On an HOA Board: Here’s How to Avoid Problems

Category: Active adult communities

May 2, 2017 — If you live in an established 55+ community or an active adult community there is a Homeowners Association (often called Community Associations) in charge. While often maligned, these boards are necessary – somebody has to run the place. Boards need interested and capable people to fulfill that responsibility – and maybe that person is you. This article is based on an association board member orientation provided by David Rogel, Chair of Community Association Litigation for the Miami law firm Becker & Poliakoff (www.bplegal.com). He is the General Counsel for over 200 community associations. Our hope is that our notes of his presentation will help you understand how you and your association can avoid legal trouble, and provide a positive experience for your fellow residents. Note that this article was based on notes taken along with a few minor additions made by your editor; we apologize for any errors we might have introduced.

Fiduciary Duty
If you a board member of an HOA the first thing you need to know is that you have a fiduciary duty to the Association and its members (residents). That means that you have a legal and ethical relationship of trust to the organization and its members. You are in essence responsible for their money and assets, and you must hold their interests above your own.

Avoiding problems
One of the easiest ways for an association to find itself in a lawsuit is to make important decisions with no clear trail as to how it arrived at them. Attorney Rogel covered a number of potential problem areas along with the steps associations can take to avoid them. He pointed out that your underlying condo/association documents control most activities in your association. As a board member you must read and follow those.

Meetings/meetings/meetings
Proper notice needs to be given of meetings so residents have a chance to attend – 14 days notice is optimum but 48 hours at a minimum. Meetings by phone are OK as long as all members have an opportunity to call-in.
The more frequent your board holds meetings the better the potential communication. Rogel recommends holding at least monthly meetings.
Decisions need to be made at official meetings, not anywhere else. Otherwise the board is opened up to potential liabilities, such as: “When did the board decide that?”
– For almost anything that affects the experience of living in the community and its finances, notice should be communicated to members and then voted upon at an official meeting. For example, a decision to change the color of the buildings should be voted on. Aesthetic decisions generally lead to more controversy than anything else.

Minutes. Minutes need to be taken at Board meetings and then quickly published and approved. Minutes should be limited to who was there, what was voted on, who made the motion and who seconded it, and whether the motion was approved or not. Including commentary about who said what in the minutes can lead to problems and is not necessary.
Voting. Every director is obligated to vote on issues at Board meetings, including the President.
Powers of the Association President. The question came up about what actions the President can take by him or herself. She can take any action the board gives “present authority” to without the rest of the board voting. The president should have the ability to hire and fire. BUT, if the rest of the board does not like what is being done, new officers can be elected at any properly called meeting.
Meeting dates. As a policy Attorney Rogel recommends setting a fixed date for regular meetings (e.g.; first Tuesday of every month at 4:00 PM).
Sunshine law. Boards, particularly small ones, need to be careful not to have unofficial meetings that are not open to the residents. For example, if your board has 5 members and 3 of them are sitting by the pool or on the phone together discussing and deciding matters pertaining to the association – that could be construed as conducting a meeting without allowing public input. For the same reason Attorney Rogel does not like boards voting by email.
Votes by residents. Your association documents and some state laws require all residents to approve certain things, such as insurance deductibles, frequency of audits, and changes to the association documents themselves. Rogel believes that notice of such votes should be made by mail and posted on the property. E-voting can help improve participation (important since some association documents require approval by a majority of residents, not just those voting).

Other Problem Issues
Attorney Rogel covered a number of other issues during the orientation session, as well as addressing multiple questions from the association board members present. Not all of the questions were strictly about legal matters.
Association documents. The law affecting Community Associations is always changing. The problem is that your existing association documents might potentially be in conflict with new legal changes. Rogel recommends approving new language in your documents to auto-accept new procedural changes in the law so as to eliminate potential conflicts in the future. Other documents that might need to be updated are those having to do with mortgage liability and insurance docs.
Changing association docs. The form, alteration, and function of the community is probably covered in your association documents. Changing those documents requires a vote. Because it is difficult to get participation from all owners, getting enough votes (75% of owners in some cases) to change anything is very hard.
Enforcement. What to do when people don’t follow the rules is always tricky. Liens and lawsuits are not what you want. The best way to handle violations is to appoint a special committee that could impose actions such as fines and/or suspension from community facilities. These committees must follow the same rules as the board itself. You can’t be selective about enforcement – letting one owner do something you punish another one for. Sometimes you will discover that an owner has been violating the rules for years. You probably can’t penalize them for prior violations, but you can put them on notice that in the future the rules will be enforced
Records. Residents have the right to see association documents, minutes, policies, etc. The association has 5 days to provide such documents, but Rogel recommends putting everything on the website as soon as possible. More communication is always better than less.
Rentals. One of the top problem areas for associations is the issue of renting. Owners who rent to outsiders like the revenue they get, but other owners don’t like the problems that often come with renters intent on having a good time while on vacation. Another issue is significant insurance increases that can surprise associations that go over a certain threshold for owners who rent. With the advent of services like Airbnb the issue is going to get even worse, particularly when it comes to short term renters. In buildings where there are a lot of renters one of the big problems is the front desk – even if there is one its staff will generally not be enthusiastic about becoming the renters’ concierge or neighborhood cop. Legal issues can ensue.
Smoking, cooking, and other activities These are some other issues that cause headaches for associations. Things like smoking can be controlled by votes without having to amend your documents.
Pets. This is another area where emotions and problems can run high. The issue has gotten even more complicated with the increased use of service and support animals (not just dogs; but horses, pigs, and birds!). A service animal must be trained, but a support animal does not. A board can ask to see the animal’s service support card or certificate. You can also require all animals to be on a leash, not violent, and stay out of swimming pools and other facilities.
Term limits. Rogel was asked what he thought about imposing term limits on board members. He does not like them, citing the problems they can cause in a small association where there simply aren’t enough members willing and capable of serving.

Non-Legal Issues
Reserves.. Your organization should have reserves on hand that it can tap – both for emergencies such as a hurricane and for planned major maintenance items like elevators and roofs. A common reserve level is 10% of the current operating budget. If there are inadequate reserves painful assessments have to be levied, and no one likes those.
Insurance. Particularly in Florida and in states exposed to natural disasters, insurance is a huge and volatile expense for homeowner associations. During the orientation meeting several ideas to contain costs were discussed, including the necessity of shopping around, comparing coverages, wind buy-back policies (covering some of a high deductible on your primary policy with a separate wind damage policy), and deductible limits. Boards should consider comparing insurance bids from admitted vs. surplus lines. The former are in reserve pools, but surplus lines from stronger companies can be an option.

Bottom line
If you are board member you must keep uppermost that you and your fellow board members have a fiduciary duty to uphold. Don’t make any decisions without giving resident members a chance for input.

Thanks to David for an enlightening presentation – we really appreciate your wisdom on these important issues!

Comments? Have you served on the Board of a community association or HOA? Tell us about your experiences – pluses, minuses, problems, successes.

For further reading:
How People Who Live in HOAs Feel About Them
Meet Your New Boss – Your HOA



Posted by Admin on May 2nd, 2017

8 Comments »

  1. We love living in our community that has an HOA. We know things will always look nice and there is recourse if you have a neighbor that doesn’t take care of his property.

    by Susan — May 3, 2017

  2. Yes, HOA’s are fine if you can afford or the additional assessments. …in our community we have been struck every few years with additional assessments and several people didn’t have the money and lost their homes in foreclosure. …so if you don’t have additional money in savings don’t move into those types of communities.

    by Babyboomer55 — May 3, 2017

  3. I am a board member for a HOA that is a condominium. Not over 55 plus. There are 150 units. It is in an area that is considered a Towne Centre where there are also two other complexes in the whole shopping area that are rental properties. So you could go to Target, or Bed, Bath and Beyond, restaurants, etc. You kind of get the idea. The two other complexed that are rentals have around I believe 211 units in each. I have been on the board for 6 years now for condominium that is mostly owners. I have been re-elected twice now. I have been the VP, Secretary and now Treasurer. This was a new condo building and was moved to the owners from the builder. In the beginning of the years we established specific committees and volunteer leads like a communications committee, building committee, security committee, strategic, committee, well you get it. It has all worked well. The hardest part-getting people to want to be on the board. It takes time. We have one meeting a month in the evening with the residents and one working session a month. Because I am treasurer I also go to the finance committee each month. So if you are ever on a board and want to not take it lightly plan on it to be a little time consuming. I agree be prepared for costs to rise. Look at your associations documentation before taking the leap. For example where I live we have to pay for the Towne Centre parking area as well as clean up. It is quite costly and when it was agreed upon before it became the condo, the builder agreed on an increase each year that we have not been able to break as he put in there a 30 year clause for increases and agreed with it. We are fortunate we have 3 lawyers on our board. We have 7 members. We use to have 5 but extended it so we had a focus. People do not like rates increased. Best is to understand why and to make sure you attend all meetings so you do not miss anything when the board is meeting. Minutes do not tell enough. Rentals are an issue with condos and some housing areas. We have setup bylaws that state there are only allowed a specific amount of rentals less than 30 percent and we have a few that are emergency rentals. Those have to be voted on, you must be on a waiting list and there were specific things that have to take place in order to be one of those units. Basically most owners that live in the association do not like renters. Most would like to have none in our association and in time hopefully we get to that point.

    Be careful with new places. the price of the HOA may be set at one price with the builder to attract you to come in and then when the association takes over the prices MAY NOT take care of the expenses. Make sure you get all documentation, see what the costs have been in the last few years for the association, as well as the total HOA each year. Ask about their contracts. On the board we spent the last 5 years basically rebidding and cleaning up contracts. Ask about other services. Will you have concierges? If you are in a condo you may. They cost. What about security. What will the concierge do for you. Will there be a general manager on site? Do you have a management service that supplies all of that. Or an off site management office. What I am saying is that it is more than about yard clean up. It may be pool services. Do you have an association pool? The list could go on and on.

    We are looking for our retirement neighborhood and it will probably be in a house not condo. For us we ask for all of the documentation so we can read up to see if there are somethings we would not like. For example there could be restrictions on building a pool or adding to the home. Is there some architectural board that one has to go thru at the HOA. How fast do they react to the ask? Just things to think about. I stay very cautious after being on the board. I have learned a lot. I do like them as it does help manage and stay structured especially when you are living in a condo with a lot of people.

    by Terri — May 3, 2017

  4. The newest problems are with allowable vehicles: specifically motorcycles, large SUVs and Trucks, multiple cars. I think HOA boards should not allow motorcycles or large SUVs as both pose safety and nouse concerns.

    by C Gallagher — May 3, 2017

  5. The answer we got here (Florida) regarding prohibiting vehicles is that if the vehicle is legal to drive on the street, it can’t be prohibited. Vehicles used for commercial purposes may be prohibited.

    by Linda — May 4, 2017

  6. The type of vehicles found at various condos often depend on the people who are attracted to the particular community. At our 55+condo of several thousand modest 2-story garden units, the average age is 75 or so. We don’t permit commercial vehicles (most residents are retired). Almost all of the vehicles here are sedans from 1-5 years of age. Toyotas, Hondas, Nissans, Hyundais and the like. At non-age-restricted places in this area, I see plenty of mammoth vans and SUVs, huge 4-seater pickups, muscle cars and motorcycles. There’s nothing wrong with these vehicles, but if you don’t like noise or too-close parking issues due to the size of a vehicle, then do your due diligence. To each his or her own.

    by Clyde — May 5, 2017

  7. I’m the president of our HOA in IL. We have existed for 25+ years. We are fortunate that we have covenants and by-laws to direct us. We try to get these in the hands of buyers before closing to avoid issues in the future after move-in. (We have had incidents when real estate agents and attorneys have failed to provide these to buyers.) Amending any of these requires two thirds approval of the homeowners (one vote per home.)

    Re vehicle parking: Our rules prohibit trailers, trucks (other than p/u trucks which comply with the state’s definition/weight limit) RV’s, and commercial vehicles (commercial plates and/or commercial advertising.) We are do make exceptions and allow folks to park and time to prep. and clean their RV’s, but only for a few days/ month and NEVER when a house is for sale in the neighborhood. State law doesn’t matter: they agreed to these rules when they bought their homes here.

    by Bob R — May 6, 2017

  8. Our board probably faces the same problems that many others have. With the addition that because we are in a resort community we get a lot of renters, often for as short a period as 1 week. The renters and other owners have some amount of tension – the former tend to crowd the pool and break the rules there, like bringing music, glass containers, and smoking. They often bring pets, which are not permitted, or throw loud parties. One renter even staged a large wedding at the pool!
    The owners who rent like the revenue but the other owners don’t like the commotion. Our insurance rates also went up when the insurer found out we had so many renters. It is a hard problem.
    The other issue we have in common is what to do with the occasional deadbeat. It costs a lot of money and time to get rid of condo owners who fall behind on condo fees and disregard rules about renting. Getting people to serve on the board is another issue. They are often quick to complain but don’t want to help either.

    by Ken — May 9, 2017

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