Ask the Expert

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

I understand the roles of President, VP, Secretary and Treasurer on a Board.... what is the common role as a Director??? Thanks!

- Francine

Good question! The officers are actually appointed by the directors to serve specific purposes outlined in the Bylaws of your homeowners association. The directors are elected by the owners to implement the purpose of the association as indicated in the Articles of Incorporation and, perhaps, the Declaration. For a very specific listing of your directors' duties, obligations and qualifications, read your Association's bylaws and relevant state statutes (check our State Resources page).

Sincerely,

Margey

How do I go about finding out who is on our Architectural Control Committee. We're trying to put in a swimming pool, and would like to expedite the matter. Your suggestions will be most appreciated. Thanks.

- C. E.

If you accessed Association Times through your community's website, the easiest way to find out the names of the members serving on your association's Architectural Control Committee is to ask your manager either by email or telephone.

If you did not access Association Times through your community's website, then I suggest that you check the bulletin boards or mailbox areas in your community for contact information for your board of directors or even for the Architectural Control Committee members. If there is no information in those locations, ask your neighbors if they have contact information for your community's volunteer leadership. Still no luck? Ask a contractor who is effecting repairs or maintenance on a common element. Finally, you may live in a state that requires that a management certificate listing association contact information be filed in the local deed records entity.

Sincerely,

Margey

Thank you for your response. I did ask our Property Manager and all she would tell me is the Committee is made up of developers. She told me she would contact them. Is this right? Don't I have a right to know who is on the ACC for ******HOA in Texas?

- C. E.

Yes, you certainly do have the right to know who serves on the Architectural Control Committee of your Texas homeowners association. Instead of hitting a brick wall with your management company, why not contact the developer directly to report the difficulty you've been having trying to contact him or her, and requesting expedited permission or a hearing to address your desire to install a swimming pool.

The governing documents for your community, in particular the Declaration of Covenants, Conditions and Restrictions, should contain provisions detailing the process by which homeowner requests for approval of architectural modifications and additions are approved. I suggest you follow that process to the letter, sending your request directly to the developer board member with a copy to your management company, each sent by certified mail, return receipt requested. Your documents may also require the ACC or board to rule on t he request within 30 days of receipt or approval is presumed to be granted. Follow the procedure in your documents scrupulously to ensure that neither the management company nor developer can delay approval because your application was not complete.

Sincerely,

Margey

I recently became the president of a homeowner association. I was told that pursuant to new civil code laws, those on the board can no longer receive any compensation. Is this true? Thank you!

- T.

While I do not know in which state you reside, I can tell you that every set of governing documents that I've seen for community associations contained a provision prohibiting compensating a volunteer for serving on the board. However, those same documents usually do authorize reimbursing board members for out-of-pocket expenses incurred during the course of their service, and paying them for specific services rendered to the association as a contractor or consultant, but not for service as a board member.

To determine if your state has laws addressing the compensation of community association board members, check its online legislative website. If you don't know how to access the website, enter "(your state) legislation" (without the quotation marks and parentheses) in the keyword field of any search engine, then scroll down to find a link to "statutes" or "code".

In point of fact, there is an increasing number of community association operational experts calling for compensation for board members in order to reinforce and foster the businesslike nature of their role which is similar to the obligations and responsibilities of board members in every other type of corporation. So far, the experts have been unable to achieve much momentum for their efforts, but it's possible that their campaign will gain more interest in the coming years.

Sincerely,

Margey

How should a homeowners asssociation deal with conflict of interest issues? ie. Should a board member's company be allowed to bid on a construction contract for an association project?

- Patricia

There are two conditions that must be present to create a conflict of interest: 1) the Board member must receive some form of financial compensation or gain; and 2) the relationship must be undisclosed or unknown to the other members of the Board. Elimination of either condition should remove the conflict of interest.

In the specific scenario you detailed, the board member should disclose in writing to his fellow board members the relationship between him and the construction company, and the board should acknowledge in the minutes that they recognize the relationship. The board member should submit his proposal prior to any other proposals being solicited, and at least two other proposals should be requested on the exact same specifications. The other bidders should submit their proposal to any board member other than the one who owns the construction company, and those other bids should not be disclosed to him.

Once all bids are received, the board member should recuse himself from all discussions and voting, meaning that he should not be present during those actions.

If, after evaluating the credentials and proposals of all three bidders, the board members determine that their colleague's company is the most qualified to do the work, they should detail in the minutes the reason why they selected the company, clearly delineating the benefits and disadvantages of each company. It's important to include this information in the minutes so that any homeowner who questions the decision can see the thorough and deliberative process the board followed in order to ensure that the conflict of interest was addressed and resolved.

Sincerely,

Margey

The vice-president of our association is also a realtor. We are trying to sell our unit but not using her to help us sell our place, we had a falling out and are not really on speaking terms. A couple is interested in our place and had their realtor call the VP to ask about any upcoming assessments and other information on the building. She said that there is going to be an assessment in July and it will be $7000. My wife and I heard this and asked the president of our association if this was true, she said that they are only in the preliminary process of getting bids and there is no way to tell how much it is going to be. Can there be a conflict of interest of having a realtor on the board? If we lost the sale because of false information can we have the VP kicked off the board because of conflict of interest?

- K.

Once the board has decided on the need for a special assessment, they are obligated to advise the owners of the pending financial obligation, even if the exact amount is not yet known. Depending on the language in the enabling state statute, homeowners are required to disclose that information to pending buyers (to see what your state's documents mandate, go to our State Resource page.

If the board member Realtor is providing false information to your potential buyer because of a personal conflict between you and her, she may be exposing herself to discipline by the local Board of Realtors as well as by your association's board of directors. Before reaching the point of accusing her of any alleged misconduct, however, be sure to get the whole story, either directly from the Realtor or from another board member.

Sincerely,

Margey

Yearly elections is coming up can all board be replaced (president, vice president, treasure, etc)?

- Sally Ann

The election of board members is usually described in great detail in the Bylaws of community associations. Included in the description is what to do in the event all board members resign, the term of service for board members, and how homeowners can remove all serving board members and replace them with neighbors who are more sympathetic to the majority of voting owners.

Remember that there is a difference between board members and officers. The Bylaws typically establish that the owners elect the board members. Then the board members elect or appoint the officers from among themselves or outside the board, whatever the Bylaws dictate. The officers serve at the direction of the board and usually can be removed at any time by a simple majority vote of the board.

Sincerely,

Margey

If a person is running for the board and he/she has not paid their dues or has some type of legal action pending against the HOA then they should not be allow on the board. This would allow them a greater voice, vote, or authority in the corporation than any other member.

SECTION 1. Membership of the corporation shall consist of and be limited to the owners of lots of land known as ****** Division II, Phase I and II, consisting of Lots 1 through 101 described in ARTICLE II in the Articles of Incorporation. The interest of each member shall be equal to that of any other member, and no member can acquire any interest which shall entitle him to any greater voice, vote, or authority in the corporation than any other member.

- W. D.

I agree with you that homeowners who are in violation of the governing documents of their association should not serve on the board. However, personal opinions aside, one must look to the governing documents and state statutes to determine if there is a legal reason to prohibit such service.

Do your documents state that homeowners who are delinquent in their assessments or otherwise in violation of your association's governing documents must have their voting privileges revoked? If so, then a board member who legally owes money to the association or is violating a deed restriction may not be allowed to participate in board votes and therefore is ineffective as a board member and of little help to his fellow board members. I would encourage you to obtain an opinion from a competent attorney knowledgeable in community association law confirming my evaluation of this issue.

Sincerely,

Margey

What, if any, restrictions is the Board obligated to follow in staying unbiased in an Association election of officers?

- L. B.

My understanding is that there is no Texas law that prohibits board members from actively campaigning on behalf of or nominating existing candidates.  Most likely, your governing documents also do not address this issue.  There is a fine line between acting in the best interests of the community as a whole and promoting personal interests.  Even though your board has announced support for its own slate of contenders, there is no guarantee of election.  Ultimately, it is the vote of your fellow association members that elects the members to your Board.  If you strongly oppose the actions of the board, the best course of action is to gather as many proxies as you and your friends can gather, so that your group of candidates is elected.

I hope this answer is helpful to you.

Sincerely,

Margey

Our board has ok'ed an addition to a home that extends past the deed restrictions. They say they missed it. What can be done?

- David

If the homeowner has not yet begun to construct the addition, then the board should immediately telephone him or her to advise of the erroneous decision and follow up with a certified letter reiterating the discussion. If the addition is under construction or already completed, you should consult with a competent attorney familiar with community association law for state-specific advice on how the board can resolve this situation.

Sincerely,

Margey

I have recently been elected to the board of directors of our Town Home Association. I was elected as treasurer by the board as well.

By being a board member and an officer of the association am I opening myself up to any financial or legal exposure, personally, by the Board? Thank you.

- Terry

Congratulations on volunteering to serve as both a director and an officer of your homeowners association! As long as you act in the best interests of your association, make decisions based on information you believe is valid and correct, and consistently and fairly enforce the governing documents of your association, you should not worry about litigation against you. If you comply with the criteria described above, the Directors and Officers Liability Insurance which you should ensure is in place (and paid for with association funds) will pay for all defense costs should a homeowner or contractor sue you for a perceived injustice.

Sincerely,

Margey

Our rural Michigan homeowners association is a normal association, and is a nonprofit corporation. The association constitution states that all board meetings are to be closed to non-board members unless the board invites an individual to attend. The President feels that this may be a violation of the Michigan Open Meetings Act and feels all board meetings should be open to all association members. I am on the board and have no problems with having other association members attend, but am not comfortable violating the constitution either. Are Michigan non-profit homeowner's associations subject to the Michigan Open Meetings Act? I am aware of the opinion of Attorney General Frank Kelley regarding Summer Resort Associations, but we are not a Summer Resort association. Thanks!

- Ben M.

To ensure that you receive a response specific to Michigan statutes, I asked for help from Mr. Craig Koss, AMS, PCAM, Vice President of Kramer-Triad Management Group, with offices in Troy, Farmington and Detroit (craigk@kramertriad.com).

According to Mr. Koss, Michigan's Open Meeting Act applies only to state-funded organizations, not to community associations. That being said, both the Michigan legislature and media are scrutinizing the actions of community associations with regard to overstepping homeowners' rights, so Mr. Koss urges your board to conduct executive sessions only for the following four reasons (which track provisions in Michigan's Open Meeting Act):

1. Litigation
   
   
2. Contract negotiations
   
   
3. Personnel matters
   
   
4. Issues that are deemed by both parties to be of a sensitive nature or requiring privacy (such as a peeping Tom or an owner with financial difficulties)

Sincerely,

Margey

We have mayoral elections this April and the mayor would like to speak at our condo association meeting. I believe that the other candidate should also be allowed to speak if the mayor does. Is there a statute or law that pertains to this issue? How about the hanging of political posters in the common areas?

- R.

It is not appropriate for a condominium association to allow candidates to use common facilities or areas as a forum for fund raising or vote solicitation. The association should remain completely impartial and not attempt to influence its members with regard to individual candidates. Conducting a mayoral forum at which all candidates are invited and at which no preferences are indicated by the board may be appropriate, depending on your association's governing documents and state statutes.

However, if an issue is being presented by local, state of federal government that will detrimentally impact the operations of the community, it may be appropriate for the board to inform its residents of the potential affect. To determine if your community is authorized to become involved in the political process, review the purpose of the association described in the Articles of Incorporation and perhaps the Declaration and Bylaws as well. If any doubt exists, consult with a competent attorney knowledgeable about your state states regarding condominium associations as well as your community's governing documents. To review the state statutes yourself, go to our State Resources page.

Sincerely,

Margey

I have recently bought and live in a newly constructed condo. We are small. There are 4 residential units and 2 commercial units, all in one building. The 2 builders are also owners. One of these builders owns a residential unit, that is being lived in by the office manager of the company who is managing our condo. This builder also is the owner of one of the commercial units. The other builder, is an attorney who also owns the other commercial unit. He has his office here.

The by-laws call for 3 members of the board, one selected from the residential owners. I, as a residential unit owner, have the support of the other 2 residential owners to be on the board of directors.

Problems: the builder is uncooperative in having a meeting. I can never speak to him, the office manager who lives in his unit, is a gatekeeper. The residential owners want a meeting, to know what is going on and we have by-laws that need to be addressed. How can I get this guy to a meeting?

Doesn't he, owning our management company and being in the association, cause a conflict of interest?

And the office manager, who lives here is a problem. Dog feces all over her front yard. We already have complained to no avail. I now consider myself on the board of directors, what information am I supposed to have? Thanks for any help you can provide.

- P.

To resolve the concerns you described, I suggest that you first look at the governing documents for your community, specifically the Declaration (which may be called the Master Deed or the CC&Rs) and the Bylaws. There should be a provision in one or both of those documents that detail the process of transitioning control of the association to the homeowners, as well as when annual meetings must be held and who may serve on the board.

When you locate those provisions, send copies of them to the builders along with a letter requesting a meeting of the owners, using the language in your documents to ensure that you are complying with that provision. Hopefully, your builders were simply unaware of the meeting and board constitution requirements and will comply with your requests as soon as they realize that the actions are mandated in your documents.

Since there are three individual owners in addition to the two builders who own three units between them, it sounds like you may be at an impasse because neither group has a majority. If the builders refuse to acquiesce to your demands that they comply with your association's governing documents, you may need the services of your state's ombudsman, if one exists, or a competent attorney familiar you're your state's laws regarding community associations.

Sincerely,

Margey

Recently, we had an annual Unit Owner meeting but we did not have the necessary quorum as set by Condo By-Laws. When the meeting ended there was still no quarum. According to the minutes of the meeting,which acknownledge that there was not quorum, the Board left the meeting open until there would be a quorum. According to the By Laws all proxies are to be submitted at the time of the annual meeting. In addition, the annual meeting notice given by the Board stated that all proxies are to be submitted the day before the annual meeting. There are no reference that proxies could be submitted after the annual meeting date. It is my opinion that the Board acted improperly. Am I correct or not? Please give reason either way. If I am correct, how can the Unit Owners correct the Boards action. Thanks.

- Fred

Your board is obligated to comply with the provisions of your association's Bylaws with regard to conducting the annual meeting. Absent specific language regarding adjourning or recessing and reconvening when an adequate number of proxies are collected, your directors should comply with the general rules of parliamentary procedure or the directions of a competent attorney knowledgeable in community association law and Robert's Rules of Order. Further, unless the proxies already collected contained wording stating that they were valid for the annual meeting and any reconvened annual meeting, they probably are not valid for the rescheduled meeting or for potentially achieving quorum with the additional proxies collected after the meeting. I think your board members should consult with legal counsel to ensure that they have conducted a valid annual meeting.

Sincerely,

Margey

Does the Treasurer on the Board of Directors have the authority to say the following: "I vote for the nominations to be closed" and other types of comments like that? I always thought only the President of the Board can make these types of statements?

- Anne

All board members may make motions according to parliamentary procedure, but check your governing documents for any specific limitations. For more information on Robert's Rules of Order, click on "Links".

Sincerely,

Margey

How do you effectively control a small group of harrassers at meetings. They complain about everything the Board does, and try to control meetings to their own personal agendas. Thanks.

- Jim

One of the primary purposes of parliamentary procedure is to enable the board to focus on the addressing the important issues of the organization. Remember that board meetings are intended to address the business issues of the organization and not for general member input. The annual meeting is the venue for member input, albeit still controlled.

Attached (see below) is some material on conducting effective meetings, including a "Board Meeting Rules of Conduct" that your board could consider adopting that would reduce or even eliminate interruptions and distractions during your business meeting. Of course, you should ask your legal counsel to review the policy to ensure that it complies with your association's governing documents and state statutes.

To address the dissident group's issues, why not invite them to a private meeting with the board at which they can express their concerns and the board can address each issue? Instead of their continuing to distract the board, it makes more sense for the board to address the issues directly and provide specific responses. The group may not be happy with those answers, but at least the board has provided the owners a forum to express their dissatisfaction and an opportunity to help craft solutions.

Sincerely,

Margey

• Achieving Quorum
• Board Members Code of Conduct
• Checklist for Running a Meeting Effectively
• Board Meeting Rules of Conduct

These documents are in PDF format. Viewing them requires Adobe Acrobat Reader, which is a free downloadable software available by clicking here:

My condominium Board has refused over the last three years to submit a budget before the beginning of the new year when they establish the dues assessment. As a result a co-owner has no way of substantiating the correctness of the assessment which has been in error in previous years. The bylaws clearly state that the budget must be established and published to all co-owners prior to the new year when the dues assessment is determined. They too reduce the auditors report and issue it as the financial report sans any compilers name, date, notes, or income statement. They and the management company have been notified on repeated occasions of this violation of the bylaws to no avail and will not produce a budget on request. The management company conspires with them to thwart the co-owners requests for any information. How can I change this abuse of office without bringing legal action since that will be only very time consuming and of no value when they can skirt the issue by then producing the budget. The only advantage for legal action would be if they could be fined or penalized monetarily so their habit of ignoring the bylaws and the co-owners may be broken. I live in Michigan.

- Alan

According to Mr. Craig Koss, AMS®, PCAM®, Vice President of Kramer-Triad Management Group in Ann Arbor, Farmingham and Troy, there is much that you as an owner can do to correct this situation. The best solution would be to get elected to the Board and initiate changes from within the association leadership. Legal action is also a possibility but it would be at your personal expense.

With regard to the actions of the management company, remember that only your board of directors sets policy and makes decisions regarding the operations of your community. The management company's role is limited to advising the board and implementing the board's decisions.

Sincerely,

Margey

I live in a 65 unit condo. About five years ago the decorating committee redecorated the condo lobby. I and others think it looks awful. Tonight at the meeting we spoke about doing the two other lobbys in our building over. I requested to be on the committee my request was denied because the chairman of the decorating committee flat out said she didn't like me. I am younger than most on the committee and their ideas are quite old fashioned. Can I be denied because the person doesn't like me? Then I spoke to the President of the Association and she made up a story that they only wanted three people on the committee after the meeting was over. Can they set a limit do I have a right to see that ruling about setting limits? If I am denied a place on the committee can I request a rule that each and every sample of the new decorating be approved by the condo owners? I felt like garbage tonight I was only trying to protect my property and I was told I am too out spoken and tell it like it is? What are my rights? Do I have any or do I have to accept this woman's answer? The Association Board seems to be a clique and for years the board hasn't changed and most unit owners are fed up and don't attend meetings. Shouldn't there be a law that a President can hold a certain amount of terms?

- Debi

Community association board members must comply with their governing documents as well as with state statutes relevant to HOA operations. Parliamentary procedure may also play a role in the administration of your association and the conduct of meetings. Typically, boards may appoint whomever they want to serve on committees, and should structure the committee so that it's purpose and duties are clear to the committee members.

If you do not agree with the attitude and actions of your board, you have a clear alternative -- either volunteer to serve on the board yourself, or persuade like-minded neighbors who agree with your position to run. Either way, it is important that you discuss these issues with your neighbors so that either they appear at the annual meeting at which board elections are held, or they submit proxies to you so that you can control the votes at the meeting.

With regard to the chairman's comment to you, I think it was inappropriate, discourteous and disrespectful. Since the board is charged with appointing members of a committee, I suggest you speak with the president of your association about this issue, suggesting that alternative opinions bring more perspective to the committee and, therefore, a broader range of options to the board whose directors make the final decision.

Sincerely,

Margey

What recourse does a co-owner have to compel a Board to submit a budget before levying a dues assessment for the new year. Our bylaws state that this must be done prior to the new year and presented to each co-owner. My Board consistently levies the dues and then months later [after the new assessment years] submits a budget. There must be somebody or entity that can mandate the Boards conduct without a co-owner having to endure the cost and long wait of litigation to correct the problem. The minute a lawsuit would be filed they can issue a budget and the time and expense to do so is just a waste unless there can be a substantial fine for their deliberate and intentional procrastination. I have cited the bylaw language to both the Board and the management company only to be ignored. I must wait months to verify the correctness of the dues assessment and have on more than one occasion had to recalculate the amount and pay less because it did not agree with the budget. Many co-owners [especially the elderly] do not know how to do this and are charged more than allowable. The management company will not respond to my request for a copy of the budget and last year I was thrown out of their offices for arriving on a pre-announced basis to procure a copy that I was previously told was available but then a lame excuse was offered for not giving me a copy. I need help without having to pay an attorney to enforce what the bylaws clearly state just because the Board and Management Company care to do all things as they choose fit and not as prescribed by law. They do the same with the annual financial statement because it is not published at times and on other occasions is redacted from the auditors report without any date, author, pertinent notes, income statement, and other normal relevant material. The bylaws state that the Board may decide what shall be contained in the report but when revising an auditors report certain material must be included as described. What good is a financial report without showing income while at the same time showing expenditures and what good is anything sans an author and date.

- A.

With so many violations of your association's governing documents and perhaps of state statute as well, it seems to me that it's time to install a new board more responsive to the owners and more committed to complying precisely to the provisions of your documents. Controlling board elections is not an impossible goal. In fact, by either talking with or mailing to every owner a brief summary of your concerns and a request for support, you may garner enough votes either in person or by proxy to be elected to the board along with neighbors with similar opinions regarding the unacceptable behavior and actions of the current board.

I do not know in which state you reside and therefore cannot advise you of any governmental resource from which you can request assistance. To find out if your state or local municipality does indeed have some kind of homeowners association ombudsmen, go to our State Resources page.

Sincerely,

Margey

Can I at least withhold my dues assessment that has not been substantiated by submission of a budget as required in the bylaws?

- A.

You may withhold your dues assessment only if specifically authorized to do so by your association's governing documents or state statutes. Otherwise, most documents and statutes prohibit an owner from withholding maintenance fees and assessments under any circumstances.

Sincerely,

Margey

We recently moved to a new development in southern California. Our HOA just recently announced the Board of Directors at a meeting that none of us homeowners knew about. I found out by accident because we submitted a letter of some problems we were having with the builder and a homeowner and was e-mailed about the meeting. The meeting was short because they said everything on the agenda was legal and had to be discussed in an executive session. One problem with that is one of the board of directors is involved with our problem and was allowed to stay in the meeting with the attorney. Is that proper procedure the executive session meeting? What recourse do we have?

- Jacquie

California protects owners in homeowners associations with a very detailed, very long "Davis-Stirling Act" which provides specific obligations of the board of directors and developer to the owners as well as comprehensive penalties for violating any of the provisions. For information regarding the Davis-Stirling Act and recourse against its violators, go to our State Resources page.

Sincerely,

Margey

I live in Georgia in a developer run association. Originally, when the neighborhood was 50% full they were supposed to turn it over to the residents. However, when it gets near that level they add on new phases and each phase with less and less appealing houses. When we first moved here they told us that no two houses could have the same blue prints and phase 3 only has 4 types of houses all 50 of them. I won't even go into how the amenities lot looks. Construction traffic parked on the sides of the road is horrible everywhere.

When I asked one builder, (on the association) to not block off the main intersection so tightly. He said basically go away (to say rudely would be understatement). When I said I was going to ask the association for some resolution. He was quick to point out that they controlled the association.

I suppose I have two questions from here. 1) Do I have to pay dues to these baboons? Or are we, the homeowners, exempt from dues until they hand over the project? 2) What can I do to get control of the association for the homeowners? Thanks.

- Jim

When you purchased your home, did you receive an "Information Statement" or "Disclosure Statement" or, whatever it was called, a document that described the planned development of the community and when it must transition from developer- to homeowner-control? If you did, and if the developer is violating that document, then you may have legal recourse. However, if the developer is complying with the governing documents with regard to management and the operations of the community, then you will probably have to wait until control of the association transitions to the owners before crafting a more responsive and owner-friendly board.

If you determine that the developer is violating the Information Statement, Disclosure Statement or governing documents, perhaps writing to Georgia's Secretary of State Cathy Cox, Corporations Division, at corporations@sos.state.ga.us, or Attorney General Thurbert E. Baker at 40 Capitol Square, SW Atlanta, Georgia 30334, telephone 404.656.3300, might provide you with support for your efforts to protect your community's property values.

Sincerely,

Margey

How do I have to proceed, or what steps do I have to get started in getting rid of our HOA. The majority of homeowners are fed up with the way our board is acting, we just took over from the developer to represent ourselves.  But the board members are doing the same thing the other board has done.  To me it seems that the board thinks they work for the management company, I say the management company works for us we pay the dues.  The people on the board seem to me like they can say to their friends and family (look at me I am a board member). They really do not know what they are doing, or care of doing anything for us.  I would like to know if the state of Illinois acknowledges that if the majority of homeowners signs a petition to remove the HOA at *****, can that happen for us. Well, I better wait for your answer, before I proceed. Thank you for your time.

- From a Combat Veteran

Before you take the drastic measure of attempting to remove your board members, I would encourage you to discuss your concerns with them. They are your neighbors and, I would hope, are acting in the best interests of your association. However, remember that they are volunteers with personal and professional commitments, and can use all the help they can get from their neighbors. They're not being paid for their service to the association, so why not offer to share their burden by serving on a committee or even on the board?

Community associations are democratic organizations, and their leaders are elected by the majority vote of their members. If you want to affect change, then campaign amongst your fellow homeowners. If they share your opinion, the majority of the members can elect different persons to the Board or make whatever other changes are needed at a special or annual meeting of the members.

Sincerely,

Margey

How can I organize to get rid of an HOA?

- Rich

Before you take the drastic measure of attempting to remove your board members, I would encourage you to discuss your concerns with them. They are your neighbors and, I would hope, are acting in the best interests of your association. However, remember that they are volunteers with personal and professional commitments, and can use all the help they can get from their neighbors. They're not being paid for their service to the association, so why not offer to share their burden by serving on a committee or even on the board?

Community associations are democratic organizations, and their leaders are elected by the majority vote of their members. If you want to effect change, then campaign amongst your fellow homeowners. If they share your opinion, the majority of the members can elect different persons to the Board or make whatever other changes are needed at a special or annual meeting of the members.

If your question relates to actually dissolving your homeowners association as an entity, there should be a provision in your Declaration/CC&Rs/Master Deed (the name varies in different parts of the country) that details very precisely the procedure that must be followed to eliminate the association, usually through a vote by both the owners and the mortgage companies.

Sincerely,

Margey

We have 5 new board members about to finish their second term. At the end of 2006 all board members will be replaced. We have 3 year term in our Bylaws. This turnover is killing us. The first year everyone is trying to figure out what is going. At the end of 2005 can two board members step down and everyone vote new members in for 3 year terms. Our bylaws state that if a Boardmember is removed by a community vote than election can take place but if someone steps down the Board members must appoint someone to take their place for the remainder of their term. What can we do? BTW we have 5 board member.

- Wes S.

Typically, the Bylaws for community associations establish staggered terms specifically to prevent the situation in which you find your community. I would first suggest that you take a look at the Bylaws or Declaration for wording addressing the initial term of the board once control of the association transfers from the Developer to the owners. Most provisions detail three different terms for the initial five member board -- two members for three years, two members for two years, and one member for one year. Subsequently elected board members serve three-year terms, so there are one or two board positions expiring every year, not the entire board.

If you Bylaws or Declaration did indeed establish initial staggered terms as I described above, then among yourselves you can determine who's term ends when so you're back to the annual election process in which no more than two board positions are ever up for a vote. If your association's documents do not address the staggered terms, then your board members MAY be able to structure them through the resolution process. On the other hand, staggering the terms may require an amendment to the Bylaws or Declaration, requiring a vote of the owners.

I strongly urge you to consult with a competent attorney knowledgeable in corporate law to ensure that the process you select is valid.

Sincerely,

Margey

If a homeowner association Treasurer directs the Landscape Maintenance contractor to install plant material in front of (or near) the treasurer's condo and pays the bill for the newly installed plant material with association funds ;and the Board of Directors has never approved a motion to install the plant material- is this unethical conduct? What if any action should the Board consider against the treasurer?

- John

I want to premise my response on the understanding that the Treasurer in no way has authority to expend association funds on any item either not previously approved by the board or which falls outside his realm of responsibility as an officer and a board member. If that premise is correct, In the least the board should censure the Treasurer and demand reimbursement of all association funds spent on the landscaping he had installed around/near his unit. The board could also consider removing him from his office of Treasurer so that he no longer had no access to association funds. If this is the first time the Treasurer has abused his position, the board should make it clear to him that such behavior will not be tolerated and any further abuse of office will be referred to both the membership of the association and to the appropriate legal authorities. If the Treasurer has a history of similar actions, the board might consider implementing now the actions I suggested.

Sincerely,

Margey

I am the new President of a Florida Condo association that has 96 units and 5 board members. The Secretary/ Treasurer states the President cannot make motions nor second motions. What Florida Statue governs this rule?

Also, there are 18 Privately owned 11' X 20' garages that are listed in the Docs as limited common areas. No one other than the unit owners have access to these garages to include the addition parking in front of each garage. No maintenence fees are being paid to the association by these owners. The electricity usage for the garages is being paid out of the general operating fund. The garages are on the same meter as the common building. Owners have dehumidifiers, power tools refrigerators, and electric garage door openers inside these units. I have been told by the S/T (who owns a garage) at a board meeting that it would take a vote of 75% of the units owners to assess any fees to these garages including the electric. (The building is 8 years old)

Is there anything that can be done to correct the problem?

- Tom A.

Parliamentary procedure allows a corporation president to vote and make motions. It is a common misconception that the president may only preside over the meeting without participating in the votes.

An association may only impose fees on owners as authorized in the governing documents or state statute. If your documents do not provide for billing each owner for electricity consumed, check out Florida's Condominium Act on our State Resources page.

Sincerely,

Margey

Our Association took up about 87 Proxy votes and gave them to our representative. The Association said they were not "Legal" and threw them out. Now they are sending out a revision of our bylaws and Covenants and are giving the people a choice of PROXY vote. What should we do with this type of discrimination on the part of our Board of Directors? Thank you for any advice you can give.

- Carol

I'm afraid I don't have quite enough information to provide a comprehensive answer to you. What reason did the association give you for invalidating the proxies? What do you mean by a "choice of PROXY vote"? What do your governing documents say about voting by proxy?

Sincerely,

Margey

We live in a Florida condo association and I am the president of the Board. The 1st annual meeting to elect board members is in April. We presently have 2 board members and myself which total 3 board members. I have received all 6 unit owners request to be included on the ballot for the election of board members.

I am sure there will be a tie in the votes. The three board members who are presently on the board will vote for themselves and the other three unit owners will vote for themselves. What is the legal way to break the tie in the election? Thank you for your assistance.

- D. W.

The Bylaws for most condominium associations allow the members to vote for all open board positions. If all three board position terms have expired, then the members would cast three noncumulative votes, meaning they cannot vote for an individual more than one time. The three members with the most votes are elected.

If your association's governing documents or Florida statutes do not prohibit cumulative voting, then it would appear that the six of you need to sit down to discuss your possible differences and agree on the direction of your community.

For more information regarding Robert's Rules of Order, go to our Links & Resources page.

Sincerely,

Margey

Top | Board of Directors | Communications | Finances | General
Insurance | Legal | Maintenance | Management | Rules

How do we go about changing the amount of the association dues to fit our newly taken over by the community HOA budjet? What form do we need to fill out to do our 2004 taxes?

- Cindy

Your governing documents, specifically the Declaration/CC&Rs/Master Deed (the name varies by different regions of the country), should contain specific language pertaining to the manner in which assessments may be calculated and imposed. In most such documents, there will be a reference to how frequently the board may increase assessments, the notice requirement to the owners of an assessment increase, the specific formula for calculating assessments (either by dividing the budgeted total annual assessment by the number of homes, or multiplying the total annual assessment by specified percentage ownerships).

Homeowner associations may file tax forms 1120 or 1120H, whichever is most beneficial each year to the association. Accountants should calculate the tax liability on each form to determine which results in the least amount of taxes due.

Sincerely,

Margey

We currently deposit the association dues at a local bank. The bank requested that we have a tax id (which we obtained). Now the bank wants us to write a document that explains that our secretary (who does the deposits and withdrawals) represents our association. Do we have to provide this document as a notarized letter of power of attorney?

- Jose

Typically, all a bank needs is a copy of the minutes appointing the person to the office of secretary, and a copy of the Bylaws which detail the duties of the Secretary. I suggest you call your contact at the bank to determine if the above is sufficient in your situation.

Sincerely,

Margey

Since hurricane Ivan, a board hired contractor has continually delayed getting drywall work done within our units...I hired my owner contractor and had the work done in December... the board has advised me that "they decided" that owners contracting their own work will not be reimbursed by the condominium insurance although nothing in our by-laws state any such policy. I contacted the State Ombudsman in FL and was told they are required to pay us what they received from the insurance company regardless of what we paid. In essence, funds cannot be collected and used for other purposes by the board. I have notifed them as the State requested. Other owners need to know this.

Also, is the treasurer the sole person who can sign checks? We have a management company that collects dues, pays insurance etc, but our board has now removed them from all the hurricane issues, has secured bids on their own, which is okay, but the president (not the treasurer) can now sign checks up to $25,000 without a second signature. We always had dual signatures when the management company issued checks. Is the treasurer supposed to be the primary authorized signature on payment of bills?

Before I ask the question to the board, I would like to know the answer. Our by-laws only state the treasurer shall have custody of all property, including funds, securites and evidence of indebtedness... nothing about issuance of checks and who can sign. I don't know if the above, "including funds" covers the signing of checks. I don't have a problem with the president signing checks as the "second signature" but do have a problem with him being authorized up to $25,000 with no second signature, especially right now with several million dollars of insurance monies being taken away from the Management company's control.

Is a fidelity bond required of all of board members. Also, since it appears they have now taken over the "management of repairs" and the funds from hurricane Ivan repairs, are they required to have a property manager's license?

- C.

According to Mr. Hal Hildebrandt, President and CEO of Community Management Concepts, Inc. in Clearwater, Florida, (hhilebrandt@cmcfla.com),

"Nothing in Florida law requires the treasurer to be the only person to sign checks. The Board of Directors normally sets policy on check signing if it is not addressed in the Association's documents. In my opinion, dual signatures is a good business practice. Fidelity bonding of Board members is a statutory requirement for condo associations in Florida. Board members are not required to be licensed as a Community Association Manager if they are performing those management-type services for their own association."

Sincerely,

Margey

I live in California. When I want to submit something to the Architectural Committee I must submit a $25.00 fee. Is this legal? Thank you.

- Carmella

Since California has such unique laws, I asked Ms. Cherie McColley, CCAM, Vice President Management Services of N.N. Jaeschke, Inc., a company located in San Diego (cheriem@nnj.com) for help. Here's Cherie's response:

"Depending on the documents and the Rules and Regulations for the association, the $25 application fee is legal. Actually, a lot of the fees are much higher than that. If there is a consultant involved, the fees will be even higher."

Sincerely,

Margey

I paid my yearly homeowner association fees 10 days late, now I received a letter to pay $25 late fee and a treat for collection by a lawyer and a lawsuit and lien on my property! I believe this is unreasonable! Do I pay dues to sue myself???? What can I do and are the board entitled to do so? Thank you very much.

- Monique

The governing documents for your community association, and more particularly the Declaration or the Bylaws, should contain a provision detailing the ramifications of paying an assessment past the due date. If the documents are not very specific, then the board of directors may pass an assessment collection resolution to address the omissions.

I would like to think that the letter you received was advising you of the consequences if you remained delinquent in your annual assessment. Since you did pay the amount, it's possible that the payment and the letter crossed in the mail. However, $25.00 is not an unfair late charge and so long as the board is authorized to charge it there is little that you can do to have it waived. I recommend paying the amount and making sure next year to submit the payment before the due date.

Sincerely,

Margey

I am a new office manager for a condo association in Virginia. Fees are due by COB on the lst of the month. There is a $25 late fee for any received after the lst. I recently sent a 2nd notice to an owner regarding non-payment & she responded with a phone call stating that it was illegal not to have a 5 day grace period. Could you please tell where I can find the answer in writing? If she's right... I need to know this so I can inform the president of the association.

- Sheila

According to Mr. Robert Diamond, attorney in the law firm of Reed Smith in Falls Church, Virginia (rdiamond@reedsmith.com), "there is no statutory 5-day grace period in Virginia. Some association documents provide that the assessments are due on the first but that the late fee is not imposed until the fifth." Other documents provide for no grace period at all. To determine your association's due date and late date, you should read the provision in your Declaration that addresses this issue.

Sincerely,

Margey

Recently conveyed message from HOA management company with regard to disbursement of monthly dues from owners.... states that if an account is past due and has late fees owing, administrative fees owing, attorney's fees owing, NSF fees owing..... THAT if that homeowner submits payment for monthly dues with or without extra payment for past due monies, - those monies are applied to ADMIN fees and attorney fees BEFORE any money is applied to monthly dues and or past dues....there is an opinion that this is not a correct procedure, and would allow for additional late fees to accumulate so long as there is $1.00 owing on the account....is there any law or ban on this sort of action?

- Sharon

Unless state statute or your association's governing documents specifically prohibit the board from developing a payment application procedure, the policy detailed by the management company is probably enforceable. However, I would hope that the policy contains reasonable limitations on the minimum past due balance that can incur late charges and expenses.

Sincerely,

Margey

I have recently purchased a condo in Sarasota, Florida. All 1 bedroom units are the same size and have the same maintenance fee. All 3 bedroom units are the same size and have the same maintenance fee. However, there are two sizes of two bedroom units, but both the large two bedroom and the small two bedroom have the same maintenance fee. Additionally, the common expenses are not shared on a weighted basis for the one and three bedroom units either.

Even though this seems unfair, the bylaws do not address allocation of common charges. Is there a Florida law that covers this issue?

- Maureen

A condominium association's Declaration (also known as a Master Deed) should contain a provision detailing the formula by which assessments are calculated. The only way to change the method of calculation is by amending the Declaration through the process detailed in that document. Absent any language in the Declaration addressing the formula for calculating assessments, relevant state statutes should apply. To review the State of Florida's laws regarding condominium associations, go to our State Resources page.

Sincerely,

Margey

We have a few renters in our complex that are causing extra expense to the association. Could we adjust our rules to include an extra amount of dues each month for those homeowners that have renters?

- Lori

While I encourage you to consult with your association's attorney for advice specific to your governing documents, I would recommend that instead of imposing requirements on all absentee owners because of the actions of a few renters, penalize only those owners whose renters are actually affecting the cost of operations. For example, if a renter damages the common elements, bill the repair cost to the owner if your association authorizes such a charge to an owner's maintenance assessment account.

Sincerely,

Margey

Our Association has a rule that renters need to fill out an application and owners submit a fee of $50.00 to the association with that application.

We, as a new Board, have found that one of our owners has not completed a new application, nor paid the $50 fee for his long-term renters (9 years now).

Do we have the right to go to him now and say he owes us $50.00 for each year the renters have been here? Is there a general rule / guideline for such a situation?

- Mary

My continuing mantra for board members of community associations is to "be reasonable". If the renter has lived in the community for nine years without the owner paying the $50 annual fee, I recommend that you restart the billing as of 2005 and ask the owner to complete the application. I would also suggest that whatever operational issue created the 9-year oversight be corrected.

Sincerely,

Margey

A member of our Board in Our Pennsylvania HOA is suggesting we Charge a Monthly renters fee. Our bylaws do not address this issue. He is thinking of earmarking such a fee to our reserve fund. Is this -- the monthly renters fee common or uncommon practice?? Thanks for your response.

- Robert B.

Your association's governing documents or state statutes may or may not authorize your board to impose an additional "renters fee" on absentee owners. If you find no provision in your documents addressing this issue, go to our State Resources page to determine if there's language in the Pennsylvania statutes.

Since imposing such a fee will no doubt create controversy, I suggest that your association hold several town meetings to discuss the proposed fee with all interested owners. Their input may persuade the board to forego or revise the proposed fee.

Sincerely,

Margey

In 2002 we bought our home in ******, TX in the ******** subdivision. The POA (Property Owners Association) initiation fee was $2,000 with all ordinances established by the developer. Since then, all POA members (property owners) pay an annual dues of $360.00. We now have over 500 (estimate) properties sold and the Developer has full (sole) control until 2010 or until all properties are sold, whichever comes first. Each year, I have written and verbally asked this developer for an end of year accounting, Financial Statement, when paying the annual bill. QUESTION: Does the State of Texas have any State Statutes requiring this type of Organization to be held accountable to it's members, financially? If so, how can I get a copy? AND, would this be Criminal and/or Civil, should litigation be needed? Feel free to call, write or contact me directly. Thanks.

- John

Here's the link to Texas' online statutes. Once you access the site, scroll down to and click on "Property Code", then click on Chapters 201 - 209 which are the statutes relating to property owners associations. However, there's another applicable Texas statute you might be interested in -- the Texas Nonprofit Corporation Act at the same link above, but click on Business Organization Code, then on Chapter 22, Nonprofit Corporations. Chapter 22 contains a provision relating to disclosing financial information:

"§ § 22.352. FINANCIAL RECORDS AND ANNUAL REPORTS.

(a) A corporation shall maintain current and accurate financial records with complete entries as to each financial transaction of the corporation, including income and expenditures, in accordance with generally accepted accounting principles.

(b) Based on the records maintained under Subsection (a), the board of directors of the corporation shall annually prepare or approve a financial report for the corporation for the preceding year. The report must conform to accounting standards as adopted by the American Institute of Certified Public Accountants and must include:

1. a statement of support, revenue, and expenses;
2. a statement of changes in fund balances;
3. a statement of functional expenses; and
4. a balance sheet for each fund.

Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006."

Note that the requirement to distribute financial reports to the members is effective January 2006. However, there may be a provision in your association's Declaration or Bylaws that specifically mandate an annual financial report by the Board of Directors to the membership of the association. If such a provision exists, I suggest that you send a certified letter to the developer, attaching a copy of the relevant page(s) containing that disclosure requirement. If the developer still refuses to provide financial information, you could try filing suit in small claims court where you can present your documentation and ask the judge to instruct the developer to comply with the governing documents with regard to providing financial information to the members.

Sincerely,

Margey

How many months HOA assessments will HUD pay when a property is foreclosed?

- Susan M.

Unless you are fortunate to live in a state in which the legislature passed a "super lien" bill, no lender owes the association maintenance fees when it forecloses on a home. The priority lien extinguishes inferior liens like the homeowners association. However, the association may still pursue the owner personally for the debt.

If you do live in a "super lien" state, the foreclosing lender may have to pay to the association up to six months in delinquent assessments.

Sincerely,

Margey

As a first time condominium buyer, what questions should I ask regarding the reserve funds of each condominium that I may consider buying?

- K.

Association Times has several articles related to reserves that you might find helpful. Just click on Articles By Subject and then scroll down to "Finances". In addition, here are some questions you might want to ask as a first-time condominium buyer with regard to the association's replacement reserve account and budget:

1. Has a formal reserve study been conducted? If so, ask for a copy of the report. This will generally explain what association property is covered as well as contain the schedule for completing long-term maintenance projects. The existence of the reserve study will also indicate that the association's board of directors recognizes the need to set aside funds in a logical manner for the future replacement of the capital components for which the association has maintenance responsibility.
   
   
2. If a reserve study was conducted, does the annual budget include a line item allocating the full amount determined necessary by the study? If so, there is less of a chance that a special assessment or bank loan will be needed when each capital component reaches the end of its useful life.
   
   
3. Ensure that monies are actually being set aside monthly or annually to fully fund the budgeted amount. It's possible that shortfalls in the operating budget precluded the anticipated transfers to the reserve account. The Income Statement/Statement of Revenues and Expenses will contain data on financial transactions, including reserve fund transfers from the operating account.
   
   
4. Review the association's balance sheet to determine that the reserve fund balance reflects the amount needed by the reserve study.
   
   
5. If no reserve study was conducted, check the balance sheet to determine the existence and adequacy of a separate reserve account. Here's a simple formula for determining the adequacy of a reserve account:
   
   
   1. Identify all the capital components of a community for which the association is responsible to maintain and replace (such as roofs, pavements, sidewalks, elevators, etc.);
      
      
   2. Determine the replacement cost of each component;
      
      
   3. Determine the remaining life;
      
      
   4. For each item, divide the replacement cost by the remaining life.
      
      
   5. The total "d" above for all identified components will indicate how much should be in the reserve account currently. You can then extrapolate the numbers to determine how much should be set aside annually to continue fully funding the reserve account.
      
      
6. Examine the Declaration/Master Deed/CC&Rs (the name varies in different parts of the country) to locate the provision which discusses the authority of the board to impose special assessments in the event an association may need to raise funds for a large maintenance project. Some boards may decide to minimize their reserve allocation, thus keeping their assessments lower, with the knowledge that should they need funds for a major replacement program, the members could vote on - and, hopefully, approve -- a special assessment. You may want to inquire if the association has ever passed a special assessment and for what purpose. Was it for a specific project or was it necessary to fund the reserves?
   
   
7. Many potential lenders insist on examining the balance sheet of a community association for proof of an adequate reserve fund before agreeing to approve a mortgage loan application. If the fund balance is insufficient, it may be more difficult to find mortgage financing which can, in turn, detrimentally impact property values.

Good for you for realizing that investigating the reserve fund is an important aspect of your search for a home in a community association!

Sincerely,

Patti

- Patti Jo Lewis, AMS®, CMCA®, PCAM®

I am the Secretary/Treasurer for a small P.O.A. in Arizona, consisting of approximately 27 homes on acre plus lots. From the time our area was initially developed, we have always collected annual dues based on each owner's property size.

This year we need to vote on a special assessment, however one of our larger lot owners wants this "special" assessment to be divided equally between all residents. Our CC&Rs do not address this, but I would rather stay consistent by calculating each owner's special assessment and annual assessment the same. Do you know of any general rules concerning collecting annual dues and special assessments based on different, or similar, calculations? Thanks, and this is a great web site.

- Bob

According to Mr. Mark Lewis (mlewis@associaonline.com), Chairman of Lewis Management Group, located in Tucson, Arizona, "There are no laws (to my knowledge), on point. In fact, his question raises the question, does his documents even permit special assessments. If not, that is a bigger problem. My suggestion is that he approach the matter in one of two ways.

1. Assuming the base assessments are calculated on lot size for a reason (like the roadways needed to serve each property), and the special project is roadways, the formula should be based on lot size. However, if the special project is a new entry feature which serves all owners equally, the equal rule would be more logical.
   
   
2. The method I would recommend. Call a special meeting to amend the CC&R's (and approve the SA) to enable the Special Assessment, as well as the methodology for calculating the SA. If it does not pass, the SA itself would not pass (in theory). In this way, whatever methodology the members desire, they can have, eliminating any future challenge to the SA. Vote on CC&R change at meeting, with emergency clause (goes into effect immediately, then pass the special assessment)."

Sincerely,

Margey

I am a member of the Board of my Condominium. At the Board Meeting last night, the property manager said that, with the permission of the President of the Board, he had withdrawn $10,000. from a Special Assessment Fund to pay some regular monthly bills. I am of the opinion that this is illegal, but I can't find anything in the Maryland Condominium Act that addresses Special Assessments. Also, what is the difference between a "Reserve" Fund and a "Contingency" Fund. I am so happy that I found your website.

- Sandy

I'm glad our website is useful to you!

Absent any language in the Maryland Condominium Act regarding expenditures from a community association's special assessment fund, look for a relevant provision either in the Maryland not-for-profit statute or in your association's governing documents.

Your president is, in effect, the CEO of your association's incorporated entity, and is empowered to act on behalf of the membership on certain matters that are typically defined in your association's Bylaws. One of the powers usually delineated in the Bylaws is to approve the withdrawal of funds from the reserve account. If withdrawals from the reserve account are not specifically detailed in any of the documents I mentioned, your board might consider drafting a policy resolution that specifies who is authorized to withdraw funds, if any withdrawal check must be signed by two board members, and under what circumstances the funds may be withdrawn.

With regard to the manager actually withdrawing the funds, as an agent of the board the manager is obligated to act on board directives and implement board decisions. In this particular situation, the manager does not appear to have acted independently but, rather, complied with the president's instructions.

Finally, a "Reserve Fund" is money set aside for the scheduled replacement of the capital components of a community such as the roof, wooden siding, pool plaster and clubhouse a/c equipment. A "contingency fund" is money set aside for unbudgeted and unexpected operating expenditures such as additional snow removal or extraordinary plumbing or roof repairs.

Sincerely,

Margey

In a Not-For-Profit Condo Association with no income other than Assessments, is there tax due on the operating fund balance at year end? We have approximately 10% ($5000) of our yearly budget ($50,000) left over. We have included this amount in our next years budget as unallocated expences. This is our 3rd year as an association, and this is the first year we have been in the black.

- Tom

Congratulations on the sound fiscal condition of your community! Your condominium association must file tax returns and may owe taxes -- it depends on which form your auditor determines is most beneficial. There are two IRS tax return forms that homeowner associations must file -- 1120 or 1120H. The 1120 form is for corporations, so the association would pay taxes at the rate beginning at 16% on net income (in general, revenue less expenses). Using the 1120H form, your association would pay taxes at the rate of 30% on income other than maintenance fees.

I encourage you to consult with an accountant knowledgeable in community association tax law to ensure that your condominium community is following the recommended accounting and tax codes.

Sincerely,

Margey

I am an independent contractor. I set appointments for sales people. What % of my gross weekly checks should I put away for taxes for Federal and State? Thanks.

- Kathleen

Association Times serves as a resource for homeowners and board members of community associations, and I don't have the tax expertise you need to respond to your question. I suggest you discuss this issue with a tax consultant or perhaps your local IRS office.

Sincerely,

Margey

Is it legal for the community of *******, PA to collect taxes from owners in a townhouse association and not provide services, such as snow removal, sewer repair,and other services that are provided to home owners?

- Julius P.

The issue you raise is a common concern nationally among owners of homes in community associations. Some courts have order municipalities to pay homeowner associations that portion of the property tax that is actually "double taxation" because the homeowner also pays the community association for the service. Other courts have required the municipality to provide all services equally to all constituents, no matter where they live. Other courts have sided with the municipality, saying that the developer agreed to, and committed the association to, assume those services when the municipality granted the building permit.

Is it fair? No. Is it legal? In many parts of the country, yes. However, many homeowner associations are becoming more politically active and demanding the end to double taxation. The next few years will be interesting as the municipalities struggle with budget deficits and community associations join forces to flex their political muscle.

Sincerely,

Margey

Is it ethical to have a management company sign income tax reports and charge them for it, when you have a contract with an auditor who includes this in their amount?

- Karen

While I sense that there is more to your question than what was expressed, I'll limit my response strictly to your query.

Typically, an officer of the community association executes an income tax return. An auditor is hired to prepare it but would not sign it because 1) it could be considered a conflict of interest and 2) tax returns are supposed be signed by an officer of the corporation. A manager usually would not sign the return for the same reasons.

However, in extenuating circumstances such as the association officers not living in the area and the submission deadline for filing the return looming, the manager may be the only one available to sign the return to prevent late filing penalties, especially if the auditor submitted it only days before the deadline. By signing the return, the manager is affirming that the information provided on the report is correct, exposing both the manager and the management company to liability if errors are later discovered. Under those circumstances, charging to sign the return is not unethical or unreasonable.

Sincerely,

Margey

Top | Board of Directors | Communications | Finances | General
Insurance | Legal | Maintenance | Management | Rules

My homeowners association recently investigated a matter for me and subsequently hinted that as a matter of legality our street was never properly annexed into the subdivision HOA. However, they won't give me a copy of the information they have discovered as I think they are scrambling to find a way to deal with this. Where do I need to go to find out this information?

- Roy

To determine if your community association's streets have been annexed to the association, I would first call your local elected city representative to ask where to find the information. He or she may have the information readily available for you, or will give you directions on how to find it.

Sincerely,

Margey

I am in the process of buying land in a gated community in Florida. I was recently told by my realtor that there is a home association and that the fees are $400.00 annually. While I knew that there would be an association in the future I didn't think that the owner of the land could establish the association and decide on the annual fees without consulting the current owners. At the present time there are no homes in the property. Also about 70% of the lots according to the realtor are sold. What kinds of questions should I be asking to the realtor who is handling the property for the owner? Any assistance will be appreciated. Thank you in advance for