Ask the Expert

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

I am currently President of a POA and our board has recently appointed a Committee Chair (one of our directors) to form a committee to look into revising our Condo Documents and By-Laws. Realizing that this is a "sticky" issue, when this committee chair/board director reported back that he had a committee and named eight people, five of those were directors (which gives this committee a majority vote within our Board of Directors) I re-checked our by-laws and found under committee designations, "Such committee shall consist of at least three (3) members of the Association, one of whom shall be a Director."

Do you think that this means that at least one Board Director may be on the committee ... or does it mean that only ONE Board Director shall be on the committee? Thanks!

- Kathy

You're right -- the intent of the provision is unclear. However, such verbiage is usually interpreted to mean "Such committee shall consist of at least three (3) members of the Association, AT LEAST one of whom shall be a Director." The purpose of such a provision is to ensure that there is communication between the committee and the board, to provide the committee with insight and direction from the board through the board member, and to provide the board with insight and feedback about the activities of the committee. Sometimes committees of the board can take an entirely different direction or attitude than that intended by the board. Having at least one board member as a member of the committee helps to prevent such wayward problems. However, please also know that some parliamentarians recommend that board members should not chair committees, and should act only as liaisons to relay communications between the board and the committee.

Even though a majority of five board members will be on the committee you mentioned, the vote to adopt any recommendations from the committee will still need to be approved by a majority of the board. Regardless of whether fewer or more board members were also members of the committee, the same five board members voting together as a block will be able to approve whatever collective decisions they may make.

As an aside, committee work is an excellent venue for grooming future leaders of the community. Your board should encourage other volunteers to participate in the process of managing the administration of your community under the watchful eye of your directors.

Sincerely,

Margey

I am President of our newly formed Homeowners's Association. Our neighborhood is 3 years old and before our Board of Directors took over one of our neighbors, who is now a board member, put out a community newsletter for the neighborhood. They own a private company and would place a large advertisement for this company in the newsletter. (They only advertised their company). The new Board now wants to send information and letters to the HOA and this board member feels that they should be allowed to send letters prepared by the Board in their newsletter and use their advertisement and they will use other members of the HOA if requested. They will pay for the newsletter. Is this a conflict of interest?

- Sharon

A conflict of interest situation exists if the party involved in the conflict fails to disclose the conflict to the other party and does not obtain written approval from the other party to proceed with the action. Please review Ask the Expert archives for several discussions regarding community association conflicts of interest.

The bigger issue is if the association benefits from the relationship with the board member. If the newsletter is produced free of charge, if any homeowner is welcome to advertise in equal-sized ads (and the association has a disclaimer stating that the association does not necessarily support or endorse any of the advertisers), and if the board has final editorial control over the content, then it may be advantageous to the association to continue to allow the board member to print the newsletter. To ensure that the current situation is most beneficial to the association, it would be a good idea to solicit other newsletter production proposals, with the board member who currently publishes the newsletter recusing himself from all meetings in which the bids are discussed.

Sincerely,

Margey

Our Board President has deck lattice that is in violation of our design guidelines. He has admitted openly to past and present Board members that one reason he is on the Board is so that he can keep his lattice even though it is in violation. I feel it compromises the credibility of our Board, not to mention the double standard with other home owners who follow the design guidelines. He also doesn't enforce our rules and regulations because he feels sorry for a resident or thinks the resident is a great guy. The President also self-appointed himslef as the liaison with the management company. He said since he is President that by default his is the liaison. HELP!!!

- J.

Please review Ask the Expert archives for many in-depth discussions about the fiduciary duty of community association board members and officers, and their roles and responsibilities with regard to the association and its members.

Sincerely,

Margey

I don't know how to express to you how much we need you advice but I can say your work is MUCH appreciated!!

I have been through our association's covenants and bylaws, even tried to look at the states websites and others issues, but no luck. We live in North Carolina and in a community of about 46 lots the majority of them owned by the community's developer. Our situation is the president of our association is also partners with a builder who has and is building houses in our community. This builder also serves on our board of directors and rents a house in the community (temporary resident). These appointments did not take place on paper votes; it was completed at our annual community picnic last year, with not many residents in attendance (maybe 7-8 families). Most in the community know there is a conflict of interest, because we have had many special assessments to fix road damage caused by the builder (13K last year alone). To the residents dismay builders do not pay a builders fee in our community. It has been brought up time and time again and ignored. So, it's been progress at the expense of others but it has recently gotten worse with 2 major landslides damaging our roads this past year. Most in the community believe these landslides (damaging the road we are responsible for) was due to lot owner negligence (e.g. not up keeping the borders of their properties/erosion). However, since the builder and president owned property on the road and were starting to break ground a special assessment was called by them and only passed because of a threatened lawsuit by a affected lot owner (person who lives on the road) and the fear of a lawsuit the president instilled in the residents. We feel taken advantage of and our concerns ignored. We have many people moving because of this and about 5 others thinking about it. We need guidance to North Carolina laws and what our rights are under them. Thank you!

- Margie

I very much wish I could resolve your predicament, but I can't -- you need professional legal advice from a competent attorney knowledgeable in North Carolina community association law. If you would like the names of such attorneys, please write back and I'll be glad to send some referrals to you.

Sincerely,

Margey

I've lived in my complex for 9 years. It has always been beautifully maintained, but started going downhill about three years ago after the board hired a new management company and on site maintenance guy. This year I started attending board meetings and decided to stop complaining and do something about it so I got myself elected to the board.  Now I'm sorry I did it!!  I am overwhelmed.  The management company does nothing but make excuses, the on site guy is rude and out of control.  The other board members won't put any more time into this than two hours a month during a meeting.  Decisions are put off month after month, harmful, uneducated financial decisions are made without good information (our reserves are gone), no one is checking on the contractors (who aren't doing their job, but are paid anyway). I've started a website, a newsletter, insisted that some weeding and sweeping get done, but I can't do this all myself.  It seems to me we need to start over - a new management company, a new board, a new on site maintainence guy - I'm in way over my head.  I don't even know where to start.  HELPPPP!! any suggestions?

- Judy

I applaud your commitment to your community and your accomplishments!

In addition to the many useful articles and resources you can find at Association Times, the Community Associations Institute has a wealth of information and material to help board members and managers foster responsive, successful community associations. Check them out at www.caionline.org.

Sincerely,

Margey

The BOD I am on is contemplating treating itself to the annual BOD dinner (exclusively for board members) to the tune of about $800-$900 at the associations expense. This is a HOA which is operating on a "hand to mouth" budget, just passed the second of two 7% dues increase and a special assesment and just read the riot act to the association manager about the virtues of fiscal restraint. I ask you to comment on this from a ethical standpoint as well as legal.

- S.

Perception is reality to your homeowners. Be responsible board members, go to a reasonable restaurant and keep the total bill under $50. The board deserves kudos for the time you've devoted to ensure the successful operations of your community, but don't make it the last dinner you'll have together before the owners vote you out and question every penny you've spent.

Sincerely,

Margey

We have a board member who sold his house and no longer lives in the community. Our covenants allow for non-owner participation on the board. If a vote is taken to allow this person to remain on the board or be removed from the board, should that person be allowed to vote in that decision?

- David

It seems to me that the question should be who votes for board members, not whether the offsite board member can vote for himself. If the covenants permit offsite owners to serve on the board, the board probably does not have the authority to decide whether or not this particular board member who was elected by the membership may continue to serve. Typically, only the membership can elect and remove board members, so board members would have no authority to even address this issue.

Sincerely,

Margey

Can a Board President close bank accounts and open new ones without V.P. or Treasurer signatures of, ven the knowledge of? Our President has opened three CD's in three othe states. Thank you.

- Vicki

The power and authority of Board presidents are limited by the provisions in the association's governing documents, state statutes, insurance policies and case law. Typically, the treasurer is the officer responsible for the funds of the association, but all officers and board members are equally obligated to protect the association's assets. Without knowing further facts, it appears that your president exceeded his or her authority by placing association funds in depositories without approval or knowledge of the other board members.

Sincerely,

Margey

I am a board member of a HOA and we are having difficulty with a fellow board member who has disclosed financial information about homeowner, to another homeowner. Is she in violation of some kind of "privacy act"? I want to get my facts straight before I ask for a vote to kick her off the board.

- Beth

It is certainly inappropriate, and perhaps a breach of the board member's fiduciary duty and federal debt collection laws, to reveal financial information about a homeowner that the board member acquired through her role as an elected representative of the homeowners. I urge you to consult with a competent attorney to ensure that you have specific documentation and substantiation for your request to remove the director from the board.

Sincerely,

Margey

Hello: I own an Illinois condominium, 33 units, that my 80 year parents live in. In November 2004, I wrote the board of managers a letter asking why they had used the reserve fund for operating shortfalls in 2003 of $12,000 and $2004 $17,000. Our bylaws actually state that any shortfall in the budget plus be specially assessed to owners. Plus an election was held in October, 2004 and the appointed 3 board members were not put up for vote.

In December, 2004 My father put duck tape around the airconditioning cover which is in violation of the Condo's rules and regulations. I was sent an attorney's letter instructing me to have my dad remove the tape within 5 days and I did. Plus the attorney wrote that my fence needed replacement because it was old, however, I voluntarily wrote the board an email that I could not afford to replace my fence until 2005, my email is dated 10/3/04 and the attorney's letter is dated 12/20/04. Prior to the attorney's letter the board had never asked me to replace the fence verbally or in writing. Needless to say, I was charged back the attorney fees of $356.00 based upon Section 9.2 of the Illinois Condominium Property Act. I was never given "due process" as I was told by the attorney that it was not required. And for that answer, I was charged back another $86.00. I was also told by the attorney that the board of managers did not have to answer my questions regarding the reserve fund.

I realize that the board is using their power because of the questions I asked as most of the owners don't care or even come to the meetings. Any suggestions? Thanks for your time.

- Rose

According to Ms. Chris Evans, PCAM, President and CEO of Vanguard Community Management based in Schaumburg, "It sounds like you are in quite a quagmire of red tape and I assume that you don't wish to incur the cost of hiring your own attorney to do battle with the Board or the association's attorney.

The Illinois Condominium Act addresses the election issue quite clearly in Section 18 (a) (13). As far as reserves are concerned, I am not aware of a law that governs the borrowing from reserves, but any CPA knowledgeable in community association accounting and tax law would probably agree that the board's actions are not appropriate. If you are in the Chicagoland area, I would suggest that you write to the Chicago Tribune, to the attention of Mark Pearlstein, a well known attorney who specializes in Condo law and does a weekly question and answer column. The local Illinois CAI Chapter also has attorney members who focus on community association law, as does ACHTHA , another trade association."

Sincerely,

Margey

Hello and thank you for your answers to some other questions. The latest in the saga. The four board/officer members that I needed help with in prior letters have now refused to pay the fees that they voted to assess the homeowners. They are planning an illegal meeting not in accordance with our bylaws, or the Virginia POA Act, to "revote officers" and to change the duties of the President. our bylaws state that it takes 2/3 membership vote to change our bylaws and remove officers. The president informed them that the meeting was called legally, the homeowners were informed and given due notice, and that only the president or the secretary can call a meeting at the request of two directors or homeowners and the president must preside at all meeting. He informed them that he was in the process of organizing a member meeting. They then sent a letter stating that if he did not show up at this illegal meeting that he was "refusing to act" and that the vice-president would preside and take the votes. Only those four members will be at the meeting because the other board members have stated that they will not attend because the meeting is not accordance the governing documents. Any help you can give me would be appreciated.

- K.

It's reached the point where your membership needs professional assistance to rein in your board members. I would first try to report their actions to your association's Directors and Officers Liability Insurance agent. He or she may try to educate your board on the concept of fiduciary responsibility before letting their behavior disintegrate into a claim against the policy.

If the agent won't intervene, it's time to retain the services of a competent attorney knowledgeable in your state's community association laws and case law. Hopefully, one letter from your legal counsel demanding that the board strictly comply with the documents will be sufficient to resolve their inappropriate decisions and actions.

Sincerely,

Margey

Because my association's board of directors routinely violated our bylaws and resolutions I ran for and was elected to the board.  I have repeatedly addressed this at the past three meetings to no avail.  Aren't we legally accountable/liable to the association for this behavior?  What's the best remedy for the board? and for me?

- T.

Congratulations for stepping up to the plate and volunteering to serve on the board and attempt to educate your fellow directors on the role and obligations of board members. Please review Ask the Expert archives for many discussions regarding a board member's breach of fiduciary duty and possible recourse by other board members and homeowners.

Sincerely,

Margey

Homeowners' Association, South Carolina 46 private lots (homes on some) One owner, after building house wants to disregard the easement (noted on all maps and in his deed) in front of part of his home and move the walking path at his direction away from front of home and placed prior to the entrance, thereby inviting anyone to walk the path, jeapordizing security. Board in quandry on decision citing another owner who says we are not being neighborly. Doesn't the board have fiduciary responsibility to all not to allow movement of path and disregard for legally recorded easement?

- Katherine

A community association board of directors does not have the authority to disregard, reverse or modify the governing documents without strictly adhering to the amendment process detailed in those documents. Similarly, the board is obligated to enforce all provisions of the governing documents unless the appropriate amendment procedure has occurred.

Please review Association Times' Ask the Expert Archives for additional discussions regarding the fiduciary duty of community association boards of directors.

Sincerely,

Margey

We live in project where there are 23 condos and a lot of APATHY. Few owners have time or inclination to serve in our HOA -- consequently we have only a two-person Board and no Architectural Committee -- although the CC&R's plus AZ Condominium Acty call for a 5-person or 3-person Board, respectively. What can an owner/ Association member do if the HOA flouts provisions of its own CC&Rs continually over 4 years? That is, we need an Architectural Committee, were misled in thinking there would be one.

- Joan

If you're not already on the board or Architectural Committee, now would be an excellent opportunity to offer your expertise and your time!

Please refer to previous Association Times' articles as well as Ask the Expert archives for extensive discussions on remedies to reverse the apathetic homeowner syndrome in community associations.

Sincerely,

Margey

What can be done about a couple of neighbors who regularly send out letters through the mail questioning the actions of present board members but yet do not send these letters to the board members and do not sign them? The last mailing used your website heading to insert their complaints and questions as if it came directly from your association. A copy can be provided if necessary.

- Rhonda

It's unfortunate that some folks have nothing better to do than to anonymously harass board members and their fellow homeowners. While their attempt at legitimacy by copying our masthead to fool the recipients of their diatribes is deplorable, there's little anyone can do in the way of legal retribution since the cowardly authors don't sign their letters.

The best ways to counter such despicable behavior is for the board members to ensure that they always act in the best interests of the association as a whole, that they themselves comply with all the governing documents, and that they regard their neighbors with respect and reasonableness. Additionally, frequently and consistently communicating with the owners, offering insight into the operations of the community and disclosing bad news as well as good, will go a long way to diminish the impact of the nameless rabble rousers.

Sincerely,

Margey

Our Bylaws allow any owner to run for the board, or any resident who is designated as a member by the owner of the unit they are occupying. In our association there is a condo which is owned by a trust which has several trustees (all  non-residents). Can one of these trustees be a candidate for election to the board of directors. Note: the association is in California. Thank you!

- Stephanie

According to Ms. Kathy Stobaugh of N.N. Jaeschke, Inc., an Associa member community association management company in San Diego, if your association's Bylaws allow an owner's representative to  be considered a member of the association, then that representative is usually permitted to serve on the Board of Directors as long as all other requirements for service are met. Review your Bylaws and  CC&Rs for more detailed information. 

Sincerely,

Margey

Thank you for your response. However, apparently my question wasn't altogether clear. I am wondering about the impact of ownership by a trust rather than an individual. Are trustees equivalent to owners? Do provisions in the bylaws (in this case about serving on the board) which apply to owners apply identically to trustees? Thank you.

- Stephanie

Check your governing documents for the definition of "owner" -- it probably includes any entity or person that is the record owner of a home. There are no different classes of "owners", so they all must be treated identically whether it's an individual, a corporation or a trust.

- Margey

I have a question regarding the removal of an officer from his position on the Board. Our By-Laws state "that an officer of the Board can be removed with or without cause by the Board",it does not say by the majority of the Board only the Board. There are five members of the Board, so can a majority vote be enough to remove this officer from his position on the Board or does it have to be all the members of the board other than the one they want removed to be unanimous?

- Bob

Typically, there's a provision in a community association's Bylaws that states that a simple majority of the board is necessary to act on motions. So, if another provision refers to a board action, it usually means that the majority of the board approved the motion for that action. In the situation you described, the provision would mean that a simple majority vote of the board members can remove an officer.

Absent such verbiage in your Bylaws, you may need to refer to your state statutes or parliamentary procedure.

Sincerely,

Margey

Our association by-laws specifically state one vote per lot owner (if you own 7 lots you have 7 votes). The by-laws also state that to raise dues 2 weeks notice of meeting and amount of the raise is to be sent to each property owner. Also that to increase the dues there must be a majority of eligible votes to pass. At our annual property owners meeting the board brought up the dues raise out of the blue and asked for a raise of hands vote After my objections they then did a ballot vote. However, there were only 98 lots or votes present out of 225 eligible lots Only 57 votes (lots) for and 41 against. It is my opinion this is an illegal vote and I wrote a letter to the board stating this and asking for it to be set aside and done correctly. It has been 3 months and I have not heard anything. There usual response is you can't get anyone to vote so therefore we'll do it this way. What are my options for this illegal vote in Texas?

- Sue

Your board has no authority to disregard the provisions in your association's Bylaws. If the directors can't achieve an annual meeting quorum necessary to conduct business, then they should access resources at Association Times and Community Associations Institute (CAI) for suggestions on ways to ensure that meetings are legally held in accordance with the governing documents and applicable state statutes.

I suggest that you ask the board to put your issue on the next board meeting agenda to provide you the opportunity to present your documentation regarding this issue and allow for an open and candid discussion regarding the implications of arbitrarily rewriting the provisions in the Bylaws. Alternatively, you could advise your association's Directors and Officers liability insurance agent of your board's inept efforts. Hopefully, the agent will discuss this issue with the directors and advise them of the potential financial repercussions to each of them if they do not comply with their association's governing documents.

Sincerely,

Margey

Our Association is currently involved in a vote to put in speed humps. The ballot says we can split our votes. The DCR says (1) vote for each lot the co-owners must among themselves determine to cast that (1) vote. The bylaws say If co-owners disagree as to the vote, that vote shall not be counted. Is there a contradiction between the two documents? Can a split vote be counted towards the total percentages of the votes?

- Marci

Based on the information you provided, I would say that only one vote per Lot is permitted. If the co-owners of a Lot disagree about how to vote, then the vote may not be counted because it may not be split.

I urge you to consult with a competent attorney knowledgeable in community association and corporate law for a more specific response based on your association's governing documents and state statutes.

Sincerely,

Margey

Our DCR under Voting Rights states... Each member in good standing shall be entitled to one (1) vote for each Lot of which he is the Owner. When more than one (1) person is the Owner of any Lot, the vote for such Lot shall be exercised as they among themselves may determine, but in no event, shall more than one (1) vote be cast with respect to any such lot. Our Bylaws under Voting Rights state.. Each Member shall have Member. If more than one person hold title to a Lot, the vote for such Lot shall be exercised as the Co-Owners among themselves determine. When one or more Co-Owners sign(s) a proxy or porports to vote for other Co-Owners, such vote shall be counted unless one or more of the other Co-Owners is present and objects to such vote, or if not present, submits a proxy or obtjects in writing to the secretary of the Assoc. before the vote is counted. If Co-Owners disagree as to the vote, that vote shall not be counted.

My question is whether or not our Docs permit the counting of a split vote in a household. A petition was sent to the membership of our HOA by the Board on an issue that in order to pass must have approval from at least 70% of the HOA. This petition is allowing split voting ie the husband may vote yes and the wife no which is 2 half votes. The board is further stating that if the Co-Owners want to split their vote 80-20 they may do that as well and be counted. My interpretation from our Docs is that if the Co-Owners can not agree to one (1) vote either a yes or no and they decide to split their vote it is not counted. Our Board is trying to obtain a high percentage of Yes votes to get the question on the ballot approved so if they take a 1/2 Yes vote from one lot and add it to another 1/2 Yes vote from another lot it actually adds up to one (1) Yes vote for their tally.

The Board is standing firm on their position on this so I would appreciate you comments on this matter. Thank You.

- Barbara

Based on the language you quoted in your question, I would interpret your documents to permit only one vote per Lot and that vote may not be split. However, I encourage you to consult with a competent attorney knowledgeable in corporate and community association law to interpret your documents based on your state statutes and case law.

Sincerely,

Margey

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I am president of our HOA and need to send a letter to a neighbor regarding a barking dog complaint that was received. Is there a site/source that offers pre-written letters to address problems like this. Thanks in advance for your prompt response.

- Greg

Community Associations Institute offers a resource center that contains templates for typical operational correspondence.

Sincerely,

Margey

I read in your FAQ's an issue regarding voting records of board members being available for members of the community. I agree that this helps home owners in making an educated decision when it is time to vote for a new board. Our minutes are available upon request and for a fee although several communities in the area have their's on-line. What is the best way to approach the board regarding getting our minutes up on the web for the community to review?

- Beth

To persuade your board members to post the Minutes on your website, ask a resident or two in the neighboring communities that provide the Minutes on their websites why having the Minutes available electronically has been beneficial. You might also download and print for your board articles from Association Times and Community Associations Institute addressing the advantages of making the Minutes easily available to homeowner association members.

Sincerely,

Margey

Hello. I appreciate your site and all the work you do. I have a question regarding the assessment process.

Our association is new; we took over from the developer this year. We have 115 lots out of a possible 183 lots occupied. The developer did not set up a working capital fund for the transition.

When the board first made assessments for this year, they took the total budgeted expenses and divided it by the total number of lots occupied at that time. That was each homeowner's assessment. The board didn't divide the budgeted expenses by the total number of potential lots, 183, since that would have resulted in a shortfall of revenues to cover expenses. Then as new lots become occupied during the year, those new homeowners are assessed a prorated amount based on number of days. If budgeted expenses equalled the revenues, then the assessments collected from these new homeowners will create a surplus.

Is it a correct process to only divide the budgeted expenses by the number of lots occupied at that time rather than by total potential lots. Our declarations state that the assessments should be divided by all lots. This would be simple enough and not leave a shortfall if all lots were occupied. But the declarations then go on to state that if fewer than all lots benefit from the common expenses, then only those lots may need be assessed on an equal basis. So since all lots are not yet occupied at the time of the original assessment, the board based the assessment on only those lots occupied.

Is this common practice in the beginning stages of an association until all lots are occupied and capacity is at 100%? I would appreciate any information or insight you may have as soon as possible. There is a board meeting this weekend and I would like to have information available to give to the board. Thanks for you concern

- Ryan

Since your documents state that "if fewer than all lots benefit from the common expenses, then only those lots may need be assessed on an equal basis" (your quote), then assessing only the sold (not just occupied) lots would be valid as long as there is another provision somewhere in your Declaration that says that the obligation to pay assessments begins when the buyer closes on the lot, not when he moves into his home on the lot.

In communities under development, it is indeed a good practice to prepare a budget based on actual anticipated revenues and expenses, considering the current number of paying lots as well as the projected number by year end. Using the current count of lots to pay for operating expenses and putting into a reserve account all additional funds collected from owners who buy lots during the year is another way to ensure the financial viability of the association. One caveat to this method, however -- it's based on a certain number of additionally closed lots per year to adequately fund the reserve account, the amount which is determined by a reserve study performed by a qualified consultant. If sales are slow, then the annual reserve transfer requirements should be paid by all homeowners through their maintenance fee.

Sincerely,

Margey

We live in a community with under 200 condos.  Three of the five Board Members just voted to approve our budget for the 2006 fiscal year. They decided to increase us by $30 a month plus a special assessment of $240 per homeowner, bringing our total monthly maintenance to $360 plus the $240 is payable over 8 month period. We have no amenities, no garages, basements, swimming pools, etc.  Our units are only 1 and 2 bedrooms. Our yearly taxes are $3200 per year.  Our concern is that if the Board continues to raise our maintenance fees it will hurt our property value and ruin our investments. We have no idea why they need so much money to run this place. We believe it will be difficult to sell our condos with such a high maintenance fee and no amenities.  Other then organizing to vote out the three Board members, is there anything else we can do to save our homes and investment? Thank you for being there.

- Jackie

It sounds like your board is trying to protect the property values of your community by ensuring that there are adequate funds for repair and replacement, but are doing a poor job of communicating to the owners the reasons for the maintenance fee increase and special assessment. Before you decide to galvanize your neighbors to support an effort to remove the board, try talking with your board about your concerns in a cordial, courteous, non-threatening manner. Remember that they are also homeowners and will also have to pay the increased amounts, so they probably have investigated many alternatives before reluctantly agreeing to raise the fee and impose an assessment.

Sincerely,

Margey

I am a member of a condo association... and the board just voted in a 10% increase in dues and approved the budget for 2006. In the past these two decisions were voted on and decided by the homeowners at the annual meeting. We petitioned with 86% disapproval, but they said they were going to continue to enforce it beginning in August. Is this legal for them to demand this since 86% have signed a petition for these decisions to be voted on at the annual meeting? The Management Company seems also to be in favor of the Board's move. Any help you could give us would be greatly appreciated. The By-Laws seem to be very gray in this area. Our feelings are that we have some inexperienced and renegade type board members. Thank you.

- Carole

Either or both your association's governing documents as well as state statutes contain provisions detailing the process by which the annual budget is approved. Typically, owners do not vote on the budget, but there certainly are associations in which the governing documents require homeowner approval, particularly if the increase exceeds a certain amount or percentage.

If neither your association's documents nor state statutes require membership approval of the annual budget, there may be provisions that specify the procedure by which the homeowners may override a board decision. Absent such language, the only remaining alternative may be to remove the board through the procedure detailed in the Bylaws.

However, before you resort to such drastic measures as removing board members, I urge you to talk with your directors about the reasons for the 10% increase. Volunteer your services on a budget committee or ad hoc committee that assists the board in evaluating all available alternatives to increasing income and reducing expenses in order to minimize any raise in assessment amounts.

In actuality, 10% may not be an unreasonable increase when you consider the rising costs of utilities, insurance and insurance deductibles, three major components in most community association budgets. Additionally, the escalating cost of oil impacts every vendor and contractor who travels to job sites and purchases material composed of oil byproducts.

Sincerely,

Margey

Can people stop paying association dues because of lack of maintenance? Some people in my association haven't paid in almost a year because there roof needs repair or replacement, and has not been done. Thanks.

- Stacy

Community association governing documents (usually the Declaration/Master Deed/Covenants/CC&Rs -- the name varies in different parts of the country) usually contain a provision prohibiting an owner from withholding the payment of assessments and valid charges for any reason, including a dispute over maintenance or the lack thereof. In many associations, the board may foreclose on the home if an owner refuses or otherwise fails to pay all fees and assessments due the association. Foreclosure or the threat of foreclosure may be the only recourse available to the board to ensure that there are sufficient funds to pay for the association's financial obligations.

I urge you to talk with your board of directors about your concerns and to find out why the roof repairs have not been implemented.

Sincerely,

Margey

The HOA community I live is in Illinois. It is a small development only 24 town homes. Approximately 3 years old. A management company was contracted in 2004 for limited services (at least according to the Board President). I was nominated and voted to be a board member in Sept 2004. We have 7 board members 3 original, 4 new members as of September 2004, including the Treasurer. The President has been in position since 2002. The management company provides monthly financial statement to the President, Treasurer and VP (me). Recently, the board had approved a large paint contracting job and when time came for the bill to be paid, it came to light that cashflow income (special assessment) collection would not be fully collected to allow for making final full payment to the paint contractor. We have reserve funds in two bank accounts, which could be accessed to pay the contractor. When the special assessment funds are collected, these funds will be deposited into the reserve accounts to bring the reserve funds back up. The management company does not administer the reserve accounts for some unknown reason. However, they do prepare monthly financial reports that show these accounts as reserve assets. But, the amounts shown for these assets have stayed the same number for 8 months of reports I received. The management company says they only report information based on documents supplied by the board. The last bank statements in their file is from Jan 2004, that is why reserve assets amounts have not changed in the financial reports.  This seems strange as I believe the bank would send monthly account statements. But, I have asked the board President and Treasurer and the management company about who has been receiving these statements. No one knows, should the management company have been more persistent in tracking down the bank statements for the reserve accounts with the board? Another odd thing is for some reason the bank signature cards were not changed on these accounts. The Treasurer who came on in September, did get the signatures changed for the general funds checking account which is administered by the management company but did not do so on the reserve fund accounts. Our President cannot (will not) give me a clear answer, he's spent last two weeks trying to reach out to past board members (some who have since moved out of the community). The President did handle the wire transfer (as he is an authorized signer), but he tells me there is some error/discrepancy between what the bank shows as the account balance and the amount the management company financial reports show. Something does not smell right about this. Can you advise on what steps need to be taken to get records and financial reports up to date? I worry that some money is missing and need advice as to who I need to contact or report my concerns to? Thanks.

- G.

It appears to me that the problem may be more of miscommunications and disorganization than anything criminal. There are three sources to review to determine the financial obligations of the board and management company -- the management contract, the association's governing documents, and state statutes. One or more of these three sources should contain provisions specifically detailing how often financial reports should be submitted to the board, who controls the reserve funds, who has signatory authority on bank accounts, how frequently bank statements should be reconciled, the financial responsibilities of the of the association board and officers, and the financial obligations of the management company.

I suggest that the board retain the services of a knowledgeable accountant who can help the directors create a financial plan for the operations of the association, mandating specific procedures and processes for the management of the association's funds.

Sincerely,

Margey

My question is about capital and reserve funds/accounts. Could you explain the differences between them? If they are "restricted", what does that mean? What expenditures are included in capital? What can these funds be used for? Can you withdraw these funds for other uses if the original use is no longer needed? Thank you.

- Ken

Typically, a capital fund refers to money set aside to construct a new component, such as a pool, tennis courts, additional lighting or landscaping, or a gazebo. The reserve fund accumulates money to pay for existing common elements that will eventually be replaced. So, once capital funds are spent on a new component, money to pay for that component's eventual replacement should be included in the reserve fund allocation.

Capital and reserve funds are restricted to their respective specific purposes -- an association shouldn't spend capital funds on repairing a roof leak, nor should reserve funds be spent on a new water feature at the entrance to the community.

There may be serious tax implications for dissolving a capital or reserve fund and distributing the money back to the owners or into the operating account. A reserve fund may not be used for other purposes because the need to replace capital components for which the fund was established will always exist. I recommend that your board consult with an accountant familiar with the IRS' opinions on CIRAs (Common Interest Owners Associations) to ensure the appropriateness of their decisions regarding both funds.

Sincerely,

Margey

I own a vacation home in the lakes region of New Hampshire. We belong to a home owners association that collects $300 annually to cover the cost of trash collection, snow plowing, water pump maintenance and electricity (to operate the pump). There are 2-3 houses in the association that have not paid their dues in the past few years. They ignore the dues invoice sent by the homeowners association and don't engage in conversation about the topic. However, they continue to benefit from the services provided by the association.

We have a legitimate board of directors with annual meetings, etc, however, we're not quite sure how to address this issue. Can you please provide some advice? Thank you.

- Steve

Collecting a debt is a serious matter than can have both state and federal implications. In addition to the archived articles and Ask the Expert responses, I urge you to consult with a competent attorney knowledgeable in your state's community association law and case law to ensure that the assessment collection policy resolution you develop complies with all applicable laws.

Sincerely,

Margey

I am president of a 36 home development HOA in South Carolina. One family refuses to pay their HOA dues. What steps can be taken to attempt to collect? Notices and/or fines have not worked. Our declarations and by-laws provide for filing of a lien. Once the lien was recorded, no response from the homeowner. To pursue a judgement in court would be costly and risky to the budget as the homeowner in question has a history of non-payment & non-compliance. help if you can?

- Bill

Federal law, state law and your association's governing documents address the collection of a debt from a community association owner, so it's critical that whatever methods you utilize comply with all three entities. Because state statutes and community association governing documents vary so much, I urge you to consult with a competent attorney knowledgeable in South Carolina's laws and case law regarding appropriate means of collecting delinquent maintenance fees in homeowner associations.

Ask your attorney if he or she would attempt collection of the delinquency on a contingency basis, meaning that the association would not pay the attorney unless the debt was collected. If not, perhaps he or she could recommend a colleague who will. Another possible alternative, depending again on South Carolina law, might be to refer the delinquent owner to a collection agency which is paid from the proceeds collected after adding their fee to the total amount owed. Your state may allow garnishment of wages, reporting the delinquency to a credit bureau, and foreclosing the lien against the recalcitrant owner among other collection remedies -- all efforts that should be performed by an attorney or person very familiar with the intricacies of collecting a debt.

Sincerely,

Margey

I live in Arizona. My HOA's management company has not cashed checks for approximately 9 months of HOA fees. I was unaware of this oversight until I recieved a letter from a law firm that specialized in debt collection. My HOA, the management company and the board members have not tried to communicate with me previous to sending me to collections.

I should also add that I hand delivered my payment for June's fees and saw my checks for April and May sitting on the management associate's desk.

In addition to the original HOA fees, I am facing $200 dollars in research fees and 45 dollars to send me the collections letter.

My question is this - what obligation does my HOA and/or management company have to communicate the lack of payment previous to sending me to collections? Thank you for your assistance.

- Allison

According to Ms. Patti Jo Lewis and Mr. Tom Miller, CMCA of Lewis Management Resources, an Associa member community association management company in Tucson, your association's governing documents should contain provisions detailing a collection procedure. If there is no such verbiage in the documents, state statutes may fill the void -- you can access them through Association Times on our State Resources page. There are also federal and state laws that address debt collection, and your association must comply with every one of them.

Typically, association boards of directors adopt a formal collection policy which enables them to ensure reasonable and equitable treatment of all owners. A policy could require the issuance of collection notices to owners when a debt meets certain delinquent dates, such as at 30, 60 and 90-day benchmarks. If the owner remains delinquent after a specific date, the association assigns collection of the account to an attorney. Once the attorney begins the collection process, the association typically may not accept payments from the delinquent owner (to ensure there are no miscommunications with the attorney) -- perhaps that is why you saw your checks on the desk. However, many governing documents do not require the association to send any notices of delinquency whatsoever, imposing the entire burden of responsibility on the owner to pay on time.

Is it possible that the association did not have your correct address, resulting in notices being sent to some other location? Could there be other reasons why your payments were not deposited for 9 months? Have you made any effort to discuss your situation with the attorney or your board? Many times, misunderstandings are the result of miscommunications. Once the lines of communication are open and all parties can converse cordially and courteously with each other, it may take little time to resolve the issue.

Sincerely,

Margey

Where can I find guidelines for a fine schedule?

- John

The Community Associations Institute offers informative publications regarding the development of fining procedures and other reasonable methods to enforce deed restrictions. Go to www.caionline.org, then click on "Publications" and enter keyword "fines" or "deed restrictions".

Sincerely,

Margey

San Diego, California. If the treasurer of a HOA receives a bill from the Property Management Company for repairs made in the common area of the HOA by the property management company's maintenance division should the bill include WHAT was repaired and the LOCATION of the repair or simply state common area repairs? Furthermore is the Treasurer justified in not signing the check to pay the bill without knowing what was repaired and the location of the repair?

- John

In any business transaction, the invoice should contain detailed information regarding what work was done, when it was done and where the service was performed. Additional information such as time and material costs would be useful but are not necessary. Warranty information is helpful if relevant to the work performed and if a contract had not been executed that contained such information. Recording data on the repair enables the consumer to easily determine when the warranty, if any, expires, if the labor was unacceptable or the material defective, and when to plan normal maintenance and replacement

It would be prudent and reasonable not to approve payment for a service without first obtaining the information described above.

Sincerely,

Margey

My question concerns monthly association Ffees/late fees/attorney's fees. Until last December (2004) my Management complany was paying my monthly association fee and charging the amount back to me. Beginning in January 2005, I began to pay the amount directly. The last payment my management company made, in December 2004 was misallocated by the association and never put towards my payment. In the meantime, starting in January 2005, the monthly fees increased by about $3.50.

Just last week I received a letter from an attorney stating that I owed the association approx $600.00. This was based on no December 04 payment, plus a recurring $25.00 late fees from December through August 2005. Plus about $80.00 in attorney's fees.

We have proven to the association that the money was received last December. Therefore, the initial reason for accruing late fees, etc. was wrong. However, my January 2005 payment of $155 was about $3.50 less than the new payment amount of $158.50. (Starting with February I began paying the $158.50 amount). This lawyer is telling me that even though the association incorrectly charged me for December, they can still charge me a monthly $25.00 late fee even though the "late" amount is just the one time short pay of $3.50.

My question(s)- I know this is 2 different issues that are somewhat tied together, however, if the association would not have misallocated the December payment and the only issue was a one time short pay of $3.50 I cannot believe that they would have initiated a legal proceeding. In other words, does a one time $3.50 short pay and subsequent late fees constitute a "reasonable" involvement of an attorney plus all related costs?

If I explained this entire situation to a judge would he possible he would think that, given the association's original error, the entire proceeding was not "reasonable"? Please note that I have offered to pay a $25.00 late fee for the January error, but nothing more. Your thoughts please? Thank you.

- Budd

The association made the error and should pay the attorney for his time without charging back the cost to you. I even think assessing you a $25 late charge in January because of the $3.50 shortfall is excessive, but it appears to be valid in accordance with your governing documents. Your board needs to be reasonable and compassionate in every interaction with owners, thoughtfully considering each unique situation before determining the appropriate response.

Sincerely,

Margey

Hi. I recently moved into a gated community and the Board is looking to assess each home $200.00 for repairs from the hurricanes last year. Can you please tell me the laws regarding the voting process to allow the assessment to be approved.

I was told that the board is allowed to approve the assessment even if the homeowners vote the assessment down by a majority vote. Is that true?

- Michael

Your association's governing documents, typically the Declaration/Master Deed/Covenants/CC&Rs (the name varies by attorney and in different regions of the country), and state statutes should contain the criteria for approving a special assessment.

Sincerely,

Margey

I live in a 27 unit townhouse community in California. One of the units requires extensive termite repair. The cc&rs say nothing about this issue. The board contends we must all split the cost 27 ways. The HOA regulations say that each owner is responsible for maintenance and repair of the inside of their unit. Can the Board force each owner, by special assessment, to pay this cost?

- Jerry

According to Ms. Kathy Stobaugh of N. N. Jaeschke, an Associa member company based in San Diego, your association's governing documents should detail maintenance responsibilities for both the association and the homeowners. If the homeowners are responsible only for the finished interior surfaces, then the association must use common funds or special assess all owners to repair the damage to the structure inside the finished surface.

On the other hand, if the governing documents state that owners must maintain a specified portion of the structure behind the finished surface, then the association may need to split the repair costs with the owner of the unit affected by the termite damage. Some documents even provide that if the need for maintenance or repair only affects a particular unit or units, then the cost of the maintenance or repair may be assessed against just that unit or units.

Since it appears there is no verbiage in your governing documents specifically focusing on repairs necessitated by termites, your board could consider crafting a policy resolution addressing this issue. However, Ms. Stobaugh urges them to consult with a competent attorney knowledgeable in California condominium law to ensure that the policy is reasonable and complies with state statutes and case law.

Sincerely,

Margey

Are condominium association's required to file tax returns?

- Ethel

Yes, condominium associations must file tax returns. With the advice of a knowledgeable accountant, the board can elect to file either the 1120-H ("H" stands for "H"omeowners Associations") or the 1120 corporation tax return forms.

Please refer to previous Ask the Expert questions at for additional information regarding tax liabilities of condominium associations.

Sincerely,

Margey

Are you able to deduct a percentage of your condo assessment fees from your taxes?

- Seyfried

Homeowner association maintenance fees may be deductible under special circumstances. Please consult with a qualified tax expert who can evaluate your particular situation to determine if you may deduct all or part of your assessments.

Sincerely,

Margey

We need to specify and transfer about 20% of our annual dues to a Capital Reserve Fund for a roof project in 2011. Are there tax implications (Form 1120-H)?

What steps do we need to take? Any simple references on this subject?

- George

There are two tax forms for homeowner associations -- the 1120-H ("H" is for "H"omeowners Association), and 1120, which is for corporations (if the association is incorporated). The association may elect to use one or the other every year, depending on which one is most beneficial. The tax rate for the 1120-H is almost twice that of the base rate for the 1120 form. However, there may be serious tax implications regarding the reserve account if the 1120 form is used.

Because situations vary significantly in each association, I can only provide you with an overview of each option. To determine the specific implications of electing the 1120-H form for your association, I encourage you to consult with a knowledgeable accountant familiar with community association tax code. To read more about tax implications in community associations, you could purchase relevant publications from the Community Associations Institute's Bookstore.

Sincerely,

Margey

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

I have been assigned the task of updating our color palette for the architectural change committee. The problem is - I don't have any idea where to begin. Can you help?

- Jenifer

There are several local sources for help in updating the color palette for your association. Free resources include some paint stores, paint vendors and big-box do-it-yourself stores such as Lowe's and Home Depot. If you want to hire someone to create a new palette, consider looking for interior designers and architects.

I applaud both your efforts to modernize the approved color selections for your owners as well as for recognizing the need to obtain professional advice on what can be an emotionally-charged endeavor.

Sincerely,

Margey

Can you tell me the difference between an owner association vs. a professional off site person? And which do you think is better? Thank you.

- Ann

An owners association is a legal entity created either by the developer before the first home in a community is sold, or later by the requisite number of like-minded homeowners who comply with state statutes to create an owners association sometime after the community has been developed. The typical purpose of the association is to foster a sense of neighborliness, maintain the common areas and enforce the deed restrictions.

Perhaps by "professional offsite person" you are referring to a professional community association management company that is hired by the board of directors of the owners association to manage the administration of the association and the operations of the community.

Owners associations can be managed by a manager who is an employee of the association, by a community association management company, or by the homeowners themselves who volunteer their services to address the fiscal, physical and administrative aspects of their community's operations.

Which form of management is better? It all depends on the requirements of the governing documents and state statutes, the willingness and knowledge of the homeowners, and the expertise and cost of the management company. For a more detailed discussion of the disadvantages and benefits of each form of management, please review the Ask the Expert archives or the Community Associations Institute's Bookstore, click on Bookstore, then enter keyword "management selection".

Sincerely,

Margey

I live in a condo community in San Diego California. Can a homeowner (or a Board member) record (like with a tape recorder) the monthly homeowner meeting or must permission be grant by the board prior to recording? Does one even have to ask for permission from the board to record - or make the board aware the meeting will be recorded?

- John

Corporate legal experts recommend not recording and archiving board meetings because they could potentially be used against the board in future litigation. The Minutes of the meeting are the actual historical record of a meeting, so tapes should be destroyed or reused once the Minutes are approved.

However, many state legislators have imposed requirements on all corporations or perhaps just on property owners associations mandating the board to permit owners to audio or video record the meeting. Check your state statutes and parliamentary procedures.

Sincerely,

Margey

Does adding a swimming pool increase property values in small townhome community? I reside in a small (50-home) townhome community in *****, Georgia.

My questions is two fold:

FIRST:
Are there any studies available that reflect how the value of homes are affected by the installation of an in-ground swimming pool on the subdivision's common property (assuming such a measure is approved via a quorum vote by all homeowners and bylaws can be amended)?

Personally, I am opposed to such a measure. So far, the only statistical information we have obtained is from swimming pool companies and real estate agents, who, in my opinion, are biased in favor of such an addition.

SECOND:
What are the legal ramifications of adding a swimming pool (who's responsible if our community is sued for whatever reason due to pool) and what are the insurance liabilities (i.e., kids from other neighborhoods using pool with no supervision, no life guard, and possibly sustaining injuries, or worse, etc.)?

Any assistance you can provide will be greatly appreciated. Thank you.

- Kathi

If you don't feel comfortable relying on the opinions of a Realtor or swimming pool installer, why not talk with a certified property appraiser about the potential of increased property values resulting from the installation of a pool in your townhome community?

With regard to increased liability, of course the pool will bring more exposure to loss -- your association's insurance agent can tell you about how the premium may be affected by the addition of the pool. The insurance underwriter, state statutes and local health ordinances all have specific pool installation and security criteria that should minimize any possible insurance claim.

Is the increased cost of installing and maintaining the pool offset by the potential increase in property values and the enjoyment of the members who benefit from the additional amenity? I think those questions can only be answered by your membership through input at townhall meetings and ultimately at the ballot box in accordance with your association's governing documents, along with the help of open-minded board members and professional consultants.

Sincerely,

Margey

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

We are a homeowners association non-profit (not a condominium association) and some members are saying that there is legislation regarding insurance deductibles.  Currently, we have four buildings and each building has a 2% deductible.  Therefore, if one unit gets damaged and the deductible is not met, they are solely responsible for repair.  They are now saying that a law exists that prohibits this. I understand for a condominium homeowner's association, however, if this is true for not-for-profit homeowners associations, then if a house in a neighborhood suffers damage the whole neighborhood must pay?  Doesn't seem quite right.  I think they are lumping us in with condo homeowners. Could you clarify?

- Diane

You can check on your state's laws regarding homeowner associations at Association Times' State Resources page, then click on your state. Your association's governing documents may also contain provisions detailing the acquisition and application of insurance for both the association and the individual homeowner. It sounds like your association is a unique form of a common interest development if it isn't a condominium. If insurance underwriters don't have a classification for community associations such as yours, they may be forced to match yours to the closest category they have which, in your situation, may be a condominium.

Sincerely,

Margey

Our condo association employs a maintenance staff.  In addition to the common areas, subject to availability, they can also do work in owner units.  The fees for work in owner units are paid to the condo association. I presume that, as their employer, the association is liable for any negligence on their parts.   Would the board members have any personal liability - - given that this work is not to the common area?

- Douglas

The board should retain the services of an attorney to craft a release that all owners must sign before your association's maintenance personnel can perform work for individual owners that is not an association responsibility. The release would waive all liability by the association, board members, officers and staff (and management company, if applicable) in the event the worker damages the individual's property or causes injury to an occupant.

Sincerely,

Margey

I recently had a sprinkler pipe break in my unit. I was informed that the "Association Policy" covers everything from the studs out and the "Homeowners Insurance" covers everything from the studs in. Taking this into consideration, as well as Massachusetts General Law (Chapter 183A, Section 1-3) that, "the elevators, tanks, pumps, motors, fans, compressors, ducts, and in general all apparatus and installations existing for common use" fall under "Common areas and facilities" it is obvious that I have minimal ownership in the actual pipe that broke, and thus the subsequent water that fell from it. Therefore, shouldn't the Association should be held liable for any damages, personal property or otherwise, stemming from this incident? Is there any case law to back up my claim? Thanks for your time.

- Brad

Your association's governing documents and state statutes may contain additional information necessary for a complete understanding of your situation. For example, there may be a provision stating that an owner is responsible for common utilities at the point in which they enter the unit. Further, no matter the responsibility for the loss, your own insurance policy would typically be responsible for damage to your personal items.

I suggest you let your insurance agent and your association's agent determine which policy is obligated to pay for what. If that's not an acceptable solution, you may need the services of a competent insurance attorney knowledgeable in Massachusetts condominium law to assist you in sorting through the often confusing legal and insurance issues.

Sincerely,

Margey

Our association is small (6 units) and self-managed. Several years back, we decided to have one unit owner keep a set of all the units' keys for lock-outs and because we have some quarterly maintenance service requiring entry to units. So it was easier to have someone have the keys, although some unit owners in the past have elected not to supply one. Currently they all do. I am moving out and asked for my key back so I could supply all keys to the new owner. The president of the association heard about this and is insisting that I return the key immediately because the Illinois Condo property act provide authority for boards to require that keys to units be submitted. He included threats of not signing my paidassessment letter and therefore disrupting my closing. I cannot find this in the act. The only thing that is close to it is a reference to the boards having authority to enter units to do repairs that impact common elements or emergency repairs that are impacting other units. Is it correct that Condo associations can require that keys be provided? Can he hold up my closing because of this (I did pay my assessments)?

- Janey

The governing documents for your community association detail the powers as well as the limitations of your board of directors. Either your state's condominium act, your original governing documents, any amended documents or a policy resolution that was legally approved by the board can properly authorize your board to require that all owners provide them with access keys. Those same sources should also authorize the board to impose penalties for failure to comply with the relevant provision.

If no document authorizes the board to withhold required closing information for failing to provide an access key, then the board president must submit the closing documents in a timely manner.

Sincerely,

Margey

My condo association received a request recently by a homeowner who had lost a lower limb from diabetes complications. He wanted a sidewalk cutout in front of his unit and a reserved parking space for his wife (not a handicap space). After consulting with our management company, we told him he could have this cutout done at his own expense. He was unhappy and went to the state advocate for the handicapped. As it turned out, we were having other cement work done in the community and the mason agreed to do the cutout at no additional cost. We don't want to do a reserved space for the wife because parking is a hot button issue and others will want the same thing. The state code department and the advocate visited our site and are claiming that we have multiple code violations as regards accessibility for handicapped persons. We feel these violations should be laid at the feet of the builder and not this association. This could be a significant cost to us and to all the other condos in this area of  central NYS. Do all condo units with separate entrances have to be accessible by wheelchair? My neighbor has fused bones in her feet because of an automobile accident and she cannot negotiate ramps very well. Are there no protections for a community such as ours?

- Mary

Please refer to your state statutes and the U. S. Department of Housing and Urban Development Fair Housing Act, both available at Association Times on the Links & Resources page, for requirements regarding accessibility issues. You should also review all applicable local ordinances in order to determine the entire gamut of requirements affecting accessibility.

You may also need the services of an attorney knowledgeable in the above laws to guide you through the sometimes confusing and seemingly conflicting requirements.

Sincerely,

Margey

I am on the board of directors for our neighborhood HOA in Texas. There are a couple of questions that I have:

1. An amendment was voted on in Oct 2000, but was never filed with the county. The only documentation is an unsigned draft of the amendment and a newsletter that said it passed. Is it legal to file it with the county now and hold all homeowners to the amendment including those who have moved in after the amendment was voted on and prior to filing it with the county?
   
   
2. The board has an email from an attorney stating they can not fine without amending the CCR's because currently they do not allow for fining. The only remedy for non-compliance is litigation or entering the property and fixing the non-compliance. The board is considering a fining policy in spite of the legal opinion. Is this a breach of fudiciary responsibility?

- Craig

According to Dallas attorney Dean Riddle, "If they published the amendment to all the owners, then they have actual knowledge of the amendment. I think the amendment is enforceable against those owners. However, the amendment is perhaps not enforceable against persons buying after the amendment was passed because it was not recorded. Those owners have neither constructive (being filed of record) nor actual knowledge. However, if the amendment was provided to buyers in their closing packages, even if not recorded, it is still probably enforceable against them because they knew about it.

I think they can still record it because it passed. They just have problems with enforcing against those who bought after the amendment was approved but before it is recorded. The answer may also depend upon how long ago the amendment was approved before they noticed it was not recorded.

Look at the bylaws. If the amendment section does not require recording, the amendment, as long as properly approved by the correct vote, satisfies the requirements under the bylaws to be effective. It is probably enforceable against those who received a copy of it. The failure to record violates Section 202.006 of the Property Code. Even though Section 202.006 of the Property Code requires that bylaws and amendments thereto be recorded in the deed records, there is no stated penalty for failure to do so. I think 202.006 is a consumer protection measure to ensure that buyers get notice of all rules and documents governing their community. Nothing says you cannot record now or provides a time period within which you must record to be effective.

If the voting requirements are easy to achieve, then it may be wise to revote in order to eliminate the possibility of a challenge. The facts will drive the answer and the board's decision on a proper course of action. Avoid risk when possible and pick and choose the battles you are confident you can win."

Sincerely,

Margey

Thank you so very much for your reply. I have learned a lot from reading all of the Q&A's on your website. In reference to the scenario below where we are not a fining community, what other options are available or recommended with a resident who will not comply with an ARC ruling. I have come up with the following, but am hoping you have other suggestions:

1. Meet with homeowner - listen to their side of the story and explain the board's situation with regard to remedies. They have already appealed to the board and the board voted to uphold the ARC ruling.
   
   
2. Allow the non-compliance with condition that it has to be replaced with compliant materials when repairs are required.
   
   
3. Arbitration

Thank you again for your time and assistance.

- Craig

You've already done an excellent job figuring out some practical, realistic options to resolve the noncompliance issues at your community. Here's another one for you: perhaps some owners are financially or physically unable to remedy the violation. Is it possible to form a "Help Your Neighbor Committee" so that neighbors can pitch in to correct relatively minor deficiencies such as deteriorated fences and faded, chipping paint?

The Community Associations Institute offers a publication entitled "Reinventing the Rules" that may help you formulate creative methods to enforce reasonable rules. Please check their online bookstore.

Sincerely,

Margey

I live in a hoa in Georgia. No one living here seems to have received a copy of the bylaws. I have been trying to get a copy from the officers and or the developer.  They seem to be unaware of any bylaws for our hoa. The officers had no clue that we should have any until I brought it up. Aren't we supposed to have them?  We do have the covenants and design guidelines.  The hoa connected to ours had the same developer and they have bylaws. How can I get a copy of these for our own neighborhood?  Thanks.

- Cheryl

Bylaws detail the administration of the business aspect of a community association such as when the board and membership must meet, how many board members and officers there should be and what a member in good standing is. Whether or not a homeowners association is incorporated, Bylaws are necessary to ensure the smooth operations of the community.

If your community is still under or recently completed development, look for the disclosure book that was submitted to every owner prior to closing. That book (the name varies in different regions of the country) should contain every single legal document that affects the association and each homeowner. Perhaps your developer has extra copies, or you could conduct a community-wide search for one, perhaps posting a plea to your neighbors in a common area frequently visited by other owners.

Still no luck? Consider asking a real estate agent or title company/escrow officer for help, or retain the services of an attorney to conduct a search. If after all your efforts no one can produce the Bylaws, the developer's legal counsel may have overlooked drafting them. If Georgia state statutes require all community associations to have a set of Bylaws, your board of directors may need to retain the services of a competent attorney knowledgeable in community association law to draft a set for your association -- or the directors could copy the one from your neighboring community, ensuring that they are applicable to your association, and comply with statutory requirements to adopt it.

Sincerely,

Margey

Hello, First I would like to thank you for taking the time to read my question and offer your opinion. Thank you very much! I have been the Treasurer/Secretary of the ******* property owners association since September 1, 2004. Here is the Associations Web Site ********.

We recently held a meeting where we voted in several changes to out by-laws. One member has brought up the legality of these changes. Most of these changes were simply to change some wording as to bring consistency to the By-Laws.

Here is my question, in section 8.09 of our By-Laws state;

"These By-Laws may be amended at any regular or special meeting of the members of the Association by the vote of two-thirds (2/3) of the members entitled to vote thereon."

We, as the Board, interpreted this as being 2/3 assent of the people that showed up to the meeting. Our by-laws, before this meeting, did not provide any provision for proxy voting or, voting rights suspension. We considered "members entitled to vote thereon" as any member that showed up to the meeting.

This member that is bringing up the legality issue quotes section 7.05,

"Written notice of any meeting called for the purpose of taking any action authorized under Section 7.03 and 7.04 shall be sent to all members not less than fifteen (15) days nor more than thirty (30) days in advance of the meeting. At the first such meeting called, the presence of members or proxies entitled to cast sixty percent (60%) of all votes of the membership shall constitute a quorum. If 60% be not present for the first meeting called, a second meeting shall be called not more than thirty (30) days following the first meeting, and will require fifty percent (50%) of the members to constitute a quorum."

She is contending that the Amendments are not legal due to not having 60% of the lots represented. She is correct, at the meeting there was only 40% (or 36 of the 90 lots) that showed up. The notices were mailed out within the legal time frame with a sample ballot. All members knew of the meeting, and were given the chance to vote.

It is the position of the board that this section refers to taking action under a Special Assessment OR raising the amount the board could raise the Annual Assessment more than 10%. So with that being said, what is your opinion? Do the changes stand, or are they not "legal"?

- Carl

The document language that you cited was preceded by "Written notice of any meeting called for the purpose of taking any action authorized under Section 7.03 and 7.04". The language you cited that then followed only pertained to whatever is referenced in Section 7.03 and 7.04 of your document. Since you did not cite what was in Section 7.03 and 7.04, I do not have enough information to answer your question.

The language you cited, however, is very typical in association documents, and the two sections usually refer (as you later mentioned) to the approval of special assessments and annual assessments above a set amount which may be approved by the Board. If these are in fact the two items referred to in Section 7.03 and 7.04, then your Board is correct and those sections do not apply to amendments of the Bylaws.

There should be another section in your Bylaws (usually near the end) that specifies the procedure needed for amendment. Check your Bylaws again, and I urge you to consult with a competent attorney knowledgeable in community association law who would be more familiar with potential nuances in your association's governing documents and state statutes that may impact your effort to update your documents.

Sincerely,

Margey

CC&R's - Amending

I am VP of ******** Owners Association, which is a California non-profit condominium association for a 16-unit self-run condo conversion in *******, CA. We have ANCIENT CC&Rs, from 1978, and would like to obtain a correct new form of CC&Rs that can be tailored for us, then we would have an attorney review and file with, I believe, the L.A. County Recorder's Office. Am I even on the right track and, if so, can you tell me how I can obtain this form, hopefully electronically in MS Word? Any advice would be most appreciated. Kind regards.

- Laurie

Every community association has unique issues ranging from maintenance responsibility allocation between owners and the association to the more intangible concerns such as the level of services desired by the members. There are no cookie-cutter governing documents that will adequately address all those matters as well as comply with the most current state statutes and case law. However, if you want to lay the groundwork for your attorney, you could visit the sales offices of a few communities under development to review their governing documents, or research already recorded documents at the L.A. County Recorder's office.

I applaud your interest in updating your association's CC&Rs that are no longer relevant and that lack the enlightened verbiage of contemporary documents. The fact that you realize that an attorney is necessary to ensure that your new covenants comply with all applicable laws assures me that your efforts will not result in new CC&Rs that are invalid and unenforceable.

Sincerely,

Margey

I am trying to find articles of cooperation, by law examples. Can you direct me to help me get started? Thanks.

- Sandra

If you would enter "articles of incorporation" in the keyword field of any search engine such as www.google.com, you will find thousands of results that will provide sample verbiage for you. Enter "Bylaws" for similar results.

Sincerely,

Margey

What is "NOTICE OF INTENTION TO CREATE A LIEN"?  Is there a certain format it has to be done in? Can the Treasurer of the association and management company (owns management company) send this notice?  Does it matter that he signed as "Agent" not Treasurer? Lastly, isn't the notice suppose to be sent from their attorney's, on letter head? It's really messed up when the Treasurer among others own the unit above yours, causing damage to mine.

- K.

Most states permit only attorneys or other legally designated entities to place liens on property. Typically, in a community association the lien for delinquent assessments is imposed on each unit in the property before the first unit is sold, through the recording of the Declaration. It's not utilized, however, unless an owner becomes delinquent in maintenance fees or other legal assessments. However, since it's possible that the Treasurer is not familiar with the lien process, he or she may be attempting a do-it-yourself collection remedy that may result in clouding title to your unit.

I urge you to retain the services of a competent real estate attorney as quickly as possible to protect your financial interests in your unit. Perfecting the lien is usually the first step in foreclosure proceedings, so time is of the essence.

Sincerely,

Margey

We have a resident who files a new (unfounded) racial discrimination claim every few months. We have no contact with this person, but the suits continue in every forum under the sun. They are costing us time and money and we are completely frustrated. We have received death threats from this person. What can we do legally besides continue to respond to every complaint and duck if they show up with a gun at our door?

- C.

Allegations of racial discrimination are very serious, expensive and time-consuming, unfounded or not. Lay people should not attempt to represent themselves against the federal government with regard to discrimination charges. I urge you to consult with a competent attorney knowledgeable in discrimination law to help you resolve this issue, especially since threats of personal injury are involved.

Sincerely,

Margey

My condo association would like to reduce the number of renters but think they would not get the required number of majority votes to change the HOA to strictly owner occupied. We have heard of other HOA's discouraging rentals by charging owners who rent out their units a non-resident monthly assessment, e.g. $275.00 instead of $175.00. Is this legal? Do you know of any other creative solutions HOA's have found to encourage the owners who rent out their units to sell? Please advise. Thank you.

- Nancy

Please review the February through July 2005 archives of Ask the Expert for in-depth discussions about the concept of limiting renters in community associations.

Sincerely,

Margey

My wife and I own one unit, our residence, in a duplex condo in *******, MA. My brother owns the other unit and has been the worst kind of absentee landlord over the last several years, renting to several unrelated people, who thankfully didn't listen to loud obtrusive rock and roll, but who did enough damage to impact our property value.

He just had another tenant move out, leaving him holding the bag and now he wants to sell. I went to the bank this morning and chatted with them, and to tell the truth, I'm not really interested in tripling my living expenses, for any reason.

I would like to find a way for any new absentee owner to not pack the place with 20-something construction workers who smoke and drink till the wee hours. Do you suppose it's possible to add an amendment to our master deed, which I just realized is online, to prohibit an owner from renting to certainly not kinds of people, but numbers of people?

This is not a rooming house and he has been basically treating it as one for the past several years. He had a couple in the finished bedroom on the third floor, a guy occupying the second floor with the only bathroom, and a couple with a child occupying the first floor, with the only kitchen. Is there a way to prohibit that kind of use through an amendment? Thanks in advance.

- David

If your duplex comprises the entire condominium association, then it may be difficult to amend the documents unless you have a larger voting percentage than your brother. Read through your Master Deed/Declaration and Bylaws to determine the specific amendment requirements.

You might consider asking your local municipality if there are zoning ordinances or other habitation codes that limit the number of unrelated residents in a unit such as yours.

Sincerely,

Margey

Our declaration of condominium allows owners to match an outsider's offer to buy when a unit is up for sale. Is this right of first refusal legal & valid?

- Joaquin