Ask the Expert

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

I am a president of an association. My question. Can the homeowners that are present at a "board meeting" vote on issues that the board has brought up? Or are just the board members allowed to vote? The homeowners seem to think that they should be allowed to vote on everything the board brings up. Im aware that members can vote at a regular membership meeting. Thanks for your help. Your answer will clear up a big problem for me.

- John

Unless your governing documents and state statutes specify otherwise (and very few do), homeowners are welcome at board meetings as spectators, and to express their usually time-limited opinion at an open forum if the board provides one. However, through the governing documents for the association, the owners delegated the right to vote at board meetings to the board members, their elected representatives. It's just like any governmental entity; constituents may watch a City Council, legislative or congressional meeting, but cannot vote because we delegated that right to our elected councilmembers, legislators and congressmen.

Sincerely,

Margey

Motions

I am the President of an HOA in *****, CA. Is it appropiate for a board member to make a motion to approve a matter in open session (time each meeting for the board to listen to homeowner concerns) or for the board to vote on the matter?

- John

Board members should conduct their official business during their formal meetings. Issues raised by owners during their open forum are often postponed until the next meeting in order for board members to be as informed as possible on all aspects of the matter. Alternatively, if a policy decision is not involved, the manager could follow up to resolve the issue, or a board member could respond to the owner as soon as an answer or a solution is reached.

Be aware of any provisions in your association's governing documents or state statutes that address decision-making in and outside of board meetings.

Sincerely,

Margey

We are a 189 townhome community in VA that until this year has been self-managed by volunteers. The President, Secretary and Treasurer have had their HOA dues waived as payment for services. Now that we've made the large and wise decision to hire a management company,we assumed this compensation for officers would cease, but nothing has been announced as of yet. Could you comment first on the prevalence of paying officers, and second, on if other HOA's pay both officers and a managenent company. Our financial status is weak; not a lot in reserves, plus several years worth of neglected AR. Many of the responsibilities of the officers have transferred to the management company. Thanks.

- Margaret

Most community associations' governing documents, and many state statutes, prohibit paying community association board members for their service as a board member. Many documents and statutes do provide for reimbursement of out-of-pocket expenses or for a service to the association not related to board membership.

You can access the Virginia laws on community associations going to our "State Resources" page, and scrolling down to "Virginia".

Sincerely,

Margey

We have had problems with our HOA board. They have altered the by-laws and covenant, recording them at the courthouse while the dates and notary signatures have remained the same the filing date also remained the same. Many people have requested to see the financial books, but are never allowed too. Our by-laws state we have the right to view them.

We recently held a special meeting to vote the board out and to remove the lawyer as our association lawyer. The lawyer is stating it was not a legal election. We were able to get the information on the finances and there are several thousands of dollars worth of checks written to the Board members for "consulting fees", along with checks written to them for cellular phone, land line phone and internet. There are many other checks written to them for and family member that seem way out of line.

We have gone to the local police and courthouse, no one seems to be willing to get involved to try to get this matter taken care of.

In the State of Indiana what is the correct avenue to take to try to get an investigation, an audit and to get this matter resolved?

- Steve

I urge you to contact two entities--your association's insurance agent and an attorney. The insurance agent may accept your concerns as a claim against the association's Directors and Officers Liability Insurance policy and/or fidelity policy (if coverage is in force). The attorney can file suit against the board on your behalf and a jury can determine if malfeasance, misappropriation of funds and/or inappropriate behavior occurred. Since retaining an attorney can be quite an expense, I suggest you first focus on the insurance agent alternative.

Sincerely,

Margey

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We have a 3 member association board and one member (non-Chair) emails communications out to the homeowners, without permission or agreement by the other 2 members. Is it agreed that the Chair only communicate with the home owners? Thank you!

- David

All board members should agree on communications sent to the owners. The board should speak with one voice, so it's important that your board members work out a means by which each one can sign off on draft communications before they are published or posted. I suggest that the communication originator email the draft to the other two board members for review, and sends it to the owners only when the other two board members agree on its content.

Sincerely,

Margey

Because of my hearing problem how can i get the association minutes?

- Leila

Minutes of community association board meetings should be available to every owner. I suggest you write to your board or management company and simply ask for a copy.

Sincerely,

Margey

Odors

I have had problems with recently new neighbors and this only happens during the summer months. When my neighbors moved in within a month there were anonymous notes posted on the bulletin board stating "strong odors coming from my unit #". I got a letter from the MC regarding this. I hired an attorney and the MC couldn't get the record straight if it was a call or notes. Last year I left out a cup of tea for awhile and my next door neighbor called me and said that there was "strong odor coming from my unit". Yesterday afternoon I heard my neighbors talking in the hall. This morning I was leaving for work and found on my door carpet & room deodorizer with no note. Awhile back on the other side of my neighbor unit I heard their neighbors apology for something they did. I have been in my condo around 15 years and I haven't had the problems I'm having now. My neigbors have had home improvement in there kitchen for nearly a year so I'm hearing hammering and a yapping dog.

- Mary

Before you spend more money on an attorney, ask a good friend to tell you the honest truth about whether or not there are odors in your unit. Oftentimes, we become so acclimated to our living space that we may not be aware of unpleasant odors in it.

If your good friend says everything smells fine, then invite your neighbors over for drinks or snacks and let them smell for themselves that the problem is not emanating from your unit.

On the other hand, if your good friend admits that there is an odor, apologize to your neighbor and assure them that you will take care of it.

Sincerely,

Margey

I'm the new Treasurer for a condo association and I have over 20 years experience working in the accounting field (with an Associate Degree in Accting). Legally you are required to send out 1099-Misc. forms to service company's that are not incorporated and that we paid over $600/yr and this Association hasn't done this for over 20 years. A previous Treasurer told me that by law years ago, sending out 1099-Misc wasn't necessary under the above-mentioned circumstances. I thought this law was intact more than 20 years ago and that legally the 1099-Misc forms should have been done, am I right? This association has never had a CPA do an audit. Thank you.

- Brenda

You are correct. Your association must prepare 1099 forms for every unincorporated service provider to whom it paid more than $600 during its fiscal year.

You might also check your association's governing documents and state statutes to determine if an annual audit or review is required.

Sincerely,

Margey

Reserve Studies

Comment;
I read you suggestions about getting a reserve study. I don't know if it was just a fluke but here is what happened in our HOA. 180 home gated community. Our expenses are landscaping common areas, gates, sidewalks and 1 mile of pavement. We have over $300K in the bank.

Reserve study came back with a 30 year plan estimating expenses of several million. The board took it as gospel, and announced the first of dues increases with more to come . Next came so much opposition that the complete board resigned. Special meeting and new board elected. sub committee members began looking at the reserved study closely and ended up with a figure of about 20% of the reserve study. So I say, so much for reserve studies.

- Karl

Reserve studies are absolutely critical to determining the current and future financial health of a community association. If your board members are so shortsighted as to declare the report unnecessary, ignore the recommendations and proceed to operate the community with their heads firmly buried in the sand, the community's homeowners should elect new board members who better understand the need to set aside funds on a systematic basis for the eventual replacement of the major physical components in the community for which the association is responsible.

What would you prefer: relatively small amounts allocated in your monthly, quarterly or annual maintenance fee for the reserve fund, a special assessment that could vary from several hundred to several hundred thousand dollars, or a steep decline in your property values because the association does not have the funds to maintain the common elements?

Homeowners should not blame the previous board for trying to do the right thing by catching up with the funds the reserve study reported as necessary. My suggestion? Encourage those farsighted board members to run again and express appreciation to them for trying to protect your community's physical assets--and yours as well (your home's property values).

Sincerely,

Margey

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Do you have a sample letter of how an HOA can coordinate with all HOA members to get their concurrence to sell some of our HOA lots. We need to use the money for improvements in the subdivision and need to do a letter to all the residents to get their approval. We will have each signature notorized but need to have a sample letter to go by. We live in Alabama.

-Teresa

I urge you to contact your association's attorney before pursuing the sale of the lots! There are too many legal requirements and laws regarding the use and sale of common areas for lay people to attempt to accomplish this on their own.

Sincerely,

Margey

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Hi,

We are a small community in NC (approximately 40 families). When our community was originally built, we had a community pool. Over time, the remaining land was not developed and sold to an Apartment Complex, which included the pool. After the sale, the Apartment Complex management continued to let the community use the pool for a fee and has for the past 20 years (even with changeover of new Apartment Management companies).

This year, the Apartment Complex was once again sold, and after the new management refurbished the pool area, they have now denied the use of the pool to the neighborhood community. Over the years, there have only been 6 families who have used the pool consistantly and paid the fees every year. Is there any recourse we as a community have to gain use of the pool again? Any help or advice you can give would be appreciated. Thank you.

- Scarlette

If the agreement was a verbal, informal understanding between the association and the apartment owners, there's probably not much you can do to demand continued access to the pool. Look at your association's governing documents and public records for a recorded easement or access agreement that formalized the understanding. You may need the help of an attorney to determine if there are other legal means to continue the relationship.

Sincerely,

Margey

I purchased my home in 2001. I became totally disable in 2005 and my income has completely changed. I have not been able to keep up with paying my home owner association fees. Yesterday I was served with a papers that states the Board will foreclose on the lien recorded on your property. What does this mean?

My home is already in Foreclose through the mortgage company, but no terms have been worked out and no sale date has been set.

- Anonymous

Your association can foreclosure in a similar manner as your mortgage company. If the association forecloses first, it has an opportunity to collect your delinquent maintenance fees. Depending on the state in which you reside, if the mortgage company forecloses first, it may extinguish your association's lien and make it more difficult to collect the maintenance fees.

If the association forecloses prior to your mortgage company and your state law permits, the association can take ownership of your home, evict you, rent the home to someone, and apply the rental income to the delinquent maintenance fees.

Foreclosure should be the action of last resort, when all efforts to resolve the delinquency have been exhausted. The association doesn't want your home; it needs the maintenance fees in order to pay its own expenses. I urge you to consult with an attorney to determine your rights before either the association or the mortgage company forecloses. Perhaps you can work out an extended payment agreement with both the association and the lender. It's up to you to make the effort, though, so pick up your phone today!

Sincerely,

Margey

In your article on CC&Rs in April 2002, the writer states, "...these are almost as critical as the loan documents because they are a legal contract binding the owner and the owner's prescribed land use as a member of the association." Does every state view these as a binding contract? If the Association is an Non-Profit Corporation, is it a contract between the member and the corporation? In short, the sole purpose of the existe ce of our Association is to maintain all association roads. The last covenant states that I "covenant" and agree to pay annually an equal share to maintain all roads within the association. Thank you.

- Adam

Yes, the governing documents for your association created a valid and enforceable contract that empowers the board to enforce compliance through the judicial system.

Sincerely,

Margey

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We live in Houston, TX in a gated community of about 210 homes. Most of the residents are retirees, but there are about 6 families with young children. Many of the retirees have grandchildren. We are trying to convince the Board to install a playground. So far, they have been resistant to installing one.

One of our arguments will be that a playground will increase property values. Do you have any information which would support this argument - studies, statistics, papers...?

Do you have any other information or arguments which would support having a playground in a gated community such as ours?

Best regards,

- Claudia

A local Realtor may be your best source for information regarding the impact of a new playground on property in your community. Why not ask one who is listing a house in your neighborhood?

With regard to the board's resistance to your request to install a playground, consider asking that they survey the residents (if you receive a favorable report from the Realtor). The board should listen to its constituency.

Sincerely,

Margey

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