Ask the Expert

Marjorie Jean Meyer, CMCA®, PCAM®
Vice President and National Director of Education and Certification
ASSOCIA

Can a master association board of directors sell part of the common area [parking spaces] to a utility company, without calling a special meeting of homeowners to get their approval? [condominium]

- Jim H.

The answer to your question is not as easy as you probably hoped. Depending on the governing documents for your condominium association and the state in which you live, and even perhaps your local ordinances, your board may or may not have the right to sell common area without an affirmative vote of the owners. However, you may be describing an act of condemnation by a local governing entity, so be sure to investigate both issues in the material I mentioned.

Although most often the answer would be that the board cannot arbitrarily sell off property owned by all owners in common, you still must research all material that affects the operations and existence of your community association for a specific answer. To locate your state's Condominium Act, try using the key words “(your state) government”), and scroll to a heading that mentions “statutes”. Then, enter the key word “condominium”, and you should find the Act. In most cases, whatever is provided for in the Act supercedes any provisions in local ordinances or your association's governing documents, but check for any grandfathering clauses.

If you can't find the answer in any of the documents I mentioned, write back and I'll be glad to pursue this issue more with you.

Sincerely,

Margey

Hi,
I just came back from the Board meeting at ********. This was a first annual meeting since your company took over management. Some questions are unclear between most of the people attending this meeting and there was really not an appropriate person to ask. I've been here for a while and the old management wasn't doing much on safety nor on how properties look outside. We are hoping that your company is going to be better since this is a home for more that 100 families.

Question: Why is our home owner's association charging $95.00 a month? There is grass that needs to be cut once a week, that is around $2000.00 and we have no pool or play ground. As I said earlier there are more than 100 units here (you should have exact number) and where does all this money go??? I got a break down of expenses at this meeting but office supplies, printing and mail $700.00 a month?!?! Please let me know if is possible to get the exact amount of how much money is spent during a month. Again, we have had a bad experience with previous owners and people would really like to know where this money goes. There was also a rumor that $95.00 will be increased by your company, is that true?? I would really appreciate response on this letter.

- Sincerely, Dina, Homeowner

I wish I had the answers for you, but I don't know who your management company is. However, I'll be glad to obtain the information you've requested if you'll provide me with the company's name and address.

Sincerely,

Margey

Our Homeowner's Association is a single family or planned unit development located in Houston, TX. I just happened to be reading our corporate by-laws and they state that the Association should be having an audit prepared by an outside CPA annually. For some reason, the Association has only had a review prepared every year. (For at least 20 years now if not longer) The By-Laws were dated 1978. How can I find out if maybe the state statute in Texas requires only a review??? I greatly appreciate your help. We have approximately 550 homeowners.

- Lori P.

You made it easy for me to answer your question now – I'm also from Texas! There is no state statute in Texas that requires property owners associations to have annual audits. However, if your Bylaws clearly state that the association should engage a CPA for an annual audit, then that's exactly what must be done. As fiduciary agents for your community association, your board must comply with your governing documents unless they've been superceded by local, state or federal law.

While a review costs much less than an audit, it is much less comprehensive. Your board and the members of your community association are better served by engaging a CPA to confirm annually that the financial statements prepared by your accountant fairly reflect the financial condition of your community.

Regards,

Margey

I am told that employee records for a Home Owners Association in Florida are private and that the secretary of the Corporation may not be privy to this information. I am certain that employee files are not being kept properly with regard to reprimands and feel that this issue needs to be corrected. However if I am unable to see the files I really do not feel that any allegations may be made. Any information will be helpful.

- Lee Ann

As Secretary of the Association, you do have a fiduciary responsibility to ensure that the books and records of your community association are being properly maintained. If a management company, onsite manager or payroll processing service is currently maintaining the records and you are concerned that the files are not being kept appropriately, why not write a note to the payroll processor, detailing how you think the material should be kept and requesting written assurance that the records are in compliance with state requirements?

If you are not satisfied with the response, I suggest you request approval from the board president to personally investigate the records, offering to report back to the board with any deficiencies you observe or with admission that your fears were groundless.

Remember, though, that what you see in the files, including rates of pay and background investigations, must be kept confidential and may not be shared with your colleagues on the board or other homeowners unless there is a specific need to know.

Sincerely,

Margey

I am curious as to your opinion on how to treat email documents between Board members and BOD and manager. Are these documents open for a homeowner to view upon request? (Unless they contain confidential information, of course.) I am a manager, and have been asked for these documents and I am not sure whether they are exempt in some way from being available, or if I should go ahead and share them. Do I need the permission of the persons involved? Any insight you can give me would be appreciated.

-Pat T.

Most state statutes and community association governing documents don't delineate between electronic and hard copy written communications. While I'm not an attorney, I would say that all records of the association, except those that are specifically excluded by statute, governing document or resolution approved by your association's legal counsel, are available for review by the members of the association.

Sincerely,

Margey

If a condominium takes on professional management does that put the staff that works their out of a job?

- Joann

Contracting with an offsite professional management company doesn't necessarily mean that the onsite staff no longer has jobs. It depends on the actual contract and the objectives of the board. Here are just a few possible scenarios:

1. The board hired the management company on a consulting basis to oversee the onsite staff;
   
   
2. The management company was hired to provide accounting services only;
   
   
3. The board instructed the management company to retain all onsite employees;
   
   
4. The board instructed the management company to determine each employee's value to the association in determining his or her continued employment;
   
   
5. The board hired the management company to assume all functions of the onsite staff.

As you can see, there are several possible reasons to hire a professional management company. I would think that the board will clarify its intentions to the owners and staff in the very near future

Sincerely,

Margey

Our documents, by-laws and rules, indicate restrictions with respect to contractors. What I want to verify is this - with everything in place, how can we ENFORCE these rules. Fines? And if fines not paid, property liens? Enforcement is the problem we have.

- Nona W.

I suggest you look to two resources to determine how to enforce provisions in your condominium's governing documents, and especially if fines are an option. First, look at your association's Bylaws and Declaration to see if there is a provision that specifically addresses enforcement of your documents, or which empowers the board to implement whatever steps are necessary to enforce the deed restrictions or property promulgated rules.

Also search your state's Condominium Act for statutory provisions that empower the board of directors to enforce the new rules. Be sure to check whether such provisions have retroactive clauses that may preclude applicability to condominium associations in existence prior to the effective date of the Act.

If, after checking both sources, you've determined that the board is empowered to create a fining system, be sure to thoughtfully craft a Deed Restriction Enforcement Resolution that is fair, reasonable and easily implemented, the process for which was described in my previous response to you.

Regards,

Margey

Our board would like to restrict vendors by indicating that owners use vendors that are licensed, insured and bonded. Can the board do that without legal arguments from owners? We (the board) feel that it is necessary since the building is a historic landmark and some vendors are doing work in units that is not to code. Also some unit owners are making changes, without approval from the board. We fear that their work/structural changes may not be up to code. Thank you.

- Nona W.

From the subject matter of your question, I'm assuming that you live in a condominium building. The type of community association impacts my advice, so please let me know if I'm off base.

Before your board can restrict access to your historic building, check your governing documents (Declaration, Bylaws, Articles of Incorporation, Rules and Regulations, Resolutions) to determine if there are any provisions that either prohibit or authorize the board to require vendors who work in your building to be properly licensed and insured. Next, check your state statutes (try using keywords "(your state) government" to find the official website, then enter "condominium" in the search field.

If you don't find a provision prohibiting your board from passing a rule limiting vendor access, then you're safe to proceed to the next step, which is to ascertain that you will able to enforce the restriction if you pass the rule. Do you have a concierge or onsite manager that controls access? If so, you're set for the next step in this rule development process. If not, will it be logistically and reasonably possible to check every vendor who enters?

Check your governing documents and state statutes again, this time to determine if there is a specific procedure describing the steps the association must take in order to adopt a rule. Also check your state statutes for any proscribed procedure. Absent language dictating the process, consider adopting the following method:

Now that we've addressed your first question, it's time to discuss the issue of owners (or lessees) making material/structural changes to the interior of the units without prior board approval. Let's go back to your governing documents and state statutes to see if there are any provisions mandating that owners must obtain prior written board approval before making any structural changes to their units, or material changes that will affect the quality of life of surrounding neighbors. I'm betting that in one or both of those sources you'll find language reflecting that policy. If there really is no wording to that effect, follow the rules development process I outlined above to create a rule protecting the common elements.

Whether your building is a historical landmark or not, it's critical that the board maintain the integrity of the structure. If an owner alters his or her unit and in the process weakens the structure or increases the transference of sound, the board must immediately act to require that the unit is restored to its original condition. If the owner refuses, it's time to call in the attorney to pursue prompt resolution of what could develop into a very serious problem.

Whew -- I bet you never expected such a long response! However, I'm still not done, because I must tell you that both of your issues could have critical legal ramifications, and I encourage you to consult your legal counsel to ensure that you are proceeding in accordance with both your governing documents and state statutes.

Good luck!

Regards,

Margey

If a homeowner rents/leases their property to another party, may we require that they submit a rental agreement to the management company? This way we can control who is listed on the central gate box, and we will know for sure how many people are residing in the house.

- Marietta H.

In order to answer your question, though, I'll need some more information. So, I get to turn the table and ask you some questions!:

1. Do you live in a condominium or planned unit development (townhome or subdivision)?
   
   
2. Are there state statutes, such as a Condominium Act, Planned Community Act, or Uniform Common Interest Ownership Act, that allow community associations like yours to govern renters or to create rules regarding the leasing of units/homes?
   
   
3. Is there a provision in your association's governing documents (Declaration, Articles of Incorporation, Bylaws) that allows the association to govern renters, or that allows the association to create rules regarding the leasing of units/homes?
   
   
4. Is there a provision in your state statutes or governing documents that allows you to enforce the required submission of leases to the management company?
   
   
5. Is there a provision in your management contract that requires the management company to govern renters?

When you have the answers to these questions, I'll be more able to help you address your own question about requiring renters to submit their leases to your manager.

There's no doubt that community associations run more smoothly when all the residents can be identified and relevant data obtained. Unfortunately, some communities have a more difficult time than others when attempting to gather that information because of restrictions or absent language in their governing documents or state statutes.

Sincerely,

Margey

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