Ask the Expert

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

We are a new association and a problem that we are encountering is that one member of our board of directors is insisting that the officers are not board members and not allowed to do anything without the express permission of who they deem to the board members to be (themselves and the remaining two members) None of us have served on a board except for this person and are confused as to how to handle this situation. When we were elected and the developer turned the association over to us our guidance was to elect a President, Treasurer, and Secretary and three board members to assist the officers, now there's been a mutiny on our board because this one member insists that the three officers are not board members but are only there to serve them in their wishes. The only provision that the bylaws give are: "at least three board members..." What is correct? Are Officers Board members?

- Tamara

Typically, directors select officers from among themselves. Officers usually do serve at the whim of the board and can be removed at any time. For example, a board member may elected president by his fellow directors. If he does not fulfill the board's expectations, he can be removed as president but would remain as a director. Your association's governing documents, in particular the Bylaws, should contain specific provisions addressing the election of officers as well as the authority and responsibilities of both the officers and the directors.

It seems to me that there is more in question here than just the role of the officers. I urge you to refer your volunteer leaders to the many articles available at www.associationtimes.com, including Ask the Expert archives, that address the duties of the board and how to successfully administer the operations of a community association. Another excellent source of information on community association administration is the Community Associations Institute.

Sincerely,

Margey

Thanks for providing a wonderful source on HOA management. I have the following questions:

1. Our Board positions consist of President, VP, Sec, Treas and Director. The Director has resigned, can one of the remaining members serve as a director also? Covenant only addresses transfer from developer and 5 Board members. I can't seem to find any parlimentary reference for this matter.
   
   
2. Architectural Committee shall consist of 5 members, appointed by Board. Committee should have no less than 4 members from HOA, and no less than 2 shall be directors of the HOA. To start, we only had one director (who has now resigned), the President of HOA serves as committee chair, and remaining individuals have been appointed/volunteered from the various lot/homeowner group. Is this makeup a correct interpretation of the bylaws?

Thanks for help.

- Kathy

Don't get confused between officers and directors -- each role has very specific responsibilities and accountability. Typically, homeowners elect board members and board members appoint officers who serve at the discretion of the board. Your association's Bylaws should contain provisions detailing the process involved in replacing a board member who resigned. Usually, the remaining board members appoint a replacement to either fill the unexpired term or until the next annual meeting, at which the owners elect the incumbent or another person to fill the unexpired term of the original director.

If the ACC composition you related is stated in the Bylaws or Declaration of your community, then it does not sound like the current mix complies with the criteria. You need two board members on the Committee, and the President should not serve as the Chair unless mandated in your documents. It makes more sense to have another volunteer serve as the chair so the owner has the opportunity to appeal to the board to contest an ACC decision.

Sincerely,

Margey

Thank you for the reply and confirming my interpretations. A follow-up comment and another few questions:

Is a covenant and a by-law the same? Our HO documents read covenant and there are supposedly a few versions; we are using a copy of the one on file with the county.

With regards to homeowners electing board members and in turn the board electing officers, we have officers elected by the homeowner's; so it would appear that we need to make a few changes.

Recognizing that this is a volunteer board, and new officers elected each year (almost) what format should we consider to ensure that we have continuity and knowledgeable participants?

- Kathy

“Covenants” and “Bylaws” are words usually not used interchangeably. “Covenants” typically refer to a community association’s Declaration/Deed Restrictions/CC&Rs (the name varies in different parts of the country). This document creates the planned unit development – single family homes and townhomes that aren’t condominiums – and creates a contract between the association and the homeowner regarding the rights, obligations and responsibilities of the parties to each other. The Bylaws usually establish the governance of the association as an incorporated or unincorporated entity, detailing the number of board members, duties of the board and officers, voting rights of the membership, when the annual meeting of members must be held, and other administrative issues.

If there’s only one recorded set of Covenants but other unrecorded drafts, the recorded set is the valid one.

To encourage continuity of expertise in your board, consider staggering terms. If you have five board members (or officers, in your situation), two would be elected for a one-year term, two for a two-year term, and one for a three-year term. When the terms expire, new board members/officers are elected for three-year terms, establishing staggered years for new leadership and eliminating the complete turnover of board members/officers every year.

Sincerely,

Margey

During the meeting, the board president cautioned four members against going home and discussing the contents of the board meetings (because they had admitted to talking to many people and neighbors about board organizational matter and issues) before we sent the information around to ALL the homeowners. They were also cautioned against advocating for retaining or dissolving the POA, telling members how they will vote, exaggerating negative images of POA's, confidentiality issues, telling horror stories about what could happen if they voted to retain the POA etc, and to remain impartial on all issues. 

Two of the board members shouted out that they would discuss anything they liked with homeowners, and quoted "free speech", "free country".

Is there a specific article that addresses the fact that Free speech does not include breech of confidentiality, or giving certain members a heads up before the issues are published to ALL the members, and discussing everything that is discussed with people outside the community?  Thank you for your time and trouble.

- Kathy

While board members should not disclose issues that were discussed in Executive Session, most legislatures have restricted the ability of the board to meet in Executive Session to discussions of 1) personnel issues; 2) current litigation; 3) contract negotiation; and 4) issues that all parties agree are of a sensitive nature, such as discussing with a homeowner allegations that he is a peeping Tom.

A similar caution relates to board meeting minutes. Until the minutes are approved and thus become the permanent record of the board's actions and decisions, they should not be distributed to the membership. Preliminary minutes could very well contain incorrect information that the board notices and revises before approving them at the next meeting.

If the issues your board members are discussing with members of your association do not meet the criteria (or other criteria detailed in your association's governing documents or state statutes then the issue of nondisclosure is more one of the role and obligations of your association's board of directors. Perhaps your board could consider each director executing a “Rules of Conduct” agreement which details how the board is expected to behave. An example of such a resolution is attached (pdf document) for your review, although I would encourage your board to consult with a competent attorney knowledgeable in community association law to ensure that the sample complies with your state's statutes as well as with your association's governing documents.

Association Times and the Community Associations Institute contains many articles and (CAI) publications addressing the role and responsibilities of board members. You could direct your board to both Association Times' and CAI's websites and encourage them to actively research the obligations of board members serving as volunteers in community associations.

Sincerely,

Margey

We would like to know if:

1. A President of a Board directors can sell Real Estate in our Community Association for Seniors.
2. A Chairman of the Financial Committee, can sell us a Reverse Mortgage.

We live in a (Non-Profit) Community Association Retirement for Seniors, in California , and we are not sure if this would be a conflict of interest and if it is the right deal for us.  Please Help.

- Anonymous

There are several areas to research in regards to your question #1

1. Review your governing documents to determine if there are any restrictions for Board members conducting normal livelihood with other members in the association.  Generally speaking, there usually is not a restriction.
   
   
2. Not knowing your real estate law, the state board of real estate may or may not have established guidelines for ethics in this regard.
   
   
3. Review your state's statutes through Association Times' State Resources page to determine if there are any specific conflict of interest provisions for homeowner associations.
   
   
4. There are no known federal restrictions for board members to conduct this type of business.

As for question #2

1. Again, review your governing documents to determine if Board or Committee members are restricted in activities of this sort.
   
   
2. The board should not allow only one individual -- the Chairman of the Finance Committee – to offer financial services to the association. Y ou might consider having a “vendor” day in which the Association invites numerous businesses and/or individuals who can provide services to the members (financial consultants, insurance, etc).

There are several articles addressing conflict of interest issues in the Ask the Expert Archives. I urge you to review all of them for a better understanding of what constitutes a conflict of interest and how to resolve them.

Sincerely,

Patti

- Patti Jo Lewis, AMS®, CMCA®, PCAM®

Can a husband and wife both be on the board?  Also, is there a restriction on whether only one can hold an officer position?

- CC

The board eligibility requirements are outlined in your bylaws or Declaration/Covenants/CC&R's(the name varies in different areas of the country). Most documents do not specifically restrict a husband and wife from serving on the board, but the documents will generally outline that to serve on a board, the candidate must be the Owner of record for a property within the association.  Owner of record is usually defined as the person(s) named on the deed for the property.  Some associations have amended their documents to prohibit multiple individuals from the same property ownership serving on the board.  As for the officer positions, most documents mandate that the President must be either from the Board of Directors or, in the least, a member of the association.  Again, it is important to read the association documents to determine the eligibility requirements.

Sincerely,

Margey

I live in a 55+ HOA in Arizona. Recently a homeowner was elected to the board who is not 55 yrs old, and no one lives with him and his wife that is 55+. Our documents do not have language regarding age restrictions for board members. However, our documents do state you must be a resident in good standing. They also state at least one permanent person 55+ must occupy the unit. Our BOD has chosen not to enforce our age restriction. My question: If a homeowner is in violation of the Documents (age requirement) can they be in good standing???

- Concerned 2

First and foremost, let me say that your board does not have the option of whether or not to enforce the age restriction or any other provision in your governing documents. The only way to revise or eliminate a requirement contained in the association's governing documents is through the amendment process detailed in that document.

With regard to your young(er) president, I understand from the Department of Housing and Urban Development that a certain percentage of homes must be occupied by an adult 55 years of age or older.

Your association's governing documents may be even more restrictive. If your association's Bylaws do not require board members to be aged 55 or older, and if your membership constitutes the appropriate percentage, then there is no reason why the new president couldn't serve out his term.

Sincerely,

Margey

If the Board fails to appoint a new board member after a board resigns when can the membership elect?

- K

Your association's Bylaws should contain a provision detailing the procedure by which unexpired board terms may be filled. Typically, if the remaining board members will not appoint a replacement, the membership may elect someone at the next annual meeting. However, I urge you to read your association's governing documents to ensure compliance with what may be a process unique to your community.

Sincerely,

Margey

Hello. I just read your article, “So Now You Are On The Board of Directors?” (online articles 2002).  My question to you is this:  From reading the first section of things that a new board member needs to have, the nonexistent board in my area does not have any of them for the last 30 years.  Does this still make it an active HOA or is the HOA and the covenants considered null and void?  If you have any questions please call me at 303-210-0642.  Thank you.

- Trena

There are several issues to consider in regards to the legal existence of your association.

If your association was originally “incorporated” as a corporation in your state, there would be articles of incorporation filed with the Secretary of State (or a like entity).  If the articles were never filed, then the corporation never existed. Many states require that a corporation file an annual report with required information.  If this annual report is not filed within a specified time, there are usually laws in place that put the corporation (association) on administrative dissolution.  This means that unless the required documents are filed, the state will dissolve the legal corporation.  In that case, there is no legal protection as a corporation.

If your association was not incorporated, it was created when the Declaration/Covenants/CC&Rs were recorded. This document details how long the covenants will be effective.  Many CC&R's are effective for twenty years from the date of recording and automatically renew for additional term, unless the members vote to dissolve them.

If your CC&R's are dissolved, there is no reason for the corporation to exist.  The corporation exists as a legal entity to protect the members.  If your CC&R's are still in effect, but the articles of incorporation are not, the members of your community must still comply with the covenants, conditions, and restrictions in that document.

If the issue you present is the nonexistence of the board of directors, your association may still be in effect based on the above scenarios. It sounds like your neighbors should get together to elect new leaders for your community, based on the election procedure detailed in your association's Bylaws or covenants.

Sincerely,

Margey

I was curious. I am not a member of a property association but I live next door to the community and I would like to attend their board of director meetings. The board of directors tells me that because I am not a member, I cannot attend their meetings... unless they ask me to attend.. Does this sound right? They say that only directors can attend their meetings. Thank you.

- Elizabeth

The association is probably a nonprofit corporation and operates in compliance with your state's nonprofit corporation act. The homeowners are the only members of the association, and the board of directors is authorized to limit access to the meetings to the members and their designated representatives.

Sincerely,

Margey

What are the potential ramifications of a board member talking with neighbors outside of a meeting about executive session issues? For example, a homeowner having financial problems and being behind on HOA dues. This is discussed in executive session and is considered sensitive information. There is a board member telling others in the community about these private matters. Is there some type of breech here?

- Eric

Meetings are conducted in Executive Session to ensure that confidentiality of the subject matter is maintained.  Board members who are in these meetings must comply with the confidentiality requirements unless instructed by the other Board members to follow up on an item in this meeting with someone outside the meeting) to avoid potential personal liability. 

Since disclosing to nonparticipants the discussions that occurred in executive meetings can result in charges of libel, slander or defamation, I encourage you to review your state statutes to determine the specific legal requirements in your state as well as possible ramifications for breaching the obligation not to disclose confidential information. Your association's governing documents may also contain provisions addressing executive sessions.

For more information on executive sessions and board members' obligations, please review the archived articles and Ask the Expert answers, as well as at the Community Associations Institute's website.

Sincerely,

Margey

As the President of the Board of our POA, our by-laws state that I "shall in general supervise and control all of the business and affairs of the corporation." Four of the board members are trying to convince the property owners to vote to dissolve the POA, and thus want the association to only appear in a "bad light". Consequently they are trying to prevent any information of a positive nature from reaching the property owners.

To accomplish this they are now insisting that I cannot take any action as President that the board has not specifically voted to approve. They insist:

1. I cannot send any letter to the property owners that contains information or answers to questions they have not approved, such as information about county road repairs, new speed limits, any information that local police have provided for the membership, and requests for volunteers for community projects such as mowing or neighborhood watch positions.
   
   
2. I cannot consult any government official regarding legal issues involving the POA, its covenants, or subdivision zoning without permission.
   
   
3. I cannot consult with officers of other local POA's to ask questions.
   
   
4. I cannot answer phone or e-mail questions from our membership about covenants, fees, or upcoming voting without getting the Board's approval of the answers.
   
   
5. I cannot solicit free legal advice or answers to questions regarding POA issues from local attorneys.
   
   
6. I cannot send out informational letters to realtors regarding availability and cost of our disclosure packets.

I have explained to them that these things are part of my carrying out the necessary business of the POA, and that our by-laws do not prohibit me from doing these and similar things. The attorney/developer who wrote our by-laws agrees with me. But these four board members refuse to accept these things as within my authority because they are not specifically spelled out in the by-laws.

Any suggestions on how to convince them? Thanks.

- Charles

The Bylaws of most community associations usually contain a litany of duties and responsibilities of the president, including acting as the CEO just as do presidents of most other nonprofit corporation. The Bylaws also typically state that officers serve at the discretion of the board and can be removed at any time.

Since the board of directors has the power to remove and appoint officers of the association, it also has the authority to impose additional controls over the activities and decision-making power of each officer. The board is ultimately responsible for the actions of every employee, manager and officer, and your directors may feel that it's necessary to micromanage your activities to ensure that your actions meet with their approval.

It appears to me that the board wants to maintain tight control over your actions to ensure that you do not dissuade owners from voting in favor of dissolving the POA. If you feel strongly about the need to continue the association, perhaps you would consider resigning as an officer so you could present your opinions as an unfettered homeowner.

Sincerely,

Margey

We have just recently formed a HOA. Several of our board members refuse to authorize spending on a management company before our annual meeting. The concern being that they are not empowered to make some such decisions. I take the counter position that that is what they were elected to do. Is the board authorized to enter into a contract with a management company prior to a budget being approved.

- Rob

A community association's board of directors is governed by the association's Bylaws and Declaration/CC&Rs/Covenants (the name varies in different regions of the country). If the board is not authorized to expend funds other than that which is specified in the documents, and if a management company is not included in the purposes detailed for the common funds, then the board cannot contract with a management company without approval of the membership.

On the other hand, if the governing documents require the board to ensure that the association is professionally managed or to do whatever is reasonably necessary to ensure the optimal operations of the community, then one might interpret that language to permit the board to hire a management company.

With regard to the budget, remember that it is an estimate of the association's income and expenses for a defined period of time. Most documents do not require membership approval of the budget; usually they mandate a simple majority vote of the board. If your documents allow the board to approval the budget, and if it further permits the budget to be revised as conditions change during the year, then your board probably can contract with a management company before the next budget cycle so long as there are adequate funds to pay all the expenses of the association.

If there continues to be debate among board members as to their authority to hire a management company between budget cycles, I recommend that you consult with a competent attorney knowledgeable in community association law for legal opinion on this issue.

Sincerely,

Margey

I live in an association that is comprised of 9 units and the members don't want to get involved and don't understand what an association is. When I bought, the association consisted of 3 Asian families and the rest white. It has now turned into 1 Guatamalan, 1  Mexican/Asian, 2 white and the rest Asian. They don't know what an association is and don't care. Only they have to have one. The new board only wants to let the families lead by letting them make decisions and meeting. They have no plan. I have been president many times and I wanted a break. And I don't want to do this the rest of my life. The reserves are bad and they don't see the problem. They won't make a plan to try and fix it. What are my alternatives? Report to the Attorny General they are not in compliance with the state laws? Get a lawyer and sue because they don't have a plan to fix the reserves? This association is 8 yrs old and only has $43k in reserves. The dues are too low... $157 a month. And they don't see a problem. There are only 9 units. What to do?

- Robert

Unless your association's governing documents or state statutes mandate that reserves are fully funded, you have no grounds to sue your board. While fully funded reserves ensure that there will be no or at the most a small amount of special assessment when the component must be replaced, it's still a decision of the board and the membership as to whether current or future owners will bear the burden of the replacement cost.

As in all democracies, the majority rules -- or, at least in community associations, whatever percentage or number is required to elect board members. If you feel very strongly about the poor leadership of your community and cannot garner enough votes to elect board members more responsive to your particular opinions, you might want to consider moving to another community association that better reflects your operational philosophy.

Sincerely,

Margey

I would like to remove the members of my HOA board due to mismanagement. We have 18 homes 5 owners are on the board, 3 owners have not paid dues in over a year, we need 13 votes to remove the board members. If I take the board to court can a judge remove the members of the board due to their failure to make these 3 home owners pay their dues? No liens, or collections have been done on these 3 owners I have looked at the records.

- Tony

Your suing the board may result in a judge ordering the current directors to resign, but only after significant expense and angst. Rather than fighting the board, why not volunteer to help them by serving on a Compliance Committee? You would be working as a good neighbor to help the board enforce the governing documents, including assessment collections, without creating the acrimony among neighbors that would be generated by a lawsuit.

Sincerely,

Margey

I have already offered to help the board but they will not use collection due to the percentage they want to keep. They said that they will not cause someone to lose there home. They would rather everyone else pay for the bills and when that no longer works turn it over to a property manager so they are not directly responsible for some one losing there home.

- Tony

I understand your board’s reluctance to pursue collection efforts against their neighbors. However, the governing documents for your association obligate the board to uphold those documents and, as fiduciary agents of your association, they cannot selectively enforce certain provisions. If the board members will not ensure that each homeowner pays his or her fair share of the common expenses, they are breaching their fiduciary duty and may be subject to personal liability.

You might try calling the association’s Directors and Officers liability insurance agent to discuss your concerns. The agent certainly does not want a lawsuit filed against the policy and may advise the board about the implications of breaching their fiduciary relationship with the association. If the agent prefers not to get involved, you could consider retaining an attorney to send a letter to the board explaining the concept and consequences of being a fiduciary agent.

Sincerely,

Margey

We are a new board and are trying to find out what the specific duties of each officer are. Thanks

- Clara

Congratulations on your election to the board AND for realizing that there's a lot to learn about your roles and responsibilities.

My first suggestion is to thoroughly read your association's governing documents, every single page in every single document. The Bylaws describe the majority of the functions of the board and officers, but the Declaration and Articles of Incorporation may contain additional duties.

The next step is to review your state statutes for any other restrictions and obligations of a community association board of directors.

Finally, both Association Times (look at the articles as well as the Ask the Expert archives) and the Community Associations Institute website contain invaluable material and information for board members regarding how to successfully administer the operations of a community association.

Sincerely,

Margey

I have a question about voting. As I wrote before, some members of our board are confused as to their fiduciary duty and we are trying to educate them. Our covenants and bylaws state items that specifically require a vote either from the homeowners or from the board.

Certain board members are claiming that the president does not have the authority to send out informational letters to our homeowners without their approval and that our board must "vote" on everything, including sending out informational letters to the homeowners, format of the letters, every word must be approved by them. Of course the president knows his authority and never attempts to overstep it and is doing a wonderful job.

We know that things such as making a decision that will affect the homeowners financially, safety, health, etc. of course needs a vote. But the certain board members (whose goal is to dissolve the POA) seem to not know the roles of the board members who also serve as officers.

Is there someone or someplace that I can go to that would give examples of issues that are votable, other than ones in our covenants and by laws? Thank you for your time and trouble.

- Kathy

Association Times, which contains relevant articles regarding association operations as well as Ask the Expert archived responses, is an excellent resource for board members and homeowners. The Community Associations Institute is a national educational and research organization created specifically to foster responsible and responsive communities. Between these two resources, you and your board members should find all the information you need in order to properly administer the operations of your association.

Sincerely,

Margey

If a petition is signed in the community with verbiage effectively stating that the signatures are for changing a certain bylaw of the Association, can this petition be used as affirmative votes towards that changing?

- Felicia

Typically, the purpose of a petition like the one you described is to impose on the board the obligation to call a special meeting at which a formal vote would be taken regarding amending a provision(s) in the association's governing documents.

Your association's Bylaws and Declaration/Covenants/CC&Rs (the name changes by region of the country) should contain provisions detailing the process by which owners may amend each respective document. If the documents are silent with regard to the amendment process, check your state statutes for any applicable language.

Sincerely,

Margey

Hi. I have always found the information you provide very helpful. May our condominium association in Arizona allow members to vote on association matters and cast votes for potential board members via the internet?

- Lisa

According to Mr. Tom Miller, CCAM, Community Association Manager for Lewis Management Resources in Tucson, Arizona does not allow Internet voting. In fact, your state legislators just passed a bill that prohibits proxy voting as well. Effective September 1, only written ballots are permitted.

To review the Arizona state statutes affecting community associations, go back to Association Times at our State Resources page and click on "Arizona".

Regards,

Margey

We are going to have a very hotly contested election in October. We've tried to get the President to resign voluntarily and we thought a lot about getting a petition, but it was too late by the time we were unified. We can prove he's lied and cheated, stealing isn't that far off. The only way we'll prove that is with an audit. Anyway, my question is, he has posted a notice that proxies will not be accepted on election day. All proxies have to be put in the board's mailbox several days before the election. With his track record, he'll throw our votes away. This has to be illegal. Please tell me what we can do. Our strategy revolved around collecting proxies and securing them. Thanks in advance for your help.

- A.

Your board of directors, not just the president, must comply with your association's governing documents as well as with state statutes pertaining to the operations of both community associations and nonprofit corporations (if your association is incorporated). Typically, an association's Bylaws contain provisions detailing the election process including the use of proxies.

The president reports to the board of directors, and the directors are ultimately responsible for ensuring the proper and appropriate operations of your association. I encourage you to express your concerns to the board members, reminding them of their personal liability if they allow the president to conduct the meeting in contradiction to the process mandated in the Bylaws or state statutes.

You might also consider hiring an attorney or parliamentarian to witness and validate your proxies before you submit them to the president. Then, if the president rejects or "loses" them, you have legal grounds to contest his actions.

Sincerely,

Margey

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

Our Management company just presented the HOA board with a new contract that specifies only 2 board members may contact the Management company of the 5 members that serve on the board. I do not think this is an effective way to run a HOA by excluding 3 board members from even talking to the company that handles the legal and financial business of the HOA. Is this ethical? A common practice, or even legal? We are in Texas if that helps.

- Jeff

You have brought up a subject that has recently received a lot of interest in the professional management arena, not just in Texas but nationwide. Though it does not appear yet to be common practice to limit board contact within the management contract, some Boards are considering it in an effort to keep management fees as reasonable as possible.

I would like to refer you to an excellent article entitled "A Day in the Life of a Community Manager" at www.associationtimes.com. This article gives a brief summary of the many services a manager is expected to perform on an almost daily basis. If you consider that the typical portfolio manager manages seven or eight community associations and that each association has five to seven directors, imagine the workload if all directors are issuing directives or asking questions. The more serious issue is when board members call with directives that conflict with another board member's instructions.

Homeowners should realize that management companies are in business to make a profit while providing a service based on expectations that may not always be realistic. Communications and reasonable expectations between management and the Board is critical, so it is often necessary to streamline the process to ensure that directives reflect the wishes of the entire board, not just one Director, to prevent redundant or inconsistent requests that result in unnecessary and time-consuming work.

Since the use of email has become so common, you might propose to the Board a procedure whereby the manager broadcasts an email to the entire Board on management issues. This will help keep all Board members informed. The same practice can be established if a Director has a management question or issue. That director simply emails the Board member liaison to the management company and the liaison either answers the question or emails the manager, copying the other Board members. The manager should be instructed to reply to all Directors so everyone is kept apprised of the response and/or action.

The practice of limiting contact with the management company will most likely receive more attention as a growing number of management companies audit the time they spend on certain communities and find, in many cases, that the fee they are charging does not come close to compensating them for the time spent servicing the contract. It all comes down to expectations and what the board is willing to pay.

Sincerely,

Rhonda

- Rhonda Major, PCAM
Houston Community Management Services

Hi again, I have another question if someone could help me. I know that all records, minutes, etc are open to members and board members of course.

My question is: We have a board member whose sole purpose for serving is to created as much trouble as he can in order to interrupt our ability to get things taken care of that we are required to do as well as having admitted on record that he accepted the position to get rid of our POA as fast as possible even if it meant being dishonest.

He is now demanding any email correspondence that the president or his secretary has had with any homeowner. These emails are simply addressing topics such as county requirements for setbacks, things that were decided upon in executive meeting and sent out to homeowners in a letter updating them on the boards progress, and emails we received from homeowners requesting to be added to the email group we formed to facilitate communication among the homeowners.

most of these emails were addressed to either the president or the secretary. this board member refused to allow his phone number or email address to be given out to homeowners, does he have a right to demand to read the ones sent to us?

What kinds of emails does the officer have a right to demand? Thank you for any advice you can give.

- Kathy

You are correct in your understanding that all records except those considered confidential by your governing documents, state statutes or case law are open to members of your association. Your association's governing documents as well as state statutes probably contain provisions that require those records to be made available to the membership during specified periods of time.

It is unfortunate that a board member announced and demonstrates intentions other than serving on your board of directors to preserve, protect and enhance the assets of your association. Self-interests and agendas that conflict with the sole purpose of serving the association to the best of one's ability have no place in the operations of community associations.

Your email group was formed to facilitate homeowner communications. Even though the messages were primarily between the president and secretary and the homeowners, as long as they are communications relating to the homeowners association, the dissident board member should be permitted to view that correspondence.

In the bigger picture, it seems to me that the board member you described needs to be educated about his fiduciary obligations and role as an elected leader in your community. I urge you to present him with copies of articles from Association Times as well as relevant responses in the Ask the Expert archives. Another excellent resource for community association board members is the Community Associations Institute at which you'll find the "Roles and Responsibilities for Better Communities", an excellent document that recognizes the duties and privileges of both the association and the homeowners.

Sincerely,

Anne

- Anne Calarco, CMCA, AMS
Benchmark Association Services

A) Can you please inform me, how long I should wait to receive my Monthly Financial Statement, after 30 days have passed? I live in a Seniors Community Association and every months, I have to beg and beg to get my copy. There is a "specific length of time in which I SHOULD receive it," ONCE I'M on the list to get it every months?

B) There is a Law about "inaccurate reporting" in the Minutes from the Members' Board Monthly Meeting? What I mean; when a Member speaks, at the Meeting, what is said is recorded on tape. The issues and comments are distorted and changed by the recording secretary, who transcibe them. The comments are modified and untrue. The recording secretary replaces them with her owns views. This happens, all the times, with several Members. It is very unfair and frustrating. What can we do? We complain and the Board does not do a thing about it. PLEASE give us your suggestions. SINCERELY.

- P.

If you are a non-board member homeowner who waits longer than you expect to receive your copy, are copies being  sent to you by the board, an onsite manager or the management company? Should it be available at your onsite office, if one exists? Could it be posted on your association's website, if one is available? Or, is someone making a personal effort to forward the financials to you and sometimes overlooks that responsibility? If it's the latter, then perhaps you could make a cordial call to the appropriate person each month with a gentle reminder to send you the new financial statement.

With regard to taking accurate Minutes, it is each Board member's obligation to ensure that the Minutes reflect his or her decisions and actions. Minutes are the only legal record of the Board, Annual and Special Meetings, since tapes used to transcribe the material should be destroyed or recorded over once the Board approves the Minutes. If the Secretary is revising the Minutes to reflect her own bias, the entire Board potentially can be liable for errors, omissions and deliberate misinterpretations of their decisions and actions. Remember, however, that Minutes should reflect ONLY the actions and decisions of the Board, not discussions or conversations. For more information on taking Minutes, consider purchasing “The Role of the Association Secretary” from the Community Associations Institute's bookstore.

Sincerely,

Margey

I have a major question about a possible violation of our association's bylaws.

Article III Section 2 states the duties of the officers, specifically, the secretary. Under this section, it states that the secretary is to "keep a record of what happens at meetings called the minutes; has the minutes available to all members".

Here is the problem: the wife of another board member has been writing up the minutes for the last few months. She is not an officer of the board, plus she is not even present at the meetings. When I asked about this, a board member replied that he tapes the meetings for her to transcribe later & sees no problem with this. When I read the Article III Section 2 description, he & the other board members felt that there was no violation taking place. I, on the other hand, having been secretary of this particular association in the past, feel that it is in direct violation. The Article does not say anything about a substitute or non-board member producing the minutes, but the Secretary only.

I would love to hear your advice in this matter. For right now, until I have more "ammo", I will have to wait for the minutes of our past meeting to be distributed on our community website to see if my point gets across to the general population, the way I hope it does.

- Jeannie

It is not unusual for the board of directors of a community association to accept the offer of a volunteer other than the appointed secretary to take the minutes of board meetings. The language you referenced can be interpreted as requiring the secretary to ensure that someone, not specifically the secretary, takes the minutes while the secretary is responsible for maintaining the minutes, such as in a Minute Book. By relinquishing actual minute-taking duties to someone else, the secretary is more able to actively participate in the discussions.

Remember, too, that minutes are the official record of the actions and decisions of the board. They should not be a narration of the meeting, nor should they include discussions and motions that were not seconded. For more information on taking proper minutes, please refer to the archived articles and Ask the Expert answers at Association Times. You will also find links to other resources on minutes at the Association Times’ website.

Sincerely,

Margey

I am the secretary for our 241 home community. I have been asked to start taking the minutes at our Board meetings, instead of our managing agent. What formats are available for me to use? Previously, our managing agent has used a long hand, narrative style of recording the minutes. This seems tedious and difficult. Surely, there are other methods out there. Please help!!

- Sandy

Meeting minutes should reflect the actions and decisions of the board, not a narration of discussions. Please refer to Association Times' Links and Resources, scrolling down to Parliamentary Procedure, as well as Ask the Expert archives for further discussions on taking minutes. Another resource is "The Board Secretary" available through the Community Associations Institute's bookstore.

Sincerely,

Margey

I live in Texas and belong to a mandatory homeowners association. Our by-laws and the "Texas Residential homeowners protection act" as well as the " Texas non-profit corporation act" states that the books and records of the association will be available to any homeowner who asks to see them within normal office hours.

I have made verbal and written requests to inspect and copy certain records but have been denied on each and every occasion.

Is the Board of Directors in violation of the above mentioned acts and if so who has the legal authority to enforce the provisions of the acts.

What can a homeowner do to make the Board of Directors abide by the By-laws and above mention Acts??? Thanks.

- Ed

Yes, indeed, Texas homeowners have the right, offering an acceptable reason, to inspect and copy (at their own expense) records of their community association except those that are determined to be confidential or sensitive in nature. If a board refuses to comply with TRPOPA or its association's governing documents with regard to providing access to records, a homeowner's recourse would be mediation, arbitration or asking a judge in Small Claims Court to order the board to allow homeowners access to the applicable records.

Sincerely,

Margey

I recently joined a condominium board in a ski resort. Board members are firmly entrenched with little turnover. Our management is firmly entrenched with several members. Management has been here for 10 years and with much angst I finally got them to turn over some general figures. It appears we as a condo association are generating 1,250,000/yr. They are reluctant to release any further information. I see a big problem with forseeability and liability and negligence. What information should I be asking for and what procedures should be in place for prevention?

- Tom

Almost every state now has laws requiring community associations to permit members to view the books and records of their association (except for a very few which may address personnel issues or ongoing litigation, among other sensitive issues). To determine if your state has adopted such laws, go to our State Resources page and click on your state.

In addition to state statutes, however, most governing documents also require that the records of the association be available to the owners during reasonable business hours, with the same exclusion caveat.

Board members have an even more pressing reason to access the records in a timely manner. As fiduciary agents of the association, directors are responsible for complying with the governing documents and state laws, and can be held personally liable for inappropriate expenditure of common funds or failing to enforce the governing documents reasonably and equally among all members.

In the least, with an annual budget exceeding $1M you should be receiving monthly financial reports which include a balance sheet, statement of income and expenses, check register and delinquency report. Accrual basis of accounting is better than cash basis because it provides the big picture of the financial condition of the association by listing receivables and payables as well as other important data on the balance sheet.

Checks and balances procedures should include the board receiving copies of reconciled monthly bank statements and well as requiring dual signatures on every check. Ensure that the management company's Errors and Omissions insurance policy extends to the association's funds in the event monies are misappropriated.

Finally, I urge your board to review our articles and archived Ask the Expert responses. Community association board members must understand their fiduciary responsibility to their members. The best way to ensure that they are complying with state statutes and their own governing documents, as well as demonstrating best practices in their administration of the association, is to learn about their responsibilities and roles as volunteer leaders of their community. Another excellent source of education and information about community associations is the Community Associations Institute.

Sincerely,

Margey

My husband and I are divorcing, the members of the board will not accept a check for dues from me because my husband has the house only in his name but we have occupied the home together for three years. He slept with one of the board members and moved from the home and I still reside here with my children, in the marital asset home. Bias by the board and personal new rule is it? They said I don't own the home so they do not have to accept my money leaving me in the summer unable to use the pool. Is this legal? There are many couples in here that were not married, no rule existing that only the person on the deed can issue payment. What should I do?

- S.

Most association documents stipulate that the Owner of the property is responsible for payment of the assessment on the unit. I doubt that there are any documents that specifically require that the payment of the assessment be tendered directly by that Owner.  It is certainly an unusual stipulation that the Board has imposed on you. I suggest that you document in writing all your communications with the association regarding your efforts to timely submit payment of the maintenance fee. It might be advisable for you and your husband to seek legal counsel on this matter to avoid late penalties and potential litigation.

Sincerely,

Margey

I have read our bylaws regarding assessments and late fees and it does not state how to apply a payment in light of a penalty. We have four homeowners who every year pay late and then call up the trustees to complaint about the 25% penalty attached. We never waive the penalty. They get billed in January for three installments. They can pay as they go or the entire amount is due on May 31. I feel they have a five month grace period.

We have hired a company to pay bills and collect assessments. This year when these four homeowner's were late, and they had received their late notice with all penalties and interest applied, they paid an amount that would be for the "assessment only of $375.00. They left the "other" charges unpaid. I called our company and said that they needed to first apply the money to the late fee and penalty then to the assessment. This way any remaining balance would be "assessment" and if it continued to grow we could file a lien. We cannot file a lien for late fees. They told me that they would look into it as they had never done it that way.

Is there a hard and fast rule as to how to apply a payment received? I know credit card companies take their fees first why can't a homeowners association do the same. If we can't then late fees really do mean nothing. We are in Missouri. Thank you

- Lisa

To determine your state's requirements or limitations on the application of maintenance fees, go to our State Resources page.

If there are no state mandates on the application of community association maintenance fees, and if your governing documents -- in particular the Declaration/Covenants/CC&Rs (the name varies in different parts of the country) -- and Bylaws do not describe the collection process, and if the Bylaws authorize the board to make rules regarding the collection of assessments, then the board could consider crafting an Assessment Collection Resolution that details the manner in which maintenance fee payments will be applied. While they're at it, the board members could include other issues that may not be addressed in your association's governing documents (and so long as they are not prohibited by state statute) such as the treatment of insufficient funds and partial payments, as well as the standard procedure for attempting to collect delinquent assessments.

I urge your board to have a competent attorney knowledgeable in community association law review the final draft of the resolution before it is presented to the owners to ensure that it complies with all applicable laws.

Sincerely,

Margey

I live in an association, which includes townhomes and villas. My association last year finally set up our dues based upon the amount of square footage I own. For example a villa around the block is 1,500 sq feet with a garage. They were paying $601 every 3 months and I with only 1200 sq was paying $526 every 3 months. Thought that was very fair and about time. There are 88 townhomes and 177 villas. Well the villa homeowner recalled the board who made this happen and put themselves on the board then changed it back again.

Why should I have to pay for their garages, bigger roofs, more painting. We, the smaller homeowners, are being bullied. Is there anything besides moving I can do, since they hold the voting power in the community. I live in the state of Florida and need some help.  I don't mind paying equal to common area, that's fair, but property. The values on there homes are almost 60,000 dollars more then mine. Fair is fair.

- Scott

Florida law prohibits me from providing legal information to you. However, I can tell you that, in general, the governing documents (usually the Declaration) for a community association specify the manner in which the assessments may be calculated. Most governing documents also contain a provision that mandates the very specific amendment procedure. In many documents, changing the manner in which assessments are calculated requires approval of all or most of the unit owners' mortgage companies in addition to a specific percentage approval by the owners.

To determine if a community association board of directors erred in the manner in which it amended the documents or imposed maintenance fees, it would be necessary to carefully and thoroughly review the governing documents. If the results of the investigation reveal that the board acted in error, the most reasonable action would be to bring the matter to the directors' attention, accompanied by an suggestion on how to rectify the oversight.

Sincerely,

Margey

Our HOA wants to raise our fees by "substantially more" than is allowed in order to take over the tennis, fitness facility, and Executive Golf Course, from the Country Club. And then pay the Country Club to run them. They say in the letter this is to help the Country Club stay profitable. But I don't see how they can basically ask me to support a private club I can't afford to be in. Could this posssibly be legal? We are located in ******, Texas, in the ******* subdivision. If you know of any resources I could check with to find out I would be thankful.

- P.

Most governing documents for community associations require that both homeowners and lenders vote on substantial changes to the purpose and functions of the organization. Also, homeowner votes are often necessary if the board proposes an increase in maintenance fees above the maximum amount authorized in the documents. Check your Quail Valley Declaration/CC&Rs to determine the specific process for both actions.

The Texas Legislature has also imposed controls on the operations of community associations. Go to our State Resources page, then click on Texas, then open Chapters 201 - 209 to learn what state mandates may impact your board's efforts to buy the recreational facilities from the country club.

You might consider retaining the services of a competent attorney knowledgeable in community association law, and Texas law in particular, to determine if your board's actions are appropriate.

Sincerely,

Margey

Living in West Virginia, we may or may not fall under the jurisdiction Uniform Common Interest Ownership Act West Virginia Laws, Chapter 36b. I’m sure you are familiar with this Act. If so, you are well aware of the wording in this code under §36B-1-203, Applicability to NEW common interest communities, which states as follows. “(2) Provides, in its DECLARATION, that the annual average common expense liability of all units restricted to residential purposes, exclusive of optional user fees and any insurance premiums paid by the association, may not exceed THREE HUNDRED DOLLARS as adjusted pursuant to section 1-114”.

The past board feels that we were not under the jurisdiction of this act, only because our association dues have never exceeded $170.00, including any Special Assessments. The current board believes that, even though his attempt was to establish a “Limited Expense Liability Planned Community”, he overlooked an important factor by including in the Protective Covenants and Restrictions the following wording, “Such annual assessment may not exceed $150.00 per tract until Northwoods Properties, Inc. conveys its rights to Northwoods Property Owners Association; thereafter that Association may assess whatever reasonable amount it deems necessary to maintain the roads and common facilities”.

The current board believes that once the transfer took place, there was no longer a set amount as is required by the Act and, the board may as noted within it’s C&Rs, “assess whatever reasonable amount it deems necessary.” We understand your not an attorney however, do you believe we are correct in the assumption that as a Homeowners Association, we do fall under the jurisdiction of the UCIOA Chapter 36B?

- Dean

I'm glad you recognize that I'm not an attorney, because the opinion I'm going to give you is based strictly on my 25+ years experience in the community association management industry as well as many years of involvement in the legislative arena.

You omitted some very critical words from your quotation of Chapter 36b-1-203, specifically, "unless the declaration provides that this entire chapter is applicable." If your declaration states that your association was created under Chapter 36b of the West Virginia Code, then the provision you referenced is applicable no matter the stated minimum assessment.

It appears to me that the provision limiting the Act to community associations with annual fees less than $300 was intended to relieve very small associations with few maintenance and administrative obligations from the burden of complying with the Act. The caveat you quoted authorizes the board to exceed that limit and therefore be subject to the Act.

I urge you to consult with a competent attorney familiar with West Virginia community association law to ensure that your association is compliance with all state statutes.

Sincerely,

Margey

Is the HOA responsible to give you a written notice if you are 90 days late on association dues?

- H.

Your board of directors must comply with the provisions of your association's governing documents as well as state statutes with regard to the collection of delinquent assessments. If none of those documents reference a specific procedure, the board may craft a resolution that details the process. I recommend that all community associations have a collection resolution to ensure uniform and fair treatment of all owners.

Please refer to "Resolution Process" for a recommended procedure for developing and approving resolutions.

Sincerely,

Margey

What would be considered a capital expense? Our board has voted to replace the neighborhood signs for a cost of $2,400. They voted to take half of the money from Capital funds and the other half from our checking account. Can they do this?

- Felicia

With respect to community associations, a capital component is considered any physical asset of the association with a definable useful life and a relatively significant replacement cost. The neighborhood signs probably qualify as a capital component. I can think of two reasons why the board is planning to split the payment for the replacement of the signs between the reserve account and the operating account:

1. there are insufficient funds in the reserve account allocated to signage;
2. some of the signs have an insignificant replacement value and do not qualify as a reserve item.

My suggestion is to ask the board why they've taken this approach to paying for the signs. Instead of doubting their actions without having all the relevant information, make an effort to attend board meetings and understand the board's role and decision-making process.

Sincerely,

Margey

I am thinking of doing an audit of our condominium homeowners association's records to make a list of capital improvements that could be used to increase the cost basis of our condominiums for capital gains purposes. Besides the IRS publications on basis of assets and selling your home, is there a good source for a list of potential improvements that would qualify as capital improvements for this purpose?

- Bruce

I encourage you to consult with a CPA knowledgeable in capital gains tax to determine what common area improvements can be allocated to individual owners. You might consider retaining the services of a CPA member of the Community Associations Institute which may have a chapter in your area.

Sincerely,

Margey

Hello, I have a question that I am hoping you will answer for your "Ask the Expert" column.

I live in an association of approximately 300 single family homes in New York. The association has several common properties, including two lakes, two parks, a playground and a few storage sheds.

The only form of dues/assessments authorized by our Declaration are for "Recreational Land Maintenance Charges," which is defined as charges for the "maintenance" of the lakes, beaches, greens, groves, playgrounds, community buildings and other structures, along with related administrative and other proper expenses. In other words, if an expense isn't for "maintenance" of the common areas, or for a related and necessary administrative purpose (i.e., insurance, legal, accounting, etc.), it does not appear to be permitted.

The Bylaws (which have been maintained and amended haphazardly over the years, without the advice of an attorney) say that the purpose of the association is, in part, to "promote the social conveniences and advantages of [homeowners] and to do and carry on such things in connection with the foregoing as are reasonable, necessary and incident thereto."

My association (which is operating on a shoestring, with no reserve fund) spends approximately $8,000 per year in mandatory homeowner dues on family-oriented community "events" such as parties, festivals and social gatherings. The expenses include food for the attendees, party favors, pony rentals, equipment rentals, etc. The people who benefit from these gatherings are those with children (including the board members), and large number of homeowners in the community do not attend and do not understand why they are paying for these things.

More importantly, it appears that these expenses are not authorized under our Declaration. It's also my understanding that Bylaws cannot authorize something that the Declaration does not. Is that correct? And if these expenses are inappropriate, can you suggest how I might best address this matter with my association board?

Thank you for any guidance you might be able to offer.

- Daphne

You are correct in understanding that the Bylaws cannot conflict with the Declaration. However, not being familiar with your entire Declaration prevents me from commenting on the appropriateness of the expenditures. That said, I must admit a partiality for associations that try to foster a sense of community, of a cooperative spirit among its members. While there may be enticements for children at your gatherings, there's still the opportunity for the adults to get together and develop friendships.

If you disagree with your board's interpretation of your association's Declaration to authorize the expenditure of common funds on social gatherings, talk with you neighbors to see if many of them agree with your position. If you have significant support, bring the matter to your board's attention for discussion.

Homeowners in community associations have ultimate control over the operations of their community. If their elected board members are not responsive to the owners' preferences within the legal parameters established by the governing documents and state statutes, then the owners' recourse is a recall election. However, I much prefer discussion to contentious discourse, and urge you and your board to cordially converse about your concerns.

Sincerely,

Margey

We live in a Colorado mountain HOA. Area has a volunteer fire department. It operates on donations. At our annual meeting the members (75 out of 210 attended) voted that each member "donate" $100 to it. Notice to do such was posted in call for meeting. Most find no problem in donating but several ask the legality of requiring a "donation". Failure to "donate" is cause for a lien to be put on property. Any ideas, comments? THANKS.

- Duke

Usually, liens cannot be filed on a property for failure to pay a donation. Unless your association's governing documents and state statutes vary significantly from the norm, only properly authorized maintenance fees and special assessments, accompanying collections fees and late charges, and possibly fines for noncompliance with deed restrictions are legal reasons to perfect a lien.

Sincerely,

Margey

Our association is looking into replacing our 40 year old clubhouse, with a bigger more modern clubhouse which would provide better benefits. Is it possible for an association to get a mortgage instead of a special assessment to cover the cost of the clubhouse??

- Michael

It is indeed possible to obtain a loan for major capital improvements in a community association. As with all loans, however, the applicant must be able to prove credit worthiness and the ability to pay the note. Talk with your association's banker, or contact lending institutes who are members of the Community Associations Institute.

Regards,

Margey

Hi, Here is our situation.  We are an association established to maintain ashared water system which was created about 30 years ago.  For about 26 of those years the 2 miles of dead end gravel road that links about (32) 20 acre parcels was funded volutarily with most owners (80%) paying a predetermined assessment fee for snow plowing, weed spray and road grading. Over the last two years a majority of the owners collected money and paved the road.

The association has adopted the road maintenance task into its charter with the intent to make all owners participate and pay their fair share of the annual assessment. There is currently much disagreement about how the assessment should bedetermined fairly.  All lots are accessed solely by the private road, about 14 have residences, some owners own several additional lots adjacent to their lot w/ house. 

We are currently assessing each 20 acre lot equally.  Some members say it should be per distance along the road from the point of access.  Some say equally divided per residence no matter how much additional property the owner has.

I would like to know if there is a development standard to follow or what assessment method you would suggest as the best for our situation. Thanks.

- Kurt

Unless your state or local jurisdiction has specified required methodology for determining maintenance fees, there is no "mandated" allocation method.  The governing documents will usually outline how the allocation is to be made.  In most instances, the the allocation is based on a per lot allocation.  So if one entity owned three lots, they would be assessed for three units of maintenance fees, unless the three lots have been legally combined in perpetuity.  This formula reflects the understanding that if the owner of multiple lots sells one of the lots, the new owner would be part of the allocation method and pay their fair share of the assessment.

Some have commented that allocation should be based on how much roadway is used.  However, if the owner with the shortest distance has the most drivers/vehicles, should their share be adjusted for that fact?

With the per lot allocation, there is no need to consider every unique circumstance.

Sincerely,

Margey

Our homeowner's association comprised of over 1300 townhouses is located on a golf course still owned by the developer. After 30 years, this original developer, said that the golf course may be available for sale.

Could you offer an overview of the pros and cons of our HOA's purchase, and direct me to other resources and information? And, what are the current trends in HOA ownership of golf courses?

A task force has just been formed to explore this possible purchase option.

Another consideration is that our HOA sold the "water rights" of our large lake when the developer to HOA board transition finally occurred approximately 8 years ago. Our community lake provides the golf course with irrigation.

- Robin

I've got to admit that I don't have a ready answer to your question. The situation you described is quite unique and may be affected by your governing documents, state statutes and the Internal Revenue Service (with regard to maintaining your nonprofit status).

If you would write back with the state in which your community is located, I will be glad to try to refer you to a competent attorney in your area knowledgeable in community association law and with access to tax experts.

Sincerely,

Margey

Hello, Margey, and thank you for your reply. Our homeowner's association is located in Illinois.

- Robin

The Illinois Chapter of the Community Associations Institute offers a directory of its members, several of which are attorneys who focus on community association law. Click on the link and enter “attorney” in the keyword search field.

Sincerely,

Margey

How much should we keep in Reserve fund? What do you based this on?

- Wes

While most states do not have definite standards for reserve studies, here are some recommendations when considering what amount to have in reserves:

1. Review your governing documents to determine if there is a specific amount required (for example, the association must maintain at least three months of assessments in reserve at all times or a minimum balance of $50,000).
   
   
2. Review your insurance policies; the association may have a large deductible that would need to be paid in the event of a claim.
   
   
3. Review your state statutes to determine if a reserve is required and if the association must have a reserve study performed at certain intervals. Some state statutes delineate the actual formula by which an association must calculate how much to allocate to reserves and how much must be in a reserve account.
   
   
4. Contact a reserve specialist to obtain a detailed reserve study report that would outline the association‘s assets including age, maintenance requirements, funding needed and remaining life. This report would identify all the capital components of the community, their replacement life, remaining life and replacement cost in order to determine how much should be allocated annually to the reserve account ensure that funds will be available when the component has reached the end of its useful life.   

Please review archived articles of Association Times and Ask the Expert for additional information on community association reserves.

Sincerely,

Margey

I am having trouble finding someone to do a reserve fund analysis in ********, Louisiana. Can you help me find a plce to start looking? Some sort of listing?

- Jamie

The Community Associations Institute offers a listing of national and local companies that conduct reserve studies; click on CAI National Service Directory. I recommend that you select a company which employs professionals with the Reserve Specialist (RS) designation.

Sincerely,

Margey

We are having Stucco repair/paint done as it is due per our reserve study. We have enough money to pay more than 60%. Do we need a vote of the entire membership of our complex in order to use monies set aside for this, and do we need the vote of the entire membership to impose an assessment which is less than 5% of our budget from last year?

- Irene

Without knowing your association's governing documents, I'm unable to provide you with a specific response to your question. Please carefully review the Bylaws and Declaration/Master Deed for your association for specific answers. If you are still unsure of the association's authority to use reserve funds and increase the regular assessment, I urge you to consult with a competent attorney knowledgeable in your state's laws regarding community associations as well as capable of interpreting your association's governing documents.

Sincerely,

Margey

Our condo association Management Company has recently charged us a Special Assessment for a Shortfall in 2004. After reviewing the Budgets for 2002, 2003, and 2004, it reveals that the Management Company has been Budgeting our Expenses against 110.25% of our Income from Monthly Association Dues. Is that proper advice and procedure for Condo Accounting/Budgeting and what can we do about it if it is not?

- Monica

The management company is responsible for providing data to your Board of Directors to enable the board to approve and implement an annual budget and determine if there is a shortfall of funds which may result in the need for a special assessment.  It would actually be your association, through your Board members, that is charging the special assessment, not the management company.

Typically, the governing documents for a condominium association, more particularly the Declaration, contain a provision specifying the manner in which special assessments may be approved and calculated. If you cannot locate the provision, why not ask your Board for help in understanding the process they followed in determining that it was necessary to impose a special assessment and the legality in which the assessment was approved?

Sincerely,

Margey

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

How much control does the Architectural Review Committee have?? Can the Board of Directors overrule a decision of the ARC???

- Lisa

The answer to your question depends on both your association's governing documents well as state statutes. Typically, Architectural Review Committees that are established in the governing documents are authorized to make independent decisions on variance, construction and modification requests of homeowners. The board serves as the "court of appeals" to affirm or reverse decisions of the ARC.

Check your association's Declaration/Covenants/CC&Rs to determine the extent of the authority delegated to your ARC and the appeals process in the event an owner disputes the ARC's decision.

Sincerely,

Margey

What happens when your ARB keeps changing the guidelines but never files them with POA board and just arbitrarily rules what they want and when they want?

- Harvey

Typically, the Architectural Review Board implements the decisions of the board, similar to the manner in which judicial courts are supposed to uphold and sometimes interpret existing law but not to create new law. If your association's ARB is acting independently of the board, the ARB members are exposing themselves personally as well as the association to potential liability. I would encourage the board of directors to take a closer look at the ARB's activities and provide its members with a clear understanding of their duties and obligations as well as consequences of exceeding their authority.

Your association's governing documents as well as state statutes may address the role and obligations of the ARB.

Sincerely,

Margey

Under what set of circumstances would more than one class of membership be said to exist? In our condo the engineering of the heating system is of an essentially different nature for the top floor and am wondering if this would constitute a different class of ownership. Thank you.

- John

In a community association, including condominium associations, classes of membership are determined only in the governing documents and more particularly in the Declaration/Master Deed or Bylaws.

Sincerely,

Margey

We recently purchased a home in South TX and our community has about 25 homes, I would like to start a FRIENDLY homeowners association in which all residents could voice their concerns and issues. Can you tell me the easiest way to go about doing this and does it have to be so complicated and ugly as I've been reading? I just want to control parking issues, lawncare and home businesses and such.

- HELP IN TX

Community associations typically are not contentious and complicated as the Texas media would like you to believe! They are an excellent means to bring together homeowners who want or need to share common assets and protect their property values.

Chapters 201 through 209 of the Texas Property Code (click on our State Resources page, then "Texas" and scroll down to the appropriate Chapters) detail the process by which homeowners associations may be formed and the laws by which they must be governed. I urge you to consult with a competent attorney knowledgeable in Texas community association law to help you traverse the sometimes daunting process of forming a homeowners association. If you need a recommendation on an attorney, consider going to the Community Associations Institute and click on "Chapters" to find a chapter in your area. Lawyers who focus on community association law join CAI both for the continuing education as well as for meeting potential clients.

Sincerely,

Margey

Can my homeowners association legally request a credit report and criminal history check on someone I have chosen to live in my home? What would be the purpose of their inquiry? How can they decide for me? Does this not indicate that they are looking for a way to discredit someone - would that not be discrimination? I cannot find anything in my rules and regulations that gives them this authority? Would this mean that they should run similar checks on prospective homeowners to not be considered discriminatory?

- Margaret

Your association's governing documents or your state's statutes should contain specific wording authorizing boards of directors to approve prospective renters. The operative word is "approve", because the board must have explicit permission to intervene in a potential contractual relationship between an owner and his or her renter.

It is not unusual for governing documents to authorize the board to screen renters because, just like apartment communities, a homeowners association wants to ensure that the common areas will be preserved and crime will be at a minimum. If the documents authorize the board to process rental applications and if there is no prohibition against the process in state statutes, the board should craft a policy detailing the criteria for renter approval in order to prevent selective enforcement of the process and to ensure that every potential renter is treated equitably.

If there is no specific wording in the governing documents authorizing the board to intervene in the rental process, or if the documents and statutes are silent with regard to homeowner associations' intervening in the rental process, I suggest that the board obtain a written opinion from a competent attorney knowledgeable in your state's community association law detailing why the board may process rental applications.

While condominium and planned unit development governing documents typically do not authorize associations to screen prospective buyers, cooperatives do permit the board to interview potential owners to determine to some extent if they will be compatible with the purpose of the association and lifestyle of the existing owners.

Sincerely,

Margey

Perhaps you have previously addressed these questions in your material. I will appreciate you directing me to this information if this is the case.

Question (1) - While a developer is in control of a HOA, should the developer hold regular board of director meetings, posted in accordance with Florida Statutes?

Question (2) - A developer may elect/appoint directors to the until a certain percentage of developer lots have been sold. What is the procedure of electing/appointing directors by the developer? Does the developer vacate and fill as desired and note the additions and changes in the minutes?

Question (3) - Please share your thoughts on FS 720.305, regarding the fining of homeowners for violations. If the violation and method of penalty, as well as the amount of the penalty spelled out in the covenants, does the association have to appoint a committee to enforce or impose? Or offer the hearing? Thank you for you time and guidance.

- Tom

Florida law prohibits me from providing what may be considered legal advice. However, in general, I can tell you that developer-controlled boards should comply with all state statutes affecting community associations unless specifically excluded. Typically, developers remove and appoint board members while still in control of the association. However, most Declarations and many state statutes contain a provision requiring developers to appoint or hold a membership meeting to elect homeowners on the board after certain benchmarks in sales are attained or a period of time has passed.

Sincerely,

Margey

I am an officer of the Board of Trustees of a 90 unit townhome development in NJ. One board member insists on enacting a by-law that mandates annual cleaning/inspections of all dryer vents in our 4 year old community of 90 homes. I asked how many dryer vent complaints were recorded in the past 4 years and without getting an answer I found out there were only 3 incidents and 1 was caused by a bird nesting in the only dissimilar type of vent. This one vent was exhausted thru the side wall whereas all others are vented to the roof. My suggestion that a semi- annual inspection was asked for and that we should not enact a bylaw that will be met with opposition. This board member is and has insisted on several other amendments that were not passed.

- John

Many associations are now implementing rules, not necessarily bylaws or declaration amendments, in order to manage and effectively ensure that fire hazards are kept to minimum, which is a growing concern. Many fire departments offer information and statistics regarding the percentage of fires due to dryer vent blockage as well as the incredible combustibility of lint and other fibers often found in dryer vents, including nesting materials. It is truly a safety concern, particularly in multi housing developments where the neighbor's fire is likely to be your fire.

Bottom line is that the inspections are a solid step toward safety- how your association goes about implementing it is up to the board, but I would agree that an expensive change to the documents is not necessary in this situation.

For additional insight into how some associations in your specific area address this issue, you may wish to contact Tom Garver, the President of CMS, a management company in Lindenwold, NJ.

Sincerely,

Chris

- Christine E. Evans, CMCA, PCAM

Hi, I'm thinking about buying a condo in NJ.  I want to hire someone to perform a thorough investigation on the HOA and the management company before I buy. Who should I hire?  A lawyer or CPA?  Thanks!

- David

Both parties are probably capable of handling their individual fields of expertise.  An important point to note is that many states have laws in effect that regulate what information an association must disclose to potential buyers such as budget, financials, and any known litigation or non-compliance issues on the property.  Since most associations are private corporations, information beyond what is required by law is considered confidential in nature and the association may not provide all the data you are looking for prior to making your decision.  The same would probably be true about the management company.

You might consider asking the potential seller to obtain the information you are interested in, since he or she, as a member of the association, certainly has the right to most of the material.

Sincerely,

Margey

The HOA is 18 years old and in Illinois.  Several patios are being replaced that were required by the Board. Most patios have Arborvitae evergreen trees on one side to provide privacy.  A neighbor was granted permission to remove 2 - 12 trees by their patio when it was replaced and plant 4 foot Arborvitae trees at their expense.  The taller trees provided privacy between that unit and ours.  The trees were in good health.  They contend they had overgrown over the end of their patio by 12 to 18 inches.  To me, the first option should have been to properly trim the trees back.  The 4 foot replacement trees do not provide adequate privacy.  An 8 foot tree would be acceptable by me.  What are my options to have 2 - 8 foot Arborvitae trees planted?  Do you feel the Board acted with gross negligence and willful misconduct?  Their actions appear to have set a precedent whereby other homeowners could