Tuesday, September 2, 2014

Five things a community association Board of Directors should never do!

I have represented association boards for more than two decades and served on my own HOA board at one time so understanding the mechanics of a volunteer board comes easy at this point. Part of that understanding, however, is also an acknowledgement that boards often want to undertake certain actions on their own either as a means of cost-savings or because they simply don't understand the repercussions.

While the following is certainly  not an all-inclusive list when it comes to ill-advised actions , these five do come with significant and sometimes costly results if a board goes it alone. So what are the five things your board should never do?

1.      Negotiate the Legal Terms of a Contract.  Yes, we all know that you and your fellow board members previously signed legal contracts in your business careers and sign them personally now and again but doing so on behalf of your membership without having those contracts properly reviewed and negotiated by your association attorney is just bad business, period.

Boards can and should discuss with potential vendors what they want the business terms of a contract to look like: how long the project should take, what materials will be used, what it will cost, etc. However, ensuring that the contract language used actually garners you the results you negotiated is your association attorney's job and not yours.

2.      Fire an employee or vendor without seeking prior legal advice.  I am often asked at social gatherings by family and friends whether or not someone can be sued for this thing or that thing. My answer is always the same "Yes, if an attorney can be found who is willing to file suit (and let's be honest there is usually that attorney out there) then you can and likely will be sued."

Firing employees and terminating contracts with vendors are two areas fraught with the potential for retaliatory lawsuits. Tell people you no longer want them and many do not go quietly into the good night. There are legal issues involved with firing employees, particularly older employees so this is yet another area where expert guidance is absolutely crucial prior to taking action.

3.      Amend the governing documents. Far too many boards get this one wrong. They either use the retired personal injury attorney from out of state to draft changes to their documents or they task their reluctant manager with doing so.

Granted, if you are looking at an amendment as simple as changing the date of the annual meeting, it can seem like overkill to have your attorney draft a one-sentence change. However, some boards attempt to draft amendments with significant changes such as implementing age and occupancy restrictions which can subject the community to liability if they get it wrong. It is also important to remember that amendments should not be drafted in a vacuum-they must be crafted with an eye towards eliminating any conflict amongst similar provisions in each of the association's governing documents as well as written to ensure statutory compliance.

4.      Threaten Legal Action before doing your due diligence.  If you are going to threaten legal action, it would be prudent to determine beforehand if you actually have the legal authority to do what you wish to do. Threatening and losing often does more harm than not pursuing an action at all. Not only will you lose face, you will also likely wind up paying your opponent's attorney's fees and costs. Check with your attorney first to ensure that your contract, your governing documents or the law allows you to safely take the stance you wish to take.

5.      File an insurance claim for property damage without assistance. The process of becoming whole after a covered loss seems simple enough,doesn't it? Your association paid a (likely hefty) insurance premium and when you are damaged, you would think filing a claim is the only action needed. You would, of course, be wrong and perhaps a tad naive. In order to level the playing field, boards must acknowledge that the playing field isn't level to begin with and must enlist the assistance of experienced professionals (namely, your association attorney) to file and shepherd  their claim through an often artificially complicated process.

Sunday, August 17, 2014

How to start building a valuable brand for your community association? Part II of our Branding Series!

My last blog discussed why you should start considering your community's brand and how you are viewed in the marketplace by potential purchasers, vendors and even your local government officials.

Today's blog will focus on the steps you need to take to build a brand that will make you proud to call your community home.

  • One of the easiest things you can do is to secure your community's web address which is also known as your URL (Uniform Resource Locator). Securing your association's URL is relatively expensive and prevents others from using that URL to either create confusion or, worse, set up a site which denigrates your community. Once you do set up a website for your association, you will find that site to be useful in terms of disseminating information about ongoing community projects, increasing transparency in your association operations and facilitating participation by your members. The most successful association websites have residents coming back again and again to check on news, list items for sale, download requested information and to participate in surveys about ongoing and upcoming projects.
  • Take a look at your signage both physically throughout the community as well as your letterhead, your website and all other printed and electronic material. What kind of image does your font and logo portray? Is there consistency throughout all your communication portals which convey a consistent and polished image or are there varying approaches which create disparate and even confusing images?
  • Speak with your association attorney about the types of policies you wish to create to support the brand you are building; these policies can pertain to security, occupancy, volunteerism, common area usage, civic involvement, ecological sensitivity and more. You will also need legal assistance to trademark your logo, craft an employee handbook and create the proper protections on your association website and other communication portals.
  • Decide if Social Media is something you could manage to further enhance your brand. A Facebook page, Instagram andTwitter accounts might attract new purchasers and employees but they can also detract from your brand if those channels are left to languish.  Social Media is not something which can be managed sporadically; successful use of this medium requires constant tending and the right tone. The effective use of Social Media can portray your community as a harmonious, well-run neighborhood and it can do this in a fraction of the time that old-fashioned networking and social events would take to build a similar image. The point of Social Media should be to start a dialogue not to make a point. Social Media portals are becoming more and more important for communities with a significant percentage of absentee owners as a necessary tool to keep those people informed and involved. If you do decide that Social Media is right for your community, your association attorney can assist in ensuring that your passwords and accounts are owned by the association.
  • If your community is professionally managed, address your branding expectations in your management agreement and revisit those expectations on an ongoing basis. In fact, your choice of management company and other professional advisers also contributes to your community's branding. A self-managed community will naturally present a different image than a professionally managed one. A folksy feel in a 15-lot HOA might benefit from a brand perspective from self-management. However, a high-rise tower's brand might suffer entirely in the absence of professional management. An on-site manager, a portfolio manager, a handyman who lives in an empty unit, a bookkeeper sitting in the association office and valet and concierge service all bring different aspects to your brand. A community lacking in retained advisers such as attorneys and accountants can also detract from your brand building efforts. Finally, it is important to remember that the reputation of the advisers you choose also contributes to your brand so choose them wisely.
It is no coincidence that the communities with the most positive brands are also those with the greatest level of volunteer involvement, the highest property values and the most membership satisfaction. Successfully branded communities also enjoy greater involvement with local public policy makers. Your community's branding (or lack thereof) will go a long way towards attracting or repelling the purchasers, renters, employees and vendors you want.

Sunday, August 10, 2014

Building and protecting a brand for your community association-Part 1 of a 3--part series on Association Branding!

I just returned from the TOPS Software CAMfire conference in St. Petersburg and was mightily impressed with the entire program. I was honored to have been one of four keynote speakers as well as having been asked to teach a class along with Pilera Property Management Software owner, Ashish Patel, and to serve on a Social Media Panel with some very talented ladies: Gina Holbrook of Premier Property Management; Andrea Drennen of TOPS, and Ashley Capps of Trapp Online.

Not surprisingly, Social Media was a very large focus of the conference. For my keynote speech, I decided to address a topic most people would not readily connect with private residential communities-branding.

When you are asked to think of iconic brands, names like Nike, Apple, Starbucks and Coca Cola probably come to mind very easily. These companies all engaged in costly, strategic and sustained brand building over many decades to ensure that their company names would convey a recognizable, memorable and successful image to their customers and potential customers.

When you think of iconic community brands you might draw a blank. You might not even understand what the concept of branding has to do with the private residential community you call home. Whether you realize it or not, the community association in which you live or provide services has a brand in the marketplace, it just might not be the brand you ultimately want associated with your community.

Think of the most upscale community in your city and ask yourself how you know what you know about that community. The communities with the best brands carefully cultivate their image and thee the steps needed to protect their brand with not much being left to chance.

If you think branding is irrelevant to your community, think again. Branding (or the lack thereof) goes a long way towards attracting or repelling potential purchasers, quality renters, talented employees and honest vendors.

Want to know how your community's brand manifests itself?  Start by asking what kind of reputation your community has in the market. When was the last time you asked neighbors outside your community, local realtors and others in your area how they would describe your association? Is your community seen as stodgy or hip? Flexible or rigid? Upscale or budget-friendly? Is yours the trendy upscale high-rise catering to young professionals in an urban area or is your community more the laid-back, family-friendly suburban enclave? The list of possible brand permutations is vast.

In Part II of our Branding Series, we will discuss some of the things you can do to start building your community's brand.

Sunday, July 27, 2014

Medical Marijuana, Google Glass and other new subjects for association use restrictions.

Summer is the perfect time for many associations to speak with their association attorney about updating their rules and regulations. I have been busy for the past few weeks reviewing and updating rules and regulations for all types of communities. Naturally, one of the rules which I have been discussing at length was whether or not secondhand smoke had become a problem and should be addressed.

More and more community associations are addressing the issue of cigarette and cigar smoke and even vapors released by e-cigarettes. However, very few address the issue of marijuana smoke.

Florida Governor Rick Scott recently signed the Compassionate Medical Cannabis Act  into law which allows for the limited use of medical marijuana for persons suffering from epilepsy, cancer and ALS. In addition to this law, Florida voters will be asked to decide in November if an even more expansive use of medical marijuana should be allowed by amending the Florida Constitution to permit such usage. Early polls indicate widespread support for this referendum.

Twenty-two states and the District of Columbia now have some form of law that permits the use of marijuana for varying medical purposes.

Of course, this new right is accompanied by a countervailing concern about how the use of and growing of marijuana might impact neighbors living in shared ownership communities. The starting point for associations in other states which have preceded Florida on this path has been the passage of rules limiting the smoking of medical marijuana in common areas as well as on balconies, patios, front and back yards.

Regardless if you see this as a personal-freedom issue or just another potential usage that should be regulated by your association, the fact remains that new laws, new technology and new products coming on to the market bring with them the need for boards and residents to evaluate how they wish to see their communities operated.

Another example of a rule which was requested by an association board for the first time recently pertains to wearable technology. In this community, a few residents using Google Glass presented questions about security risks as well as data and personal privacy concerns. Wearable technology encompasses not just Google Glass but other wearable devices such as health monitors, watches, GPS devices, cameras, etc. The basic concern with wearable technology is that there will be no telltale signs that the tech users are taking pictures or video or tape recording conversations. In fact, the very appeal of wearable technology is that it can be used with little or no effort.

Whether we are talking about smoking marijuana or wearing Google Glass, any usage which falls within the definition of a nuisance can be regulated as such. Otherwise, your association may wish to get a little more specific about these and some other new member behaviors which have popped up on your radar.

Monday, July 21, 2014

New Blog Name...Even Broader View of Community Association Issues!


You are reading the first post I am writing under the name of my new blog, the Community Association Law Blog. If you are reading this post, it is likely that you have followed my association blog for some time already now.

For the past decade, I have blogged about issues that confront all types of community associations throughout the U.S. and the world. A quick perusal of our archive reveals that we have covered an awful lot of ground together over the years.

Today my old blog URL was redirected without my knowledge to a law firm with whom I have no affiliation. Rather than risk any interference in my blog postings, I have created this new URL to continue without missing a beat.

Please make a note of the new Community Association Law Blog which can be found at www.communityassociationlawblog.com.

I look forward to many more years of sharing insights, experiences and some humor on the various issues that impact the millions of Americans who live in condominiums, cooperatives, homeowners' associations, mobile home parks and timeshare communities.

Warmest Regards,

Which affirmative defenses might derail your community's enforcement efforts?

Most association boards can decide when they wish to pursue an owner who has violated the community's restrictions. However, it is the rare board that undertakes a thorough analysis before sending out those demand letters to determine if the owner can use any affirmative legal defenses to successfully challenge the association's enforcement efforts.

Naturally, enforcement decisions should not be made in a vacuum. Association boards are well advised to consult with their association attorney to determine (a) if they have the authority to enforce the restriction they wish to enforce and (b) if there is any current or previous situation which would make such enforcement challenging at best and impossible at worst.

Let's look at some of the affirmative defenses which might derail your board's enforcement efforts.

Laches-this legal doctrine denies claims in which the person or entity asserting the right has delayed for a considerable amount of time in asserting that right or claim and such delay could prejudice the adverse party. If a board knew an owner had erected a shed in violation of the covenants and restrictions but waited several years to pursue enforcement, laches may be raised as an affirmative defense.

Equitable Estoppel-this affirmative defense comes into play when a court will not grant legal relief to a party who has not acted fairly.  For example, if an association improperly assigned parking spaces and then attempts to enforce the parking space restriction against an association member, the defense of equitable estoppel could be used. This defense brings to mind the legal maxim-"he who seeks equity, must do equity."

Waiver-in this affirmative defense, the association would have voluntarily surrendered a known right. That could be a right which derives from the statutes or from the association's governing documents. An example of waiver would be a board which fails to make an approval decision on an application to purchase within the time period set forth in the governing documents.

Selective Enforcement-An owner can use the affirmative defense of selective enforcement to prove that the association is enforcing the restrictions in an arbitrary manner against some owners and not others. Unfortunately, many owners rely too heavily on this particular affirmative defense to challenge all attempts by their association to enforce the rules. For example, if an association fails to pursue an owner for a mailbox violation that does not necessarily create a selective enforcement defense by an owner who is being pursued for a pet violation. Florida courts have held that a successful selective enforcement argument in the association setting requires an "apples to apples" scenario.

If you are a board member attempting to enforce your use restrictions, please speak with experienced association counsel to ensure that a possible affirmative defense is not lurking out there. If you are an owner who is being pursued for a violation, ask yourself if any of the foregoing defenses might apply to your situation.

Sunday, July 13, 2014

Not Your Ordinary Hurricane Guidebook!

Now that we are well into our  6-month hurricane season with Hurricane Arthur already having come and gone, it is still not too late for your board to learn a few new techniques to best prepare your community to weather a storm.

The typical advice to purchase water, fill your gas tank and stock up on candles and batteries is helpful but does not address the constraints of both the governed and the governing when it comes to preparing for and recovering from a disaster event.

Given Florida’s significant community association population, the need for a guidebook specifically designed to safeguard private residential communities is irrefutable. The same is becoming true for other states who have suddenly become vulnerable to windstorms on a more regular basis than in the past.

Does your board know the common pitfalls associated with the complicated preparation and recovery process?  The topics in the new Hurricane Preparedness and Recovery Guide released by the law firm of Becker & Poliakoff address all phases of hurricane and disaster planning, preparation, recovery, and property restoration including:

Hurricane evacuation & relocation
Best Practices for Records Safekeeping and Benchmarking
Employee policies
Disaster committees
Community Emergency Response Teams
Emergency communications
Board emergency powers
Property inventories
Insurance & reserves
Hurricane insurance claims
Pre-negotiated service contracts

Leading community association industry companies with in-depth experience in assisting volunteer boards have also contributed to the Guide, including Associa, Castle Group, Danon Management Group, FirstService Residential, KW Property Management & Consulting, Plastridge Insurance and Sentry Management.

The 24-page Hurricane Preparedness Guidebook is available free for download at www.hurricane-recovery.com/guide.