Ask the Expert

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

I am a member of the Vice President of our Board of Directors for an HOA located in California. The BOD recently mailed a letter to all homeowners requesting their feedback on some proposed rule changes. I am shocked at the reply that a member of our Board sent to a homeowner. Does this reply boarder on discrimination? What recourse do I have as a Board member to prevent this type of communication going out in writing to our homeowners?

A homeowner sent her feedback and expressed her opposition to the proposed changes. She did not mention her age or her marital status. The homeowner signed her name. The President of the Board replied to this homeowner as follows:

"Well it is evident that some older, single and unwilling residents will fight this new changes. Truth is, the laws have changed and especially for families and discriminations toward them. Kids cannot be locked in the house and I feel it is a much safer choice to have our children play in our gated community then send them outside the community when we have to fear child abuse, kidnapping and much more. As a parent of a young child I could also suggest, for those that are against these changes, to possibly look into moving to other communities where children are not allowed nor present. At "XYZ HOA" we have children and they have the right to live with the same freedom as adults, only supervised.

I am very irritated and disappointed by these comments and I am willing to fight these arguments to the end, even if I will have to recourse to legal matters...."

Please advise me what recourse, if any, to stop a board member from sending out emails of this nature to our homeowners?

Thank You.

This is nonsense and it needs to stop.

- B

I suggest that you consult with your association's legal counsel as soon as possible to determine the appropriate course of action to distance yourself and the other board members from the letter written by your colleague. Your attorney may suggest that the board approve a motion for the minutes indicating that they do not support or condone the letter written by the president. Additionally, the attorney may draft a letter to the homeowner, to be signed by all board members, asserting that the letter she received was not written on behalf of the board and assuring her that it reflects neither your collective philosophy nor viewpoint.

With regard to the board president who wrote the letter, your attorney needs to have a heart-to-heart talk with him about fiduciary duty and conduct expected of a community association leader. The attorney may recommend that the board replace him as president; if he continues to act and talk in an unacceptable manner, it may be necessary to call a special meeting for the purpose of removing him from the board.

Sincerely,

Margey

I am currently the VP of a small HOA in Vermont, overseeing a small development of 32 lots. Does the person who serves as the association's Treasurer need to be a CPA? We are in the beginning stages of the Association and have not collected dues yet.

- Andrew

As long as your association's bylaws do not require the treasurer to be a CPA, the designation is not a prerequisite for the office.

Sincerely,

Margey

We have a Board member who insists that she does not have to resign before the Board can vote in a new Board member and that she can vote on this choice of a new member. Our position is that if she hasn't resigned then there is no position open to be voted on and if she has resigned, then obviously she cannot vote! Your help would be appreciated.

- R.

If the board position is not vacated, there is no reason to vote for a new member to fill the term of the director who has not yet resigned. When the position is vacant, then the board may vote to fill the unexpired term.

Sincerely,

Margey

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Meeting Minutes

Our HOA is in Washington State. 1 year ago the developers of our 72 lot subdivision turned the HOA over to the owners after 100% of the units had closed escrow. During the development phase, the builders held the Board and had a real estate company and attorney manage the books. During our first annual meeting to turn over the Board to the homeowners, we barely achieved a quorum and elected officers for the HOA. During this meeting, I made a motion to reduce the quorum from 51% to 25%. The proposal was passed.

Over the next several months the management company and attorney failed to turn over the meeting minutes of the turnover meeting and claim the "other" party has the minutes that says a vote passed to reduce the quorum to 25%. The attorney points fingers to the management company and the management company points at the attorney. Neither appear to have the minutes so we are stuck with the original 51% quorum amount. Furthermore, they also claim since we have no minutes, we didn t officially reach quorum to vote on anything. At our first meeting (1 year after the initial meeting) we have not been able to obtain a 51% quorum so we can't vote to reduce the quorum to 25%. A catch 22.

My question is:
Are there any remedies to force the attorney to produce the minutes? I know they can't produce something they do not have. But is there any remedy for malpractice here? Can we sue them to refund the money paid to them for handing our books? Or damages we can collect? Since the builder actually paid the management company and attorney, it didn t come directly from our HOA pocket, but it did come from our HOA budget. Ultimately we would like our original vote to reduce quorum to 25% be upheld. We don t really want to go to court over this.

After searching the CCRs and By Laws I have not been able to find any language to resolve this issue. They are all very generic. Please help me with some avenue of resolution. Thanks.

- Adrian

Instead of spinning wheels trying to locate a document that may never have been created, why not have the current board reconstruct the minutes, remembering as best they can the decisions that were made at the turnover meeting. Note in the minutes that a majority quorum was present and voted to reduce future quorums to 25%. At your next annual meeting, as long as you have the 25% quorum present in person or by proxy, the owners can vote to approve both the turnover minutes and the following year's annual meeting's minutes.

Sincerely,

Margey

Checks

I live in a co-op with 12 units. We had a special assessment in the fall of 2004, to purchase a new porch. Each person owed $1725.00 for this special assessment. I paid mine in 3 installments: $900, $100, and $725.

At our last meeting, in November 2007, the new president told me that the former president "had just brought it to her attention" that I still owed $725 for the porch. I found the check number for my final installment, and it seems that the former president had not cashed the check - even though it was placed in an envelope with my regular assessment check, which had been cashed.

My question is this: 3 years have passed and dozens of meetings have taken place in which I could have been informed that this money was due. Is there a limit as to how much time can pass for an assosciation to inform a member of past due monies? I think this is the fault of the former president. If he lost the check, he needed to inform me immediately.

Any help would be greatly appreciated.

- Rita

Give your co-op leaders some leeway as they try to balance their professional and personal lives in addition to their volunteer work. Mistakes are made. You knew the check had not been cashed because you reconciled your bank statements monthly, right? So, graciously pay the $725 with a smile and feel good about paying your fair share of the new porch, which benefits the value of all the units, including yours.

Sincerely,

Margey

Does a transition committee have the power to authorize a financial audit prior to the formal transfer of control from the developer to the association?

The committee, representing a 24-member Oregon homeowners' association-to-be, has some concerns about developer kept financial records we've been shown. Some members insist on an immediate audit, but others feel the committee is overreaching itself and that an audit will have to wait until the formal transfer of power to an elected board.

The developer tells us that the financial records have never been audited while he has kept them over the past six years.

Any advice would be greatly appreciated.

- Dennis

The authority to expend association funds lies with the board of directors unless the board has delegated limited spending authority to a committee. Absent such delegated authority, your transition committee probably cannot commit funds for an audit before control of the association's operations are actually transferred to the owners.

As soon as control is transferred to the owners, a financial and physical transition audit should be conducted. There's still time to initiate discussions with the developer if any inappropriate expenditures or poor workmanship is discovered.

If your governing documents or state statutes mandate an annual audit of your association's records, you might send a copy of that page in the documents or statute to the developer and his legal counsel.

Sincerely,

Margey

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The Association Board has told me there are only three homeowner association master insurance policy providers available - really? Our policy is currently with State Farm, and they may cancel us due to multiple claims within the community. Who else can we purchase from? Thanks for your advice.

- S.

There are actually several dozen community association insurance carriers, some of which may offer coverage in your area. I suggest you go to www.caionline.org to find a Community Associations Institute chapter nearest your area. Typically, insurance agents who focus on community association insurance are members of CAI; if you contact them, you'll be able to solicit proposals from providers who are familiar with coverage requirements and have the most competitive prices.

Sincerely,

Margey

Our aging townhouse community covers exterior maintenance for our T-111 wood siding but can only afford to stain every 6 years or so. We have 5 sections in which only one uses this product. We are due to be stained this year and due to rotting wood and aesthetics we would like to use the staining money as a down payment for vinyl siding. The rest of the cost would be paid for by the unit owners. The board has approved it. There is a sentence stating that substitutions for existing exterior product must have architectural approval. We have a lady in another section declaring our activity as illegal and that she will sue the board and architectural committee. Does she have a right to? Thanks.

- D. in VA

Your board of directors should formalize their decision to change to vinyl siding by obtaining written approval from the Architectural Control Committee. In the board meeting minutes, the board should explain the financial and aesthetic reasons for their decision. Yes, any owner can sue the board -- that's why every association should have "Directors and Officers Liability Insurance" to cover attorney fees and any settlement or judgment. However, as long as the board complies with the procedural requirements and authorization provisions in your association's governing documents, their decision is valid and defensible.

Sincerely,

Margey

I live in San Diego CA. The CC&R's have a dues increase limit of 10%. Yes each year the HOA increases the fees up to 20% stating Davis-Sterling Act. Does the Davis-Sterling Act allow the increase above your CC&R s rules?

- Eric

Unless otherwise stipulated in David-Sterling, its provisions supersede community associations' governing documents, which means that the Davis-Sterling Act takes precedence over contradictions or inconsistencies in the governing documents. The hierarchy of law, which indicates which prevails in the event of a conflict, in order of priority, is:

• Federal
• State
• County
• Municipal
• Community Association
• Map, plat or plan
• Declaration/Master Deed/CC&Rs/Deed Restrictions/Master Deed
• Articles of Incorporation
• Bylaws
• Rules & Resolutions

Sincerely,

Margey

My husband and I own a condominum in South Carolina. I am the president of our HOA. We have 4 handicapped parking spaces for 36 units. One homeowner wants us to "designate" a marked handicapped parking to her. She gets very upset, and verbally abusive if another homeowner comes down, who is also handicapped, parks in "her place". Since there are 4 spaces clearly marked "Handicapped" should we make this concession for her? She states that soon she will need a wheelchair and "demands" we put her name on this parking space.

- Judy

I urge you to immediately contact competent legal counsel for advice before further discussions with your homeowner. There are serious repercussions for failing to comply with federal regulations regarding accommodating disabled persons.

Sincerely,

Margey

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I live in a 74-unit condo association in California. Each unit is equiped with a gas burning fireplace. A recent inspection has uncovered that repairs are required in about 1/3 of the units (relating to the chimney flues). The board is considering to cap/decommision each unit's gas fireplace and install a plug-in electric decorative fireplace (which they believe will be a cheaper alternative to repairing the existing flues).

As a condo owner, can they do this against my will? Don't I have a property "right" to (1) my gas fireplace and (2) access to the gas utility?

The issue is that the flues are in common walls - and the association is responsible for common area repairs, etc... where as I would only be responsible for my gas burner and fireplace box (which are within my unit) but are in good working order... just 25 flues require repair.

Thanks in advance! I can't seem to find info on this anywhere!

- Jason

I suggest that the board take another look at your association's governing documents to locate the provision that clearly imposes on the association maintenance responsibility for the flues. Frequently, the Declaration/CC&Rs/Deed Restrictions (the name varies in different parts of the country) assign to the owner responsibility for everything that services his or her individual unit. If there is wording to that effect in your association's governing documents, then the board should consider, with legal counsel approval, creating a policy resolution that specifically mentions whether the owner or the association is responsible for repairing the flues. Many associations in the same situation decide that the owners must maintain the flue if it serves only their unit.

Sincerely,

Margey

I have had an on-going problem that whenever my neighbor upstairs uses his sink I can hear the noise draining even when I'm in bed. This week my neighbor decided to use his sink at 1:00 am which woke me up. I have told the neighbor, the management company and board members including the President. It's just the same runaround like hire a plumber. I feel that this should be the responsiblity of my neighbor upstairs because the noise is coming from his pipes and not mine. When the management company brought in a contract plumber he gave the management company three options which I was told that the management company would bring to the board. When I saw the meeting notes there wasn't anything about this. I would like to see this problem resolved because I am losing my patience but the management company is good about not returning calls. Who is responsible for this ? Whenever I see the management company on site I do tell her about this and all she can tell me is "How weird". I am documenting what I can about this.

- Mary

Since the management company doesn't appear to be responsive to your concerns, I suggest that you send a certified letter to each board member advising them of the situation with the pipes and requesting resolution within thirty days of receipt of your letter.

Sincerely,

Margey

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