Ask the Expert

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

Board election: Have 2 positions open = a regular 3-year term position and a 1-year postion [situation created because of resignation]. Should not these two positions be dealt with separately? Persons can run for a 1 year term or 3 year term. Voting ballot is for persons running for 1 year term and persons running for 3 year term??? I believe this is so. Our managing agent says we should just have people run for board; ballot of all candidates; top two candidates win; one getting most votes gets 3 year position, 2nd gets 1 year term. Does not make sense to me from both the candidate and the voter. Who is right?

- Donna

If your Bylaws do not specify the manner in which to elect board members, then the typical method is as your manager described. However, without a specific mandate in the Bylaws, your board may craft an Elections Policy that addresses this situation. Go to our Links and Resources page, then select "Parliamentary procedure" for more information on this issue.

Sincerely,

Margey

I live in an COA/HOA in Arizona. I have made complaints to the management about violations. They have responded but have also told members of the entire staff, subordinates and other employees who made the complaint. In turn, the homeowner my complaint was made against threatened me. I also just found out that whenever I make a complaint it becomes public knowledge. Is there some type of legal action I can take?

- Tony

Living in the United States where the accused has the right to face his or her accuser, it makes sense to conform to that same precept in the community association environment. Moreover, because a community association is comprised of neighbors, many boards of directors have passed resolutions requiring an offended neighbor to talk to the offending party before complaining to the board. Communicating with each other is the best way to prevent miscommunications and escalation of an issue, so try to look at the board's policy from a different perspective.

On the other hand, an offending party's threats of retaliation and reprisal are unacceptable and should be reported to the appropriate authorities. If the board is aware of the offending party's revengeful or rancorous nature, it may be appropriate to intercede on the offended party's behalf without revealing his name so long as no disclosure statutes or governing document requirements are breached.

Sincerely

Margey

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Our development consists of 9 local associations, five of which are condominiums. I have been told that the buildings and other structures in each of the condominium associations are carried as assets by the Master Association for the community as a whole even though our documents show that each local condominium association's members own an undivided share of the buildings and structures. Shouldn't the buildings show up as either assets or part of owners equity on each condo association's balance sheet?

- Barry

Condominium buildings do not appear as assets on the community association's balance sheet. While the association may be responsible for the maintenance of the common and limited common elements, each owner owns his or her unit as well as a pro rata portion of the common elements, including the buildings. In effect, the association owns nothing in a condominium association and therefore should not reflect any property on the balance sheet unless it owns a unit or other highly-valued asset in the community.

Sincerely,

Margey

We just had our annual co-op meeting. The financial statement was given to us. In reviewing past years to this year, the categories were similiar (operating expenses, etc.) We noticed that a CD was cashed out of our reserve fund for $120,000, and no back up supplied. When we questioned the board six said nothing and one person said he had seen the back up from management and it was ok, no data supplied to us. What can we do to find the money, and if management padded bills and took it as a kick back (we suspect). One board member said she wasn't aware a cd was cashed out. It seems that a few on the board do things in a very sneaky way. They threatened to raise the maintenance fee every year now. In 20 years of being a co-op, it was only raised twice. Please advise the next course of action. This is very disturbing.

- Sheryl

Most governing documents and state statutes require that the books and records of the cooperative/community association are available to the members for reasonable purposes and during reasonable hours. I suggest that you locate that provision in your documents and/or statutes and attach it to your written request to the board to view the financial records of your association.

If your maintenance fees have been raised only twice in the past twenty years, I can understand why the $120,000 Certificate of Deposit was cashed in. Even at an average inflation rate of 5% per year (remember that back in the 1980s inflation was above 20%!), your association has lost tremendous buying power while costs of repairs and services have skyrocketed. Even if previous and current boards had increased your maintenance fees a minimum of the Consumer Price Index (CPI) each year, your association would still be in serious financial straits because budget line items such as utilities and insurance, and every building component affected by the price of oil, has far exceeded the CPI.

If your property values have increased and your building has been well maintained with only two maintenance fee increases in twenty years, your board members have been walking a very tight rope. It sounds to me like your association needs the consulting services of a competent CPA not only to conduct an audit of the association's funds, but also to help the board draft a long-term financial plan. The financial plan should include hiring a Reserve Specialist ("RS") to conduct a replacement reserve analysis to determine the current condition of the physical components of your building, when they are expected to be replaced, how much it will cost to replace them, and how much the association should be setting aside monthly for the eventual replacement of those components.

For more information on reserve studies and audits, enter each topic in the keyword field of the "Search" function.

Sincerely,

Margey

My condo is going through foreclosure. At what point do I stop paying association fees for a property that I no longer own.

- Daniel

I'm not sure I understand why the association is foreclosing on you if you are paying your fees. However, even if the association does foreclose and you are no longer the record owner, you are still personally responsible for all amounts due the association including maintenance fees and collection costs. I urge you to talk with the association's attorney to determine your options.

Sincerely,

Margey

I am a member of the internal audit committee at my association. I rely on your website for documents, rules and regs, and information. Recently a question arose for which we do not have an answer.

We have a new management company. There are months when the Board of Directors does not approve the financial statements as presented and requests changes and/or corrections. One member of our committee thinks this is illegal and cannot be done.

Do you have any documentation covering this situation? Thank you.

- Linda

It is certainly proper for the board to ask the management company to correct errors in the financial statement and resubmit it with the requested revisions. It is not appropriate for the board to instruct the management company to alter reality.

Sincerely,

Margey

I am a Board Member at a large community in Alabama where the HOA has nonprofit status. It has been suggested that the HOA community website offer paid advertising to community businesses to offset HOA expenses. We are significantly in the red. We have not gotten an opinion on this yet but it is believed by some members that we risk losing our nonprofit status if we venture along this pathway. I see this practice occurring at other HOA's. There must be some pathway markers if it is permissible or the HOA's I have observed are operating outside of the envelope. Can you offer any advice?

- Ed

To maintain the association's nonprofit status, the Internal Revenue Service requires that a certain percentage of income (typically 60%) must come from exempt sources -- in a community association, that would mean maintenance fees, special assessments and other similar revenue. Newsletter advertising is an excellent alternative source of income. The Community Associations Institute offers several publications that address ways for a community association to raise money without raising maintenance fees -- go to the CAI website and click on "Bookstore" for more information.

Sincerely,

Margey

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We recently moved to a new development. We have observed that there are many non-members using our common area ponds for fishing. We have been told that our homeowners association carries insurance. Do we need to worry about liability risk as homeowners because these people are not members of the association?

- Allen

Yes, indeed, the board should be concerned about liability issues with regard to nonmembers using your association's common area ponds. And it's not just liability issues relating to the ponds that you board should be concerned about. Allowing the public to trespass on private property exposes the association to potential criminal behavior. Additionally, if the association is stocking the ponds, it's an expense to each member every time a nonmember catches a fish. If the pond is naturally stocked, there may be concern about a gradual diminution in the quantity of fish, expedited by the nonmembers taking advantage of the free fishing opportunity.

Sincerely,

Margey

I live in a small HOA in Texas. The HOA's charter was dissolved in 1994. Do we still have an association and are the bylaws and restrictions enforceable if there is no charter? Can we still be charged assessment fees if there is no charter? It is my understanding of the Property Code for Texas that property owners have the right to vote on issues that pertain to special emergency assessments, is this true if you are delinquent? If your delinquent dues are sent to a collection agency for collection but the HOA excepts payment toward the dues, is HOA obligated to continue to receive payments or am I forced to deal with the collection agency? It is my understanding that if they accept payment toward the dues that no further collection action can be taken as long as regular payments are being made. Our board has no appointed committees for anything, they run everything themselves, most of the board members have numerous rental propeties and continually amend the bylaws to suit their own needs. Is this legal or do they have to have committees? The board members have also amended the bylaws to read that for each property owned they have a vote. My understanding of the Property Code is that no matter how many properties owned they should only have one vote. Am I correct or have they given themselves the right to more than one vote? Our bylaws state that amendments can only be made by unamimous vote of the board and 2/3 property owners. They do not get 2/3 owners to vote in favor of most of the amendments but pass them through with their own votes for each property they own. Is this legal? I have asked a lot of questions, and if the answer to my question regarding the dissolved charter since 1994 means there is no legal acting HOA then I understand if you would like to dismiss my other questions. I am a frustrated property owner who tries to look out for the interest of most of my neighbors that seem to be getting the shaft by the board.

- Tammy

You certainly do have a lot of questions, so I'll answer them in the same order they were presented:

1. While your association may no longer be a corporation because its charter was revoked, it is still a legal entity created by the recording of its Declaration. The actions and decisions of the board are valid, although the board and the owners have more personal liability in the event the association is sued.
   
   
2. Go to our state resources page, scroll down and select "Texas". Read Chapters 201 - 210 of the Property Code to learn about laws governing Texas community associations.
   
   
3. Typically, if the association accepts payment from a delinquent owner, even though the payment does not pay for the entire delinquency, the association must then start over again with its collection efforts unless either state statutes, the association's governing documents or a valid board resolution states otherwise.
   
   
4. It is not unusual for board members to be the only volunteer leaders of the community. It often defaults to them to do everything because no one else offers to serve on the board or a committee. On the other hand, if the board discourages participation, it may be time to galvanize your neighbors to elect new board members at your next annual meeting or at a special meeting specifically called for the purpose of replacing board members.
   
   
5. The board cannot amend the governing documents unless specifically authorized to do so in that document.
   
   
6. It is standard verbiage in community association governing documents that each lot owner has one vote. So, if someone owns five lots, he has five votes.

Good for you for asking questions and trying to understand how your community association operates. A community association is successful only if the members participate in its operations and administration.

Sincerely

Margey

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I sit on our board as a "board member at large". We have 154 units classified as 1-2 and 3 bedroom townhomes. The site is approximately 12 acres with 5 acres as grassy common area. Since the inception of this neighborhood, we have had two playgrounds located at either end of the community. The prior board from almost two years ago had to remove the playgrounds due to code compliance problems. There was a budget approved out of replacement reserves for $30,000 for a new playground and backed by majority support from a mailer sent out to all the homeowners approving the replacement. We have a total of 5 board members and three have maintaned an effective "stall tactic" on the rebuilding of the playgrounds. Have you ever heard of a situation like this and any advice as to the boards obligations to replacing the play structures in a timely fashion. We do not have money troubles in our association finances and have a large reserve. Thanks.

- Kevin

Boards of directors of community associations are charged with the responsibility of maintaining common elements and protecting property values within the community. They are elected representatives of the membership and should, within reason, state statutes and governing document mandates, be responsive to the desires of the residents.

Try to form a small group of three or four individuals to meet with the board to determine why the directors are stalling on constructing the new playground. There may be legal, valid reasons for the delay. If your group determines that the board is not acting in the best interests of the association as a whole, perhaps the group's members could consider volunteering your and their services on the board at the next annual meeting.

Sincerely

Margey

Our board members spontaneously drained our spa and took away our pool furniture coincidentally on Memorial Weekend, due to, they said, vandalism and trespassing. They say everything will be back up and running as soon as we get our new security system in which there is never a straight answer as to when this will take place. They have quit taking care of our pool altogether. It's all cloudy and dirty. How long can this go on? This is our only amenity and it's summer time. Is there anything that can be done? They only spend $300.00 a month on this pool which gets heavy, heavy traffic. Lot's of small children live here. I feel they need to step up the maintenance on this as well. How much should an association with a busy pool expect to spend yearly on upkeep?

- Amy

There are serious Health Department implications for failing to maintain the pool according to strict standards. I suggest you mention to the board that although the pool may be closed, the association is still obligated to maintain the pool according to municipal code. If you see no action or effort to clean the pool after your communication to the board, consider reporting the pool condition to the Health Department.

Depending on the size of the pool, type of equipment, weather, use and other variables, $300 per month may be an adequate amount to pay to maintain the pool.

Sincerely,

Margey

We are looking for a new Property Management company. What is the difference between an Accredited Association Management Company (AAMC®) and Accredited Management Organization (AMO®)?

- Rob

The Community Association Institutes confers the AAMC (Accredited Association Management Company) designation on community association management companies that have demonstrated compliance with the strict criteria that mandate a specific level of service and detailed financial reporting for their community association clients. The Institute of Real Estate Management bestows the AMO (Accredited Management Organization) on property management companies that provide the recommended or better level of service to their clients which are typically office buildings and apartment complexes.

Sincerely,

Margey

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Last week the Board of Directors at my 250 unit Condominium complex in Washington State decided to prohibit propane barbecue grills. They informed us that the NEW Owner of a unit is/was a fireman ("the Fireman") who told the Board about the hazards of allowing barbecues on limited common areas of the complex; specifically concrete patios and wood balconies. The Fireman indicated that 69% of all apartment/condo fires are due to barbecues. Last week the Board held an executive meeting and decided to change the Bylaws for our community by prohibiting barbecues within any limited common area. I received a notice about 5 days after the decision was made. The Board did offer to maintain one (1) barbecue to be located at the common Pool/Cabana area in which we would all need to share (250 unit condo complex sharing one barbecue, not realistic). Although I am well aware of barbecue hazards, (Insurance statistics show cooking/kitchen fires to be the number one claim actually) but is the Board overstepping the proper procedures for implementing a "use change" for the limited common areas??

The Board added this provision in the Bylaws - as such a prohibition relates to the use of an owners property with regard to their limited common area (patios & balconies) wouldn't such a prohibition be a restrictive covenant, a restriction running with land, and as such would require a vote from all owners to change the Declaration? Isn't the intent of Bylaws to provide for the administration of the corporation itself and the Declaration (CCR's) intended to administer the use of the untis and limited common areas?? Could allowing a single barbecue at the common pool/cabana area be construed as discrimination and thus opening the complex up for possible litigation from Owners?

- MD

Please refer to the search function on our website to find previous answers and articles addressing the authority and limitations of the board.

With specific regard to barbecue grills on patios and balconies of multi-unit buildings, what the fireman said was true. Worry less about the rights of the board than the nightmare of burning down your building, destroying you and your neighbors' belongings, because your barbecue grill heated up the nearby siding to the combustion point. Considering the potential consequences of the grill should put this issue in a better perspective for you.

Sincerely,

Margey

I am the President of our HOA which is made up of 326 single family residences in south central Texas. The HOA Board has given permission to one of the home owners to hold a backyard Bible Club in one of our parks for a period of four days. Is the Association at risk of violating the rights of any of the other home owners by letting a religious group (or any other group for that matter) use HOA property?

- Paul

If the members of the association are in favor of holding gatherings similar to the once you described, and if there are not provisions in the governing documents specifically prohibiting events such as the one you described, I suggest that the board craft a resolution that details the criteria for holding such affairs. By formalizing the approval process, the board can address similar requests to ensure fair and equitable treatment of all owners.

On the other hand, if the board determines either by survey or by discussion that the majority of owners prefers not to hold such functions, then it would be appropriate to craft a policy stating that such gatherings will not be permitted.

Sincerely,

Margey

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