Ask the Expert

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

I was the President of a very small Homeowners Association in Virginia. Upon taking office, I noted that in the past, it appeared that many of the association's practices were in fact illegal and out of line with our governing documents. I wanted to make sure that the Board did not fail in its fiduciary responsibility, so I enacted practices and procedures that were in line with the rules. I explained to the homeowners what and why I was doing it. Homeowners literaly threatened me for refusing to follow the will of the majority rather than sticking to the governing documents and/or the law. (One homeowner actually stated that "if we knew you were going to follow the law, we never would have elected you.")

I was removed from the Board and a new election was held which also violated the procedures laid out be the governing documents. I have pointed this out numerous times and been rebuffed. Now this new so-called Board has developed new governing documents which are extremely harsh. I have pointed out that since the Board was illegally elected that these documents cannot be put in place.

A vote was held on the new documents and they did not pass. (One member had abstained.) They then held the vote again the following month on the same documents, got the abstaining member to vote and cited Roberts Rules of Order in allowing them to rescind the previous vote. (The only problem is that Roberts Rules of Order were not in the existing documents nor in the Virginia Code and therefore, it is my belief that it cannot be used.) What are my options?

They are moving ahead with filing these documents which I believe are strongly detrimental.

- Stephanie

I posed your question to Ms. Lana Reynolds, President and CEO of Community Management Corp. an Associa member company based in Fairfax, Virginia. Ms. Reynolds strongly urges you or the board to consult with legal counsel to determine if the board's actions are valid and enforceable and, if not, what steps must be taken to rectify the situation. The association's Directors and Officers ("D & O") Liability Insurance agent should also be alerted to possible litigation resulting from the board's actions. It is possible that the insurance agent will investigate the circumstances and advise the board that unless all decisions were 1) made in the best interests of the association as a whole and 2) in compliance with the association's governing documents and state statutes, the D & O carrier may not extend coverage to any of the board members. That means that each board member would be personally liable both for defense costs and any judgment or settlement. Given such alarming news, the board members may reconsider their previous actions.

Sincerely,

Margey

I have searched for the answer to my question, but cannot find one. We really need a lot of help, however, the main issue is this: Our HOA Attorney is the personal attorney to a board member. When contacted by my husband, who is running for office, to ask a question the attorney said that there is a problem because she (The Attorney) is miss XYZ's personal attorney also. The reason my husband contacted the attorney was because the board member is not the owner of her home. Bylaws state she must be. Our recorder's office is very up to date, and Miss XYZ claims she has a Quitclaim deed with her mother. But she refuses to show a copy. There is so much more to this story, but neither you nor I have the time. Thank you for whatever advice you can offer.

- Debbie

If your governing documents define an owner as one who is the record owner of his/her lot or unit, then the alleged Quit Claim must be filed in your local jurisdiction's deed records so that anyone performing a title search will see the document. Absent recorded proof of ownership, it is possible that the board member is not a legal member of the board of directors.

It could indeed be a conflict of interest if the board member's personal attorney is also representing the association. To ensure legal opinions and recommendations that are in the best interest of the association, I would suggest locating an attorney not related in any way to any board member and who is a member of the Community Associations Institute (CAI), a national research and educational organization whose focus is to foster successful, reasonable community associations. You can find such an attorney at CAI's website, www.caionline.org. You might also consider consulting with Mr. Matt Englert, President of R & G Management Company.

Sincerely,

Margey

My husband is president of the BOM at our condo, NY. For the past two years, several of the elderly unit owners have become very upset with the BOM's and in particular my husband because of a 4 year assessment. One resident, who is not the unit owner, but the husband of the owner, has been very vocal stating that my husband is stealing from the condo and is doing so with the management company.

Recently, this resident questioned an expenditure on the year-end financial statement. The management company was asked to provide the resident with an answer. The resident was not satisfied with the answer and demanded a more detailed breakdown. He was told no by the management company. My husband has asked the management company to provide more details. They have not done so because they were in the middle of moving their office. In the meanwhile, the resident has started knocking on doors telling people that my husband is stealing and then bullying them into signing a petition to remove my husband from the BOM. Of course my husband is not stealing, as a matter of fact this resident recommended my husband for a second job a few years back.

So, does my husband have a right to sue this resident for slander..."The President is stealing and is on the take" and is there any legal action that can be taken to nullify this petition as one unit owner, who refused to sign it, said that the resident was trying to bully him into signing it and the resident's wife, as usual, had to pull him back.

- L.

Instead of spending money on an attorney, why not hire a CPA to conduct a forensic audit to prove to your husband's opponents that the association's funds were not mismanaged and no theft occurred? The association should bear the cost of the audit and any other expenses related to investigating any claim of malfeasance by association officers.

Announcing to association members that the audit is in progress should allay their concerns and reduce disharmony. Hopefully, the audit results will conclusively eliminate allegations of misappropriated funds and your husband's good name will be restored.

Sincerely,

Margey

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Our HOA was established in in ****, NY and went through several bankruptcies over the years. The last sponsor assumed control in 1998 built the third Phase of the community, which is legally defined as a separate condominium. Each condominium (Phases 1 through 3) is supposed to have a board of managers and each of those Boards elects members from their board to represent the condominium on the Board of Directors of the HOA, which manages all the community common issues.

The seats on Phase III's Board of managers were held by the sponsor until the last unit was sold in 1995. The By-laws for this phase were poorly written and don't provide for election of new board members. Needless to say, this has cause much consternation among the home owners.

The Phase III by-laws were recently re-written by me and several others on my committee, but the rules are being challenged as to who may be elected to the board of managers. The present revised but not yet accepted rules allow for the home owner, as well as their spouse or registered domestic partner to sit on the board. What NYS laws define the make-up of a Board of Managers? I have found references to the BoM in the Condominium Laws (Art 9-B) but nothing about how a BoM is created or seated.

Thank you for any help.

- Jim

I urge you to consult with a competent attorney knowledgeable in New York non-for-profit corporate and community association law. Crafting bylaws and rules for a community association is no job for amateurs, and can result in embroiling your association, and possibly each board member personally, in expensive litigation for years to come.

Sincerely,

Margey

Our Homeowners Association is an upscale 42 building lot community that is nearly 100% developed. Several members own more than one building lot. Our by-laws state that membership in the association cannot be separated from ownership... and yet previous boards have prevented the owners from casting multiple votes in association matters, while assessing maintenance fees for each lot owned. A majority of the new board members believes that this policy separates membership from ownership. In actuality there are 36 voting members and yet there are 42 assessments collected. Can this be right? Can this be legal?

- Bob

Typically, in well-drafted community association governing documents each lot is allocated a single vote. If someone owns three lots, he or she is allocated three votes. This policy is not "separating membership from ownership", but simply establishing an uncomplicated process for determining voting rights.

You might also review your state statutes to determine if the issue of voting is addressed in any statutes, including the nonprofit corporation act. If there is still a question regarding who can vote and how many ballots they may have, consult with a competent attorney knowledgeable in community association law.

Sincerely,

Margey

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At what point should receivership be considered for condos that can no longer be maintained by the homeowners?  My 20 unit building is comprised of 14 units of retired and/or disabled seniors on fixed incomes who cannot afford assessments, and 4 units with liens for non-payment of HOA fees.  Only 2 units pay the full HOA fee each month.  Meanwhile, the building is in dire need of repairs, including collapsed ceilings in the Recreation Room and parking structure, wood fencing and sections of the building falling apart due to termite infestation, pipes and drains in the parking structure backed-up with water, a "green" molding jacuzzi, non-working intercom system, rotting entrance doors, etc.  There is only $3,500 remaining in the "reserve" fund. What can I do?

- Debbie

When someone purchases a home, he or she should understand the financial obligations that accrue to home ownership.  In a community association, each owner is obligated to pay not only the monthly mortgage requirement but the association dues as well to ensure protection of property values and adequately-maintained common elements.

If a community association files bankruptcy because the owners cannot or will not pay the fees necessary to maintain the common elements and cover administrative expenses, the bankruptcy trustee doesn't let the owners off the hook. In fact, owners may be looking at a far more stern taskmaster who is obligated to pursue all legal remedies, including foreclosure and personal money judgments, to collect all money due the association at whatever amount is established as necessary to meet the monthly and long-term financial obligations.

I recommend you call your neighbors together for an informal get-together to discuss the poor financial condition of your association and possible consequences. It would be helpful to ask a competent attorney knowledgeable in your state's community association law to attend the meeting and educate those present about their personal obligations to their community association, and the repercussions if the association fails to comply with its responsibilities.

Sincerely,

Margey

I purchased a new garage from the association. There are 4 new garages and eight 20 year old garages. I have been issued an assessment for replacing the roofs on the 20 year old garages. I don't think that I should be paying the assessment on the old garages. I think that unit owners who have or had rights to the old garages should pay the assessment. Comments?

- Joanne

My answer depends on the legal structure of your association. If it is a condominium, then you own an undivided interest in all the common and limited common elements and probably share with all other owners responsibility for the maintenance of those components.

If you live in a planned unit development such as a single-family subdivision, each owner is probably responsible for the repair to the improvements on his or her lot.

However, I can only talk in generalities. Your association's governing documents should contain specific wording that addresses who or what is responsible for maintaining the garages.

Sincerely,

Margey

Can a board destroy a common area without the owners consent? It is now 2/3rds destroyed. What is the proper guidelines for dealing with the destruction or repair of common elements? Our board is misusing their trust, what can we do to stop them? I have read the Texas property codes 81 and 82 and they do not give any leeway for mistrust. What can we do?

- S.

Your board of directors must follow the provisions in your association's governing documents pertaining to reconstruction or abandonment of common areas. When in doubt, consult with an attorney to ensure that the appropriate and legally-correct direction is taken.

Regards,

Margey

We live in a brand new condo development in Phoenix, we submitted to install engineered wood floor in the living area. The HOA has been in effect for about 6 months, this is the first request they are looking at. They have denied my request based on the fact that they do not know how to proceed with making decisions on stuff like this. What can I do?? What is the worst they can do to me if I install it anyway??

- Mike

The "worst that can happen" can be pretty bad, such as the board legally requiring you to remove the entire floor at your expense, particularly if it creates a sound problem for your neighbors.

With regard to the board's inexperience, I would urge them to retain the services of a competent attorney to learn about their legal responsibilities as board members and how to accomplish them. Additionally, consider contacting Ms. Jan Lines, CEO of Jomar Association Services, an Associa member professional community association management company located in Phoenix for information and assistance.

With regard to your proposal to install engineered wood flooring in your unit, I recommend that it includes sound-deadening material below the finished surface to ensure that the new floor will not detrimentally impact neighboring units.

Sincerely,

Margey

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