too difficult to manage. What is a reasonable workload for an HOA manager?

Answer: Normally, a dozen HOAs for one manager is considered a full load, assuming that the manager has no assistant, full management services are being provided to each client and that the manager is attending Board Meetings. Of course, the number of units in each HOA is significant. If large and complex, a couple of HOAs is a boatload of work for a manager. A manager with an assistant could manage 20 smaller 20-100 unit HOAs but 27 HOAs would kill anyone but Superman or Woman. However, I detect that there are issues with your particular HOA that broke your manager. You don’t give details, but one dysfunctional HOA client can require more effort than a dozen healthy ones.

In healthy HOAs, the Board and Manager act as a team where the Board has oversight and the Manager executes the business according to Board policy, budget, governing documents, Management Agreement and good business practice. It can be quite a juggling act at times to determine which authority takes precedence. The Board should allow the Manager to execute the job without interference unless there is a compelling reason to do otherwise. For example, the Manager is charged with enforcing rules and collections. A member who is being leaned on for rules (or liened on for money) by the Manager may attempt to cloud the issue by complaining to the Board about the Manager without real grounds. Boards that bite this bait can undermine the Manager's authority. A Manager without real authority is an exercise in frustration and will not likely want to continue for long. Unless the Manager has demonstrated repeated poor judgment or management ability, he/she should be allowed to make the call and expect to be supported by the Board.

Another reason Managers bail out is nitpicking from the Board by micromanaging day to day management activity. Requiring the Manager to justify why things were done adds considerably to the huge volume of urgent work an HOA Manager is supposed to complete. Adding this to the stack is enough to break anyone. It is, of course, appropriate to question a manager’s procedures at a Board Meeting when all directors are present. But if the Board does not demonstrate trust in the Manager, most Managers will not want to stay very long. Manager turnover is sometimes necessary but should be a last resort. For planning strategies on hiring HOA Managers, see Regenesis.net Manager Issues section. BACK