Whether you live in a condominium, cooperative, timeshare, mobile home or homeowners’ association, chances are you have certain provisions in your governing documents that have been routinely overlooked throughout the years.
Two of the most common of these neglected provisions are the requirement for voting certificates and the requirement for an Insurance Trustee.
Voting Certificates are forms that are submitted to the association’s Secretary for units or homes owned by more than one person or owned by a corporation, partnership or other entity. These forms designate the person authorized to vote on behalf of the unit or lot if the association’s governing documents require the use of voting certificates. Usually, but not always, there is an exemption from the voting certificate requirement for units or homes owned by a husband and wife. Not all association governing documents require the use of voting certificates, but those that do contain this requirement carry certain risks should voting certificates not be properly used.
Elections can be challenged based on the improper use of voting certificates or the failure to use them at all. In addition, recall efforts are often impacted by the issue of voting certificates. A board facing a recall effort might seize on the voting certificate requirement in the association’s documents and challenge the recall petition despite the fact that other votes from the same owner or owners had been routinely accepted in the past. Not surprisingly, the failure to properly enforce voting certificate requirements over the years removes a board’s opportunity at a later time to challenge a recall petition for the failure to use voting certificates.
One other provision in some associations’ governing documents which is routinely overlooked is the requirement to use an Insurance Trustee. Many governing documents require that any insurance proceeds received by the association be deposited with and subject to the safekeeping of an Insurance Trustee. Most likely the reasoning behind such a requirement was to provide an added layer of oversight to prevent any mishandling or misappropriation of insurance proceeds.
Most governing documents define an Insurance Trustee as an institutional lender. Of course, banks charge a fee to perform this service and many associations and their members see this as an unnecessary, costly and duplicative service. Again, many associations with this requirement in their governing documents do not follow it and instead, insurance proceeds are handled and disbursed directly by the board, in violation of the documents.
If your association has either of these requirements in your governing documents, ignoring them is not a viable option. Please speak with your association counsel about amending these provisions to better suit your needs and current practices or to become acquainted with the new procedures that must be adopted in order to comply.
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