Questions & Answers

Where can I find a list of management companies in the local area in which I live?

The local Yellow Pages can be a general resource to find a list of management companies. In addition, the Community Associations Institute (CAI) is a national association dedicated to providing education and resources to community associations. CAI has a website that lists local chapters who can assist in providing a list of local management companies. A list of local chapters and contact information can be found at CAI's website at CAI Online. When considering a management company, be sure to look for those management companies with the "AAMC" letters following their name. That stands for Accredited Association Management Company, a designation bestowed by the Community Associations Institute on a select number of companies that comply with stringent criteria that include manager education and designations, years in business and financial reporting. Also look for PCAM-certified managers.

I am planning to purchase a condominium in a development that is still being built out. What can I expect regarding changes in my dues and fees?

Dues for an association often increase since inflation and the cost of goods and services increase. Insuring the buildings and common areas in a community is often the largest single line item in a condominium association's budget. As a result, any increase in premiums will certainly affect the amount that must be collected from the owners. In addition, to ensure a healthy reserve fund for future replacement of the major components in your community, such as roofs, driveways and pool decks, you will see an increase in maintenance fees some proportionate amount every year. Since your development is still being built, the maintenance fee sometimes increases once the builder completes construction. It depends on how much the builder is currently subsidizing the monthly expenditures and funding reserves. Asking the builder or management company for a copy of the latest financial statement will provide a better idea of the current financial condition and monthly expenses.

Typically, the governing documents are very specific about the special assessment process. Often, the homeowners, not the Board of Directors, must approve a special assessment or an increase in maintenance fees that exceeds the maximum amount or percentage provided in the Condominium Declaration/Master Deed. Special assessments are not always a foregone conclusion -- if the Association has been setting aside sufficient amounts for their reserve fund over the years, there should be enough money to pay for the replacement of the roof/pool deck/driveways when the need arises.

Some states require a community association to file financial statements with a state examiner. How does this benefit a property owner or association?

Financial reporting requirements are intended to ensure that homeowners have the opportunity to review the financial condition of their community. It also can protect the association from potential liability by mandating an accounting of the monies collected and spent on behalf of the members.

We are in a situation where our local village will issue building permits for items the HOA will either not allow or will allow with restriction. How can we get the village to request prior approval from our HOA prior to issuing a building permit?

If your Village leaders are approving building permits and variances that violate your deed restrictions, it sounds like some folks at City Hall need an education on the authority and purpose of a homeowners' association. The best way to start the learning curve is to personally talk with your elected representative, either on your own or bring your entire board with you. Give the representative a copy of your governing documents in which the applicable provisions are highlighted, and also present him/her with a copy of your annual budget to demonstrate the extent of your association's responsibility.

Once you have educated your representative, ask him to champion your cause with the Village Planning Department. If that proves ineffective, try organizing other association members to attend the next Village council meeting to discuss the importance of the association's deed restrictions for protecting your community's character and property values. You might also investigate how other villages and cities address potential deed restriction violations resulting from building permits.

I have a question regarding the Order of Business on our Board meeting agenda. The Order has been: Call to Order, Roll Call, Minutes, Etc...

However, there has been recent discussion that the Roll Call should be first in order to establish quorum, since no business can take place without proper quorum. In opposition, others say that the Call to Order is first to quiet the room and begin the meeting, like a bailiff in court would do, or a teacher at the start of a class.

Your thought process about the order of business at a board meeting mirrors Robert's Rules of Order. According to "Robert's Rules of Order Newly Revised", 1990 Edition, edited by Henry M. Robert II and William J. Evans, "When the time of a meeting has arrived, the presiding officer opens it, after he has determined that a quorum is present."

While most community associations are not bound to follow Robert's Rules of Order, the Rules are the material most referenced with regard to the conduct of formal meetings. After all, it certainly makes more sense to ensure that a quorum is present before taking everyone's time to hold a meeting in which no action may be formally approved.

My HOA will not open up their Board meetings. They normally do not publicize their monthly meetings and even when they do, and members show up, they dissolve the meeting into a closed executive session. Our Board members are in violation of several deed restrictions, and one member has potential conflicts of interest with a contractor. What can be done to open those meetings to the membership?

In most states, the Open Meetings Act applies only to governmental entities and does not apply to community associations. Even laws dealing specifically with community associations do not require open meetings. However, most states do require owners a minimum of open access to community association books and records. As a result, the association's bylaws or perhaps the covenants, conditions and restrictions control the administration of the business functions of your community and how meetings must be held and conducted.

Can owners have access to voting records of board members? Our community does not publish minutes or make known how each member voted on issues. How do we know who to vote for in an annual election if we do not know how individual board members vote on issues?

Regardless in which state you reside, I am not aware of association governing documents or state legislation that didn't require the books and records of the association to be open to the members (owners) of the association or corporation.

I would suggest that you call the keeper of the minute book (either the manager or a board member) to request the opportunity to read the minutes of the board meetings. If your request is denied, read the Declaration and Bylaws for your association so you can quote the specific provision requiring that the books be open to the owners. If you can't find it there, look on your state's website under the real estate or property heading for specific legislation for condos or planned unit developments (they'll be called something like The Condominium Act, Planned Community Act or Uniform Common Interest Ownership Act) to find the specific wording. If you still have no luck, go again to your state's website to check out its Nonprofit or Not-For-Profit Corporation Act.

Since owners are essentially stakeholders in the association, they should have direct access to all books and records of the association.

Our bylaws do not specifically address spending for community-wide events. Our total spending on such events (pizza parties, fall festivals, etc.) is approx. 1% of total assessments. Are these types of functions an acceptable expenditure for the board to approve with association funds?

Unless your Bylaws or state statutes specifically prohibit spending funds on community-wide events for your residents, it is an acceptable association expense. Surveying the membership on such expenses can also provide an arguable mandate for continuing this practice. The minimal expenditures for these types of events are often a worthwhile investment by building a sense of community among association members.

Regarding the hiring of a contractor by an association, do state laws require that the contractor be insured? Also, how can an association verify that a contractor is fully insured?

Insurance coverage requirements vary by state. Regardless of insurance requirements, an association must be careful regarding its coverages so as to protect the association's assets from liability exposure. Often, if an association does not carry its own workers compensation insurance, and an employee of an uninsured contractor is injured on the association's premises, that employee could sue the association under its general liability policy. A jury verdict could exceed the policy limits of the general- and umbrella liability policies, so the association would have to special assess each owner to fund the difference or find other ways to pay the judgment. However, if the association carries workers compensation insurance, even though it will have to pay a larger premium to cover the uninsured contractor, it will be protected under a state's workers' compensation regulations. That means that the state commission takes care of lost wages and medical treatment, and even payments in the event of death or dismemberment.

How can you be sure that all contractors hired by your association carry workers' compensation insurance? Require them to have Certificates of Insurance sent to you or your management company's office DIRECTLY from his insurance agent. Do not accept copies brought, mailed or faxed to your office -- there's too much chance of fraudulently revising the Certificate to reflect coverages that don't really exist. Also, when bids for work are solicited, be sure that the specs include proof of workers' comp coverage by way of that Certificate of Insurance, so you won't be disappointed when you find out that the lowest bidder is so much lower because he doesn't carry workers' comp insurance. Require the Certificate of Insurance from the contractor's insurance agent before you even consider the bid.

One final note -- "alternative workers comp insurance" is usually nothing more than a medical policy for the contractor's injured workers. It does NOT protect the association at all from claims filed against the association's liability policies.

To play it safe, require all contractors and service providers to carry workers' compensation insurance. It's the only way to be sure that your association is protected against lost wages, illness, injury and death resulting from work performed on behalf of your community.

What is the normal period of time it should take a management company to respond to a question from an association member? I realize some issues could be very complex and could require weeks of research to analyze before responding definitively, but in the absence of this kind of complexity, what level of service should be provided in the ordinary course of day-to-day activities?

Determining a reasonable response time depends upon the nature of the question asked or information sought. Twenty-four hours is a reasonable response time under normal circumstances. Perhaps the manager is on vacation, out ill, or working on a major project that requires every minute of his/her time. However, unless there's a very good reason for the delay, it shouldn't take more than a day to respond to an owner's question for which a simple response is immediately available. Even if the manager is out of the office for several days, there should always be someone else in the office to take care of his or her communities in the manager's absence. Should a question require legal input or a search of records, two to three days should still be sufficient for an answer.

What is the difference in association owned property (such as a parking structure) and common area property when it comes to lawsuits. Can a condominium homeowner be held responsible for improvements to a building owned by the association, for instance an electric garage opener, if the association granted permission for the improvement?

Your inquiry goes to the very fundamental definition of a condominium, and the answer can be found in the governing documents for your association. Absent those important papers, the following is general information about condominium development and ownership.

Usually, in a condominium, each owner owns a percentage of the common and limited common elements, and the air space and perhaps the finished surfaces within his or her unit. That means that each condominium unit owner owns a percentage of the roofs, drives, exterior walls, patios, clubhouse, and anything else described in the Condominium Declaration as a common or limited common element. Limited common elements generally refer to common areas that are assigned to a particular unit, such as a patio, balcony or carport.

There's a difference, though, between ownership and responsibility for maintenance. Once again, your Condominium Declaration will give you the specific details, but more usually each owner is responsible for hardware, finished surfaces, and utilities serving only his or her unit.

Regarding your specific example of the garage door opener, most likely the garage door opener is the maintenance responsibility of the owner, not the association. The Board of Directors may have granted approval to the owner to install the opener, but that approval usually attaches to the owner responsibility for any repairs to or replacement of the equipment. If the garage itself is part of the unit and not a limited common element, it would be hard to imagine that the association would assume responsibility for the opener.

If the opener was installed on a limited common element carport assigned to a specific unit, the owner of the unit would still be responsible for maintaining the opener. However, it may be up to the Board to set the specific policy on maintenance responsibility under these circumstances. As long as the policy equitably and fairly addresses similar situations with other owners and does not conflict with your association's Declaration, Bylaws or Rules and Regulations, it should be enforceable.

As always with these types of situations, it is best to carefully read your association's governing documents to see if they address changes or improvements to the garages or carports. If there is no provision for this issue, perhaps your Board of Directors passed a Resolution clarifying the matter. Your Directors should be more than willing to send you a copy of any policies they established addressing improvements to the units.

Note:
All answers provided by our experts are their professional opinions and should not be considered legal advice.