Sunday, March 22, 2015

Why do some association boards decide to "go it alone"

I often wonder what variables factor into an association board's decision to forego professional management and an annual retainer relationship with a law firm in favor of "going it alone".

Naturally, money is top of mind for most directors when deciding whether to use professionals such as managers and lawyers for their community. However, financial concerns should not be the only topic of discussion during this debate. In addition to the costs involved. boards should ask themselves the following questions when deciding if they wish to be self-managed:


  • Are we comfortable with handling requests from owners and pursuing covenant violations directly as opposed to having a "cushion" provided by our manager?
  • Do we have the time, patience and expertise to follow through on the daily operations of our community?
  • Do we have the time, patience and expertise to follow through when something out of the ordinary arises like a fire, hurricane or other disaster?
  • Are other communities of our size and type typically managed professionally or self-managed?
I have lived in a Broward County homeowners' association for more than twenty years and our community has always been self-managed. Our community could really go either way. We are relatively small (98 homes) and do not have a plethora of common areas although we have enough features (private roads, green parks, gazebo, guardhouse, perimeter wall and gate) that do require consistent maintenance and oversight. Someone buying in our community may very well expect it to be professionally managed but would likely not be shocked to learn it isn't.

On the other hand, a high-rise condominium on the water would present a host of operational and maintenance challenges which might prove far too taxing for the average volunteer board of directors no matter how enticing the cost savings may be. This is when the old adage "penny wise and dollar foolish" comes into play.

As for boards who decide to forego legal assistance on issues like covenant enforcement, document amendments, contracts, insurance claims, hiring and firing decisions, land acquisitions, easements, recalls and more, the questions I would urge them to ask would be:
  • Is our D&O coverage current and high enough and do our actions in this matter exclude coverage?
  • Will we be able to hire the attorney(s) we want when we want them for this matter?
  • Are we willing to learn a lesson the hard way?
Sometimes boards relax into patterns and deciding to forego useful professional assistance can be a bad one. 


Friday, March 6, 2015

Words Matter: Is your Board precise with its terminology?


When you go to your doctor, it is helpful if you can accurately describe your symptoms so he or she can properly diagnose the problem. The same holds true when a volunteer board of directors meets with its legal counsel.

Boards can inadvertently make a legal diagnosis more difficult when describing a problem by not being concise with certain terminology.

For example, many directors will refer to a certain provisions being in their "Bylaws" as if it was a catchall term encompassing all of their documents. In fact, the Bylaws are one of several governing documents which comprise the foundation for association operations. In a condominium association, you will have a Declaration of Condominium, Articles of Incorporation and Bylaws. In a cooperative association, you will find Bylaws and a Proprietary Lease but no declaration. In a homeowners' association, your community will be governed by a Declaration of Covenants and Use Restrictions as well as a Bylaws and Articles of Incorporation. All of the foregoing shared ownership communities will also typically have separate rules and regulations.

When your board refers to your "Bylaws", your legal counsel is already picturing a certain document depending on your community type and it may not be the document to which you are actually referring.

Another area where directors can sometimes mislead association counsel and others is by referring to their community as a "homeowners' association" when, in fact, it is actually a condominium or cooperative association. True, every community is comprised of homeowners but an HOA is a very different entity than a condominium, timeshare, mobile home or cooperative community. When referring to your community either internally to other directors and members or to professional advisors and vendors, please use the correct term.

Lastly, some directors (and association members) still refer to Florida associations being subject to "the Sunshine law". While each of Florida's shared ownership statutes do require a certain level of transparency in association operations, Florida's Sunshine Law (Chapter 286, F.S.) pertains to governmental entities and not to private residential communities so saying that your association is "subject to the Sunshine law" is not technically correct.

Remember, being precise (and accurate) in the terms you use to describe your community and its issues can only help shorten the time it takes to diagnose and resolve those issues.

Tuesday, February 3, 2015

Email Intelligence-does your Board possess it?


In my last blog entry, I discussed the considerable downside to sending a resignation via email. Today, I am discussing the pros and cons of board members and managers using email for other purposes and how to craft a sound email policy for your association.
 
Board members, managers and association residents are no different from everyone else you know inasmuch as they are all heavily reliant upon electronic means to communicate. Phone conversations and, even more rarely, in-person conversations do still occur but not nearly as frequently as emails and text messages.
 
Whether you are a member of an association board of directors or are a manager assisting such a community, it is important to understand that (a) everything you put in writing can and will be used against you and (b) some topics and situations are not well suited to an email response.
 
Whenever I teach a Board Certification or other educational course, I always ask the directors and managers in attendance to raise their hands if their community has a comprehensive email policy in place. Surprisingly, not a single hand is raised.  Deciding in advance how your Board will handle emails from residents, professional advisers and vendors is not only advisable, it is necessary.
 
Here are some questions you need to ask yourselves and then craft the appropriate email policy with your association attorney's assistance to ensure it complies with both your documents and applicable law.
 
  •         If a resident emails the entire board with a complaint, who should respond? Without protocol in place, chances are everyone will respond (and sometimes with different answers and conflicting information) or no one will respond as a result of assuming someone else did.
  •         If a resident's email is akin to a rant with no specific purpose or request, how should it be answered, if at all? Florida law requires certified inquiries and written requests to inspect the association's books and records to be answered within a certain time period. However, nothing requires boards to respond to venomous email rants. Decide as a board how you wish to handle these kinds of communications. Some boards choose to use a simple auto response such a-"Thank you for your email. Your input will be reviewed and should a response be necessary, you will receive one."
  •         Email communications to and from professional advisers, particularly the association attorney should be deliberate and thoughtful. Since reading and responding to emails is typically a billable event, the board should determine who can send such communications to the attorney or the attorney's staff. In addition, when litigation is being discussed extraneous people should not be added to the recipient list for fear of jeopardizing the attorney-client privilege.
  •         Replying to all on an email and allowing Outlook to automatically complete email addresses (and thereby send to the wrong recipient if you don't check carefully) are the bane of most emailers' existence. This is doubly true for board members and managers so be sure to review your recipient list prior to hitting send. Also, know that blind copies are  no guarantee that your email recipient will not reveal having seen a copy of your email so think twice before doing that as well.
  •         Emails are typically part of the association's official books and records. As a director, if you do not wish to have your personal email address used to send and receive emails related to the business of running your association, it is wise to set up an official association email address for your directors. You should also discuss with your association attorney how many years you must retain those emails and the best method to do so.
 
These are just a few areas that need to be covered in your association's email policy. If you don't have such a policy, what are you waiting for?
 
 

 

Sunday, January 25, 2015

Should you stay or should you go? Directors- think twice before tendering that resignation!.


How many times have you thought about resigning from your association's board of directors because you felt that your efforts and time were not appreciated at best and were resented at worst? I often tell my association clients that I understand how they feel because I do. I served on my HOA Board for one two-year term. While the overall experience was positive and certainly beneficial considering what I do for a living, I remember one uncomfortable incident that occurred during my time on the Board.

One director (we'll call him Jim for the purpose of this blog) decided that having a certain plant material installed in the community was of utmost importance to him. Jim was ordinarily a very nice guy. However, when I mentioned to him that nothing in our association's governing documents actually authorized the planting project he was steadfastly pursuing, he became a little perturbed. Jim became so perturbed in fact that he asked me to resign from the Board to "maintain our friendship". I was taken aback by the request but gave it some thought and ultimately decided that resigning to avoid a conflict was not the right thing to do. While I often counsel directors that making tough decisions is really a job requirement, I also tell them to consider quality of life issues if the stress of being on the board is too much.

Still, I have seen some directors resign in a huff only later to regret that decision. In Florida, Section 617.0807 of the General Not For Profit Corporate Act provides that a director may resign at any time by delivering a written notice to the board of directors. Such resignation is effective when the notice is delivered unless the notice specifies a later effective date.

The statute further provides that resignations must be in writing and most reasonable people agree that email constitutes written communication. Among the other pernicious aspects of email, resigning in a huff via email can pose a huge problem for association directors who later regret that decision. The statute does not require anyone to actually "accept" the tendered resignation so if a beleaguered director writes an email to his or her fellow directors tendering a resignation in the hopes that someone will talk them out of it, it is already too late as they are off the Board. Of course, he or she can appeal to the board to be reappointed to the seat he or she just vacated by virtue of resigning but there is no guarantee that will happen.

If you are an association director who is considering resigning from your board as a result of conflict with fellow directors, time constraints or perceived hostility from your members, take your time to deliberate on the matter before hitting send on that resignation email.
  

Tuesday, January 20, 2015

Attorney Donna DiMaggio Berger will be a guest on the “Condo & HOA Hour”, Wednesday, Jan. 21, 2015

Donna DiMaggio BergerAttorney Donna DiMaggio Berger will be a guest on the “Condo & HOA Hour” on radio station KKNW 1150 AM Wednesday, January 21, 2015. Ms. Berger will provide commentary on national trends in the community association industry and discuss how technology is affecting HOAs and condos, and how volunteer board members are getting the education necessary to effectively lead their communities. The show mixes education, entertainment, guests, features, and call-in conversations.

Ms. Berger is a well-known condominium attorney and shareholder in Becker & Poliakoff’s Community Association Law Practice. She is active on social media and authors the popular “Community Association Law” blog on timely topics and issues of interest for common interest ownership communities.

She has created and manages the popular Condo and HOA Law & Living Group on LinkedIn and companion Condo and HOA Law & Living Group at Facebook, two of the most active social networking groups for community association residents and professionals. She also shares news and views on community association law and living on Twitter at @CondoandHOALaw.

Sunday, January 11, 2015

Trust but Verify-does your Board do its "Due Diligence" when selecting Professional Advisers and Vendors?

The other day I was flipping through an industry magazine and came across an ad touting a law firm that highlighted the firm's ties to a particular state and a particular practice area. It conveyed a strong message that surely will resonate with many volunteer boards looking for that type of firm for that particular type of representation. The only problem is that the Firm mentioned in the ad did not list a physical office in the state they were targeting nor were the attorneys shown in the ad's pictures even admitted to practice in the State!

This kind of experience reminds us that boards do need to undertake a certain level of due diligence when selecting professional advisers and other vendors to represent and service their communities.  If your board is considering a particular candidate, take a look at what that candidate says about his or her company and then confirm. The very old adage Trust but Verify is a good place to start.



Here are some areas to consider:
  • If you are vetting lawyers and law firms, verify that the size of their firm is confirmed by the number of attorneys reflected on their website. Even a state's Bar website may contain inaccurate information in this regard. The best way to determine the size of the firm you are considering is to visit their website and count the attorney names you see!
  • If a professional company or law firm claims to be experts in specialized areas, that reality should be borne out in their published articles and credentials. If you cannot find those anywhere, there may be a problem.
  • Credentials can be easily confirmed. If someone claims to be a member of a particular society, Bar Committee or other industry group or to be Board-certified, most of those membership lists and credentials are easily found these days via the Internet.
  • If a vendor claims to have represented neighboring communities, ask for contact information for those communities and follow up with them for referrals.
  • If a professional adviser touts a blog (yes, like this one!) ask if he or she writes it himself or herself or if it is ghostwritten by a PR company. This last point was a bit of a shock to me when I discovered that some of the blogs I read are not written by the published authors but are, in fact, ghostwritten by a company's PR arm. 
You may lament having to undertake this level of scrutiny when it comes to reviewing professionals who should be conducting themselves professionally. More often than not, you will find that the honor system is firmly in place for most of the advisers with whom you would consider doing business and the information being touted is, in fact, accurate. However, for those instances where there is more sizzle than steak, you will want to avoid potential problems by verifying skills, credentials and publicized information.


Doing your due diligence requires common sense, resourcefulness and yes, the willingness to wait to make a decision until you have done your homework.

Monday, January 5, 2015

Governing Documents Determine How Parking Spaces Are Defined

Question: The association in my condominium is trying to reassign all the parking spaces, which were originally assigned by the developer in 1969. I have a two bedroom unit and ever since I moved 15 years ago, I've had two parking spaces, just like almost every other two bedroom units. Recently, a member of the board changed how parking spaces are assigned. The new plan allows two bedroom units only one parking space. The board of directors say that they can do this by vote. Is this legal? What is the proper way to do it? Thank you, Enrique D.

Answer: Parking spaces are ordinarily subject to reassignment by the Board of Directors when they are common elements. Parking spaces which are appurtenances to the units are not typically subject to reassignment. The answer to your question lies in a review of your governing documents to see how these parking spaces are defined.