Our Association finally had to adopt Guidelines to help implement fines for homeowners who defy all rules. The problem is we have a lady who is handicapped (her words) and refuses to walk her dog off premises or use an area directly out her back door, for her animals waste, She wants to be exempt from all the Animal ByLaws and Guidelines. Her husband is not handicapped, and we have given her many other options, such as hire a dog walker, take her dog in her car off premises, or ask a family member or neighbor who has a dog to walk hers also, What if anything can we do? We have other handicapped people in the Association who want to keep the Guidelines and don’t want to see her dog doing it’s business in the island or common space.

- Cheryl

A

The board typically has the authority to impose reasonable restrictions regarding pets in the community. Since the disabled owner has a husband who is not disabled, there is no reason not to comply with your pet rules. I’m hoping that the board has already tried talking with the pet owner in an amicable and conciliatory manner in an effort to resolve the issue without the need for further action.

If your discussions have stalled, I suggest you offer mediation through an impartial third party to try to resolve this issue. Mediation provides a safe harbor for both parties to express their opinions, while the mediator guides the parties to reach a mutually acceptable resolution. If your municipality does not offer free mediation services, you can search the American Mediation Association website for certified mediators in your area. The association and the owner would split the cost. If the owner refuses mediation and the board’s efforts to resolve the problem have failed, the only recourse may be to refer the matter to the association’s legal counsel..

Sincerely,

Margey

Our meeting room will not physically hold the number of voters needed to ratify any rules changes. We also never have any success getting the necessary attendance to pass anything. Could we use a ballot initiative to reduce the number of voters necessary for a quorum to a simple majority of those in attendance at the meetings?

- Harry

A

Many community associations do not have adequate room onsite to hold membership meetings. To accommodate everyone who wants to attend, there are several options:

1. Ask a Realtor, attorney or other professional who serves your area if you could use his or her meeting room, if it is adequate.
2. Rent a meeting room in a school (cafeteria), church or hotel.
3. Take advantage of free room availability at your local library.
4. Reserve a community room that may be offered by a law enforcement entity or mall.

Reaching quorum is possible – really! Check out the articles listed in www.associationtimes.com using the search field and the keyword “quorum”. (Also, see the article  “Achieving Quorum” .)

Reducing quorum requirements requires an amendment to the governing document that defines the number of members who comprise a quorum. Check your association’s declaration or bylaws as well as state statutes to determine 1) the specific process for gathering and counting votes; 2) the percentage of votes necessary to pass the amendment, and 3) state statutes that supersede the governing document amendment process or require a different quorum count. I strongly encourage you to consult with your association’s legal counsel before proceeding with any effort to amend the documents to ensure that your efforts will be valid and enforceable.

Sincerely,

Margey

Can I attend an “oversite” meeting? I just want to know what is discussed. At regular Board meeting after the open forum, the board does discuss some things but they refer to $$$ etc , (by pointing to figures and or whispering) . Concerned owners cannot see or hear. Is this the correct procedure? I do not want to sit thru someone’s hearing, I understand that’s not appropriate. Please advise thank you.

- Kathie

A

Most governing documents require that board meetings be held in the open, meaning that members have the right to be present and hear the board’s discussion. Most states have similar requirements of community associations. Go to the State Resources page on the Association Times website to find the relevant provisions in your state’s statutes. I would suggest that you copy the pertinent provisions in your association’s governing documents and state statutes relating to open meetings, and present those copies to your board in a respectful and cordial manner. Perhaps the board members are unaware of these provisions and their fiduciary obligation to comply with them. Keeping the conversation cordial and nonconfrontational will go a long way in resolving the issue quickly and satisfactorily for everyone involved.

Sincerely,

Margey

Do you have a sample evaluation form for HOA management companies? We have a management company, and would like to prepare a form for all the directors to fill out and submit to the management company. We have some issues and would like to resolve them. Thank you.

- Karen

A

The Community Associations Institute offers a publication entitled “Management Companies: How to Find the Right Community Association Professional”. You can purchase it at the CAI store. The publication provides not only suggestions on how to find a new management company, but also insight on how to evaluate your current company.

Sincerely,

Margey

How does the board get elected?

At the annual meeting of the association by the homeowners within the community, unless:

• The community is under development, in which case, most of the time, the board consists of developer representatives until the community is almost built out…usually at least 75 percent of the homes/units have closed escrow,  but this may vary;  or
• A vacancy is created by a board member resigning and then the remaining board members usually appoint someone to fill the remaining term or until the next election, depending upon the requirements in the governing documents for the association.
  What are the responsibilities of the board?

This is identified in detail in the governing documents for the association but in general responsibilities typically include:

• To ensure the community and amenities are well maintained and property values are protected;
• To ensure that the association has a healthy financial position (low delinquencies, funded reserves, responsible budgeting);
• To pursue those in violation of the governing documents–either for covenants/architectural violation or for those that have not paid their assessments;
• To conduct association business openly in accordance with state statutes;
  

What can I do to be a good board member?

• Come to meetings prepared—Read the board packages prior to the meeting and ask questions to the manager so they can come to the meeting prepared to answer them.  Some items may require additional research and, in order to be fair and timely, it is helpful to have the questions in advance of the meeting.
• Be respectful—The Golden Rule works best here…treat people as you would want to be treated.  No one wants to be treated in a hostile and disrespectful manner.
• Have an open mind—Try to listen to both sides of the issue before you make up your mind and give careful consideration to the advice of the professionals helping you.
• Communicate—Ask questions when you don’t understand, communicate with the membership and with management in a thoughtful, respectful and productive manner.

How can a board of directors provide good leadership to the community?

1. Be mindful of the tone of board meetings—Communities develop reputations and you want to ensure a positive one is set for your association.   Avoid yelling, arguing and personal insults—agree to disagree politely and professionally.
2. Lead with a plan—Work with each other and/or your management company to determine the goals for the association.  It is usually best to do this prior to approving the annual budget so that the plans can be incorporated into next year’s expenses.  Short-term goals are good—meaning 1-3 years—as the board can change considerably which can impact the direction of the association.  Long-term goals are best so that current and future leaders have a big picture of the goals of the association.
3. Build an advisory team you trust and rely upon—Carefully consider the guidance and advice of the professionals you hire.
4. Maintain transparency—Conduct business openly and allow the membership an opportunity to be heard.  Many complaints stem from homeowners thinking that the board is doing something underhanded—if you keep the business operations open, then it avoids the problem.  This does not mean the homeowners can participate in board meeting discussion (only during open forum) but they are able to listen.

As a board member, do I have to have any prior experience?

No, but you do have to have the best interest of the association in mind.  Many people volunteer for the board based upon an experience they have had, and now they want to change or correct that process.  However, what many people quickly realize is that there is another side of the equation, and they begin to understand the responsibilities of the board or the association.   Just have an open mind and be willing to listen and you will do great!

Heather Graham, CMCA, PCAM
Community Management Corporation

Q

I live in a townhome condo community of 166 units. Our association financials are completed quarterly. My question is this: Is there a “standard practice” for HOA condo associations as to how soon after the quarter has ended should financials be distributed to the homeowners? There is nothing specific in our documents relating to this. There have been times when we have waited until the end of the following quarter to get previous quarter financials.

Thank you.

- Laura

A

Financial reports are an important tool for board members, who use the information to make decisions about future expenditures and to understand the financial condition of the community. The report packet, which should include a balance sheet, statement of revenue and expense, check register and delinquency or aging report, along with a bank statement reconciliation report, should be distributed within 30 days following the end of the reporting period.

Sincerely,

Marjorie Jean Meyer, CMCA, PCAM

1. When you have finalized your plans for the change, alteration or addition (such as a patio cover, security light, or patio deck), call the association manager or a member of the board, ARB or ARC for a copy of the Revocable License and application. The application and License include the following information:
   • Legal names of all record owners
   • Both physical and legal address of the home or unit
2. Complete both forms, providing all data including the legal description of your home and attaching a photograph, sketch or drawing of the proposed alteration. Include in your attachments a description of materials and method of construction or installation, including construction plans if applicable, of the proposed change;
3. Send both executed forms to your association manager, board or committee member;
4. Your association manager will forward copies of your application to the proper committee or board member;
5. Your board or ARB/ARC representative will contact you to review the application;
6. Within the time parameters provided in your legal documents, you will be advised of the board/Committee decision, or recommendations for change;
7. You must obtain all permits and licenses necessary to legally complete the work;
8. The approved Revocable License is recorded with the local jurisdiction’s deed records, formalizing the permission granted to you and advising those who conduct a title search of your property that you, and not the association, are responsible for the repair and maintenance of the alteration. The License is also maintained with your association’s archival records.

The Revocable License is not a permanent authorization from your association. It can be revoked if the terms of the License are not upheld, such as the requirement of owner maintenance. The recorded License is an excellent means of providing protection to the homeowner against possible misplacement of the approval documents as well as assurance to the association that the approved alteration will be properly maintained.

If you are considering implementing the Revocable License process, be sure to work with your association’s attorney to ensure that the form is appropriate for your community and complies with all legal requirements.

Marjorie Jean Meyer, CMCA, PCAM
Vice President – Integration and Industry Education
Associa

Q

Because our streets are private, we cannot get the police to ticket speeders. What can we do to reduce this dangerous practice?

- Bruce

A

There are many traffic calming systems that may solve your problem, ranging from street humps to intersection centers and landscaped medians that narrow traffic lanes, naturally resulting in slower speeds. Enter “traffic calming system” in your favorite Internet search engine to learn more about this method of reducing speeding on your community’s private streets.

Sincerely,

Marjorie Jean Meyer, CMCA, PCAM

Listed below are some steps you can take to start off your new board members on the right foot.

1. Develop a New Board Member Notebook. Board members should have an official 3-ring binder that contains information and material necessary to successfully lead their community. Items to include in the notebook are:
   

   Annual board meeting schedule – Setting up your meeting dates a year in advance allows everyone the opportunity to review the dates and avoid conflicts.

   Current contracts – It is important that new board members are aware of what the association expects from the vendors as well as its financial commitments.

   Board minutes from the last four meetings – The past minutes allow new board member to read the history of on-going projects and issues facing the association. You will save a lot of time at the first few board meetings if new board members do not have to be brought up to date on projects the association has been working on for the past several months.

   Management Reports from the last four meetings (if you have a management company) – Again, this provides the history for the new board member. Be sure to include deed restriction enforcement and architectural review reports or logs.

   Governing documents – Besides the declaration and bylaws, be sure to include the association’s rules and regulations, resolutions and maintenance responsibility chart. Many board members have never read their governing documents and may not even know where they filed them.

   Current budget – Include not only the adopted version but also any board notes that describe how line item amounts were calculated. New board members needs to understand what items are included in each line item and how the budget is developed.

   Financial statements – Include a full set of the last financial statement. It is imperative that new board members understand how to read financial statements so they understand the financial position of the community and can make informed decisions.

   Resale Package and Welcome Letter – Provide sample copies of the full resale package and welcome letter that provides additional information a new board member should know.

2. Site Inspection – When possible, board members should walk around the community together. to observe both your community’s achievements – landscaping projects, capital reserve projects, clubhouse enhancements, etc. – as well as areas that require attention.
3. Preliminary Meeting – Seasoned board members spending some time with new board member(s) before the first board meeting will probably save a lot of time and really help in regard to getting them “up to speed.” If a separate meeting is not possible, suggest meeting an hour or two before their first official board meeting to review the information. Be sure to comply with any state mandate that requires homeowner notice of any separate or pre-meeting.
4. CAI Seminars and Publications – Your local chapter of the Community Associations Institute  sponsors many programs that are geared toward educating new board members. Encourage your new volunteers to attend at the association’s expense.

Lou Ann Hingley, AMS, PCAM
Mid-Atlantic Management Corporation

Do you have the proper coverage to protect volunteers as well as committee members?

One area of community association insurance that is always a little vague to most of us is liability coverage for elected board members, as well as insurance coverage for appointed officers, and committee members operating under the jurisdiction of the board.

What is Directors and Officers (D&O) Insurance?

Directors and Officers Liability Insurance provides protection for the directors and officers of your association in the event they are sued in conjunction with the performance of their duties. Think of Directors and Officers Insurance as a business’ Errors and Omissions policy. The two are not synonymous, however. Errors and Omissions is concerned with performance failures and negligence with respect to the association’s products and services. Errors and Omissions addresses the performance and duties of a business such as your management company. Directors and Officers Liability Insurance can include Employment Practices Liability and Fiduciary Liability. Since community association board members and officers could be held personally responsible for acts of the association, most will demand to be protected and are not willing to risk their personal assets to serve on a board or committee without such protection.

How is D&O Insurance applicable to Committee Members?

Generally speaking, when committee members have been appointed by board resolution, are operating under clear and appropriately drafted charters, and are conducting activities in conjunction with the charter, liability insurance usually is in place for all of these members. A common example would be an Architectural Control Committee (ARC) making a decision at a duly-called meeting, and the affected owner challenging the individual committee members in court because of perceived selective denial of his application

Activities of other committees may not be so clearly defined. For example, when a member of the “Welcome Committee” visits a new owner and words are exchanged regarding the deteriorating or unattractive condition of the owner’s lot or home, could the new owner feel as though the visit was harassment, racial discrimination, etc? How about a scenario wherein a Pool Committee member decides to discipline a youngster who was running at the pool, by sending the child home, or making the child stay out of the water for 30 minutes. Did the Pool Committee member have the authority to police the pool area or just to establish the Pool Rules? The association itself likely will be covered under even the most serious circumstances, but what if the owner sues the committee member personally? These are all important aspects to consider when working on a committee. Asking both your and your association’s insurance agent for details on committee member liability insurance coverage is paramount to a sound risk management program.

What are the key questions to raise when reviewing your D&O policy?

• Are unpaid officers, board and committee members covered by the D&O Policy?
•  If not, what types of insurance coverage can be provided that adds that extra protection for the association?
• Do the association’s governing documents provide an automatic indemnity for directors and officers?
• Does the policy extend coverage beyond the board member’s term of service?
• Does the policy extend coverage beyond the policy period if circumstances that might give rise to a claim are disclosed during the policy period?
• Is there a minimal deductible per board member?
• Does the policy also feature a low aggregate applicable to one occurrence?
• Can the Board of Directors choose their own legal representatives when defending a claim?
• Does the policy cover legal costs incurred through investigations that DO NOT result in litigation?
• Is the limit of liability for a single loss, or for total losses during the policy period, set at an appropriate level?
• Does the policy have any unusual exclusions?

Clearly, the best course of action is to remind directors, officers, or committee members who are looking after an association to only act within their established authority, commit the association to transactions or agreements that are within the law and authorized in the governing documents, and avoid placing themselves in a position in which their personal interests conflict with those of the association.
The association, through the board of directions, should adopt concise committee charters, detailing the specific areas of responsibility, and requiring committee members to sign a copy of the charter acknowledging its provisions. As always, it is critical to review the association’s governing documents to determine the legal structure of committees, areas of permitted activities for those members, as well as the authority the directors and officers to establish and oversee committees.
 

Mark Lewis, AMS®, CMCA®, PCAM®
Executive Vice President, Development & Strategic Planning
Associa