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Transparency: The Shield against Conspiracy Theories

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Anyone that has been in the community association industry long enough has come across a situation where a board of directors is faced with an owner accusing the board of acting inappropriately and making decisions without the approval or knowledge of the membership.  In many cases, these issues arise from a lack of information or misinformation.   In the worst instances, this results in rumors being spread, accusations brought, and a division created between the Board and the community.

How do the best intentions of volunteer Board members end up being met with rumor and conflict?  Understanding that process and developing practices to counter it may require looking at the nature of conspiracy theories.

What are we up Against?

In 2013, Public Policy Polling did a national poll of American voters relating to 20 widespread conspiracy theories.   Below are some of the results:

Conspiracy Percent believing Number of Americans believing
JFK was killed by conspiracy 51 percent 160,096,160
New World Order controls global economy 28 percent 87,895,931
A UFO crashed at Roswell 21 percent 65,921,948
The government controls minds with TV 15 percent 47,087,106
Medical industry invents diseases 15 percent 47,087,106
CIA developed crack cocaine 14 percent 43,947,966
Fluoride is dangerous 9 percent 28,252,264
The moon landing was faked 7 percent 21,973,983
Airplane contrails are sinister chemicals 5 percent 15,695,702
Lizard people control politics 4 percent 12,556,562

 

Overall, at least 50% of all Americans believe in at least one conspiracy theory.   Given these numbers, it is no surprise that a community association has at least one or two members that may see shadows behind a board’s actions.

To address this issue, we need to understand what drives people to believe in and spread conspiracy theories.   University of Miami political science professors Joseph Uscinski and Joseph Parent in their book, “American Conspiracy Theories” define the four characteristics of a conspiracy theory as: “(1) a group (2) acting in secret (3) to alter institutions, usurp power, hide truth, or gain utility (4) at the expense of the common good.”[1]

For community associations, I believe that we can liberally translate this to:  (1) a board of directors; (2) acting without members present (3) to make decisions (4) that may result in increased assessments or other burdens on the members.  Boards generally do not try to operate in secret, but it is rare for owners to attend Board meetings.  How is it that the regular business of the Association may be creating conspiracy soup?

Uscinski and Parent may have some explanation:  “Researchers have found that inducing anxiety or loss of control triggers respondents to see nonexistent patterns and evoke conspiratorial explanations” and that in the real world “there is evidence that disasters (e.g., earthquakes) and other high-stress situations (e.g., job uncertainty) prompt people to concoct, embrace, and repeat conspiracy theories.”[2]

Boards of directors often face decisions relating to non-delegable duties that result in increased assessments, special assessments, fines or foreclosures.  These decisions, without adequate explanation and communication, can create stressful situations that lead members to create their own theories and to repeat them to their neighbors.

Operating with Transparency:  The Cure to Rumor and Conspiracy

Communication is the key to preventing and dispelling misinformation.   Boards need to operate with appropriate transparency to provide owners with important information and context for association actions.  This starts with holding meetings and keeping records as required by governing documents and state law, but it also may also include additional communication with members such as newsletters, social media and town-hall meetings.

Board meetings should be held regularly.   For homeowners associations, open meetings are required under the Homeowners Association Act.   The Condominium Act does not specifically require open meetings, but many associations’ governing documents do.   In any case, open meetings are generally a good idea to encourage participation in the good governance of a community.  Meeting minutes should be kept of all agenda items and board actions.  Although meeting minutes should not be a word-for-word transcription of everything said in a meeting, the minutes should reflect topics raised and actions taken.

Where a Board takes action without a meeting, it requires the unanimous written consent of the Board.  This should be reflected in a resolution in lieu of meeting.  A review of the minutes and resolutions should provide owners a complete summary of association actions.   In some cases, a majority of the directors agree via email and action is taken based on that agreement.  For volunteer directors that often hold full-time jobs, this may be a convenient way of addressing issues.   The problem with this approach is that the board action is not reflected in the records of the association.   Unless there is unanimous written consent, these decisions should be made at a board meeting.

Books and records of an association should be kept and made available for review according to the associations’ governing documents and the requirements of state law.   Generally, our state statutes require the books and records to contain the governing documents, meeting minutes, roster of members, and financial information of the association sufficient for a member, purchaser or lender to determine the financial health of the association.

What about Confidentiality? 

There is no doubt that there are some discussions, for example consultations with an association’s counsel, that may be appropriately kept confidential.   As one California Court of Appeals noted:

It is no secret that crowds cannot keep them. Unlike directors, the residents owed no fiduciary duties to one another and may have been willing to waive or breach the attorney-client privilege for reasons unrelated to the best interests of the association…`[o]ne can only imagine the sleepless nights an attorney and the Board of Directors may incur if privileged information is placed in the hands of hundreds of homeowners who may not all have the same goals in mind.[3]

Use of executive session for discussion of confidential matters is absolutely appropriate.  However, executive sessions should be conducted only when necessary.  Generally, a board may adjourn to executive session to discuss confidential matters outside of the presence of the members.  The board should make clear what the purpose of adjourning to executive session is, conduct any relevant discussion during executive session, then state the action to be taken in an open meeting and record that action in the minutes.   Appropriate matters for executive session include issues relating to:

  • Legal issues
  • Formation of contracts
  • Personnel issues
  • Disciplinary hearings
  • Privacy (including health and personal financial matters, such as considering a reasonable accommodation or a payment plan due to hardship)
  • Foreclosure

Voting may occur in executive session, but any board action must be reflected in the minutes.   Unless there is a reason to vote in executive session (such as voting for a litigation settlement), the board may wish to vote in the regular meeting session.  Where discussion is held in private, an explanation of why the members are not invited to participate may help them understand that the board’s reasoning is sound.

Increasing Communication

Particularly where facing an issue that may result in increased assessments, associations should take additional steps to include and inform the owners.  For example, when considering a large-scale repair project supported by a construction loan, it is often wise to hold a town-hall meeting and invite the association’s architect, contractor, and construction lender to address the membership to explain the process and to answer questions.   In litigation matters, community association lawyers frequently attend such meetings to field questions from members.     Newsletters, mailings, and updates on websites providing appropriate non-privileged information are also helpful in preventing and dispelling rumors.   Be sure to work with your counsel if you are providing information about litigation, as all of these communications are discoverable.

By acting with appropriate transparency, keeping good records, and increasing communication, associations can often avoid many of the rumors and conspiracy theories that managers and boards of directors face all too often.

And don’t forget your tinfoil hat.

 


[1] Uscinski, Joseph and Parent, Joseph, American Conspiracies, Oxford University Press, 2014.

[2] Id.

[3] Smith v. Laguna Sur Villas Community Assn. (2000) 79 Cal.App.4th 639, 642

Addressing Crime in Community Associations: We Volunteered for This?

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Community associations are well-suited to maintaining properties, budgeting for repairs, setting reserves and collecting assessments. However, in some matters that they are called to address, associations are particularly ill-equipped to deal with their communities’ issues. Crime is one of the most difficult issues for associations to address, simply because there is not any clear guidance as to what a board member or manager should do. You can look through stacks of governing documents and you just aren’t going to find a provision that describes a board’s obligations when a methamphetamine-addicted tenant assaults an owner in a common element hallway. When faced with criminal activity in their communities, boards and managers are put in the difficult position of hearing demands from the members to take action, but lacking guidance or experience as to what to do.

It gets worse. Not only is there little guidance, but in one of the most notable cases relating to the obligations of associations and their boards of directors relating to criminal activity, the Supreme Court of California stated that, “…when the only persons in a position to remedy a hazardous condition are made specifically aware of the danger to third parties, then their unreasonable failure to avoid the harm may result in personal liability.” Frances T. v. Village Green Owners Ass’n., 42 Cal.3d 490, 723 P.2d 573 (1986). Not only can an association be liable for not acting appropriately to address criminal activity, but this is one of the few instances where a volunteer member of an association’s board of directors may face individual liability for failure to act.

In Frances T. and other reported cases involving association liability for failure to prevent harm from criminal activity, the key concept is that associations have a duty to protect the members of the community from foreseeable harm. Knowledge of a pattern of crime in the community or repeated complaints from residents likely triggers a duty to at least perform an investigation to determine if association action is necessary. The more difficult question for a board or manager is just what action should be taken.

Isn’t crime a police matter?

Of course it is. The first step upon learning of criminal activity affecting a community association, its members, guests and agents is the most obvious one: call local law enforcement. Law enforcement personnel are trained to deal with these situations. Further, making a record of the association’s response to criminal activity helps to show that the association is acting in a reasonably prudent manner.

The association can assist law enforcement through exercising its authority under the governing documents. Most associations’ documents specifically include a right of entry for emergencies. Associations can work with both police and fire officials to determine that units are being kept in a safe condition where there is reason to believe that residents’ health or safety is at risk.

Cooperation and coordination with law enforcement is often all that is necessary to address some criminal activity; however, that is not always the case. In some situations, an association may have to take additional steps.

We called the police. Now what?

Recently, a Board and its property manager requested my help dealing with a resident who had been repeatedly cited and/or arrested for various offenses, including using illegal drugs, violently abusing alcohol, causing property damage to common elements, creating excessive noise and threatening other residents. In each instance, the individual was released to return to his condominium unit. Residents feared for their safety and the problems were becoming more frequent and the conduct more volatile. The association had already sent several violation letters and imposed fines on the unit owner, who simply paid each fine without comment. The offender was the unit owner’s son, so he was not considered a tenant and could not be evicted under this association’s documents (in many governing documents, an association has authority to can evict a tenant for violations; this is often a good option for dealing with criminal activity of tenants). The board felt like they were out of options. The community’s residents demanded more be done to protect them.

In this case, the foreseeable risk of harm was clear; the association had to take additional action. The problem for this association, like most associations in these types of situation, was that the governing documents are very thin on regulating conduct. In most cases, the best associations can look to are a combination of two common provisions. First, the “noxious and offensive activities” provision is often the only provision in an association Declaration that addresses individual conduct. A typical provision says something like:

No noxious or offensive activity shall be carried on in any Unit or Common Elements (including the Limited Common Elements), nor shall anything be done therein which may be or becomes an annoyance or nuisance to other Unit Owners, would be in violation of any laws, or would interfere with the quiet enjoyment of the other residents.

In most sets of governing documents, that sentence or something like it is the only thing addressing resident conduct that negatively impacts a community.

The association had relied on this provision to send out multiple violation letters with little success, so it turned to the enforcement provision, which is common to most association documents and the second part of the combination necessary for meaningful action. A sample provision looks like this:

Each owner shall comply strictly with the provisions of this Declaration, the Bylaws, and the administrative rules and regulations made pursuant thereto as they may be lawfully amended from time to time. Failure to comply shall be grounds for an action to recover sums due for damages or injunctive relief or both, maintainable by the Board of Directors on behalf of the owners, or in a proper case, by any aggrieved owner. Failure to comply shall also entitle the Board of Directors to recover any costs and reasonable attorneys’ fees incurred by reason of such failure whether or not such activities result in suit being commenced or prosecuted to judgment. In addition, the Board of Directors shall be entitled to recover costs and reasonable attorneys’ fees if it prevails on appeal and in the enforcement of a judgment.

Put them together, and the violation of the noxious and offensive activities clause can be enforced through a court action for damages, injunctive relief or both. In most cases, there is also an attorney’s fees provision that adds further consequences.

In this case, one final letter to the owner from the association’s attorney, explaining that the association would seek damages, an injunction and attorney’s fees caused the owner to remove the problem child and the residents lived happily ever after. Associations should review their governing documents to ensure that they have appropriate provisions to address conduct-based issues.

An Ounce of Prevention

Associations do not need to wait until crime occurs to address the issue. There are several ways in which a community can act to prevent crime:

• Criminal background checks for tenants can be a useful tool. Associations should be aware that FHA Condominium Approval Guidlelines may prohibit mandatory tenant screening, so such provisions may affect FHA project approval.

• Neighborhood watch programs have been successful in many communities. Often, local law enforcement will work with local communities to set up such programs. Typically, these should be set up by volunteers, rather than through direct Board involvement.

• Regular maintenance, especially relating to lighting, security doors and gates, is a critical responsibility of associations and should be made a high priority.

• Private security is a viable option, and may be a necessity for association s in high-crime areas.

Every association is unique, but all share an obligation to act in a reasonably prudent manner and to protect residents from foreseeable harm. Associations should work with their managers, counsel and local law enforcement to determine the best way to address and prevent criminal activities, and to ensure that they have the necessary authority and procedures in place to address situations as they occur.

Handling Hoarding in Condominium Associations

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Association governing documents are generally effective in enforcing compliance with issues like use of common elements, uniform appearance and maintenance. More difficult are issues relating to occupant conduct and the safety of residents, particularly when there may be underlying mental health issues at play. In these cases, fines and violation letters may prove ineffective. In 4215 Harding Road Homeowners Ass’n v. Harris, a Tennessee appellate court upheld a ruling evicting a condominium owner from her home, terminating her ownership rights and allowing the sale of the unit to go toward the Association’s legal costs, which had exceeded $100,000.

As of May 2013, Hoarding Disorder has been recognized as a psychiatric diagnosis by the American Psychiatric Association. As a result, owners and occupants with hoarding disorder may request a reasonable accommodation, which further complicates matters for Associations and managers.

Community associations may be affected by individuals with hoarding disorder in a variety of ways. The most basic is simply the accumulation of clutter in common elements outside of units. More serious are fire hazards, health concerns, structural support issues and damage to building components. Although an Association has obligations to maintain the property and protect the safety of its occupants, a volunteer Board and its management are placed in a difficult position where those obligations impact individual privacy and mental health issues.

Because of the nature of the issue, the Board and its management may not become aware of the issue until it has evolved into a problem. In some cases, once a unit is full, the accumulation of clutter may spill out onto balconies, decks or common elements. This is typically dealt with in a common fashion, including violation letters and/or fines relating to aesthetic concerns or misuse of common elements. This may only be the beginning of a far more complicated problem, which may include cleaning the unit (often through a biohazard cleanup company), documentation and removal of items, storage costs, and in some cases fines and assessments for costs attributable to the unit.

If the Association discovers that an occupant is hoarding in a unit, it triggers concerns with health, fire and structural issues, as well as legal issues relating to enforcement. The first step is to try to evaluate the potential problem. Most Associations can request a unit inspection under their governing documents, and the Condominium Act provides for access through units for the purpose of maintenance, repair and replacement of common elements (see RCW 64.34.328). Typically, governing documents require an owner to maintain their unit in a safe and sanitary condition, so the Association can attempt to enforce these provisions. Associations may wish to consult with counsel to review their governing documents and adopt rules to clarify the obligations for unit maintenance, unit inspection and cleaning.

Additional resources include fire departments, which may inspect for fire hazards, and police which will in some cases, perform wellness checks if there is a health concern. Non-profit organizations may also be a valuable resource, as they can assist in trying to provide mental health services, evaluations and guidance. Locally, the King/Pierce County Hoarding Task Force includes members from numerous governmental, non-profit and private agencies.

The approach to each case will depend on the willingness of the occupant to communicate and cooperate with the Board, the severity of the problem, and the health or safety issues created. In all cases, however, the Association should fully document its efforts, consult with community association counsel, and work within its governing documents to try to address the issue.

Why Review Your Governing Documents?

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Your community association is not simply a group of homes and families that live in the same location. An association is a corporation, subject to statutory regulation, standards of business conduct and, unfortunately, a long history of case law arising from litigation. The governing documents represent the legal framework in which the corporation operates. For members of the Board of Directors, it is important to understand the duties and obligations of the Association, the authority and responsibility of the Board, and the rules that govern violations and enforcement.

A professional review of your governing documents by an experienced community association attorney can assist a Board in numerous ways. Most importantly, a review can identify potential problems with interpretation and enforcement in the future. In the words of Benjamin Franklin, an ounce of prevention is worth a pound of cure.

In most cases, an association is still operating under governing documents written by the original developer’s attorney. Although these attorneys may do fine work for their clients, the provisions of the governing documents they draft may not always be advantageous to the association itself. Also, these governing documents tend to be cast from the same mold; with minor differences, most sets of governing documents are applied in a “one size fits all” manner. In practice, every association is unique, and over time each develops its own issues based on specific conditions and the needs of the community. Even if the governing documents have been amended, not everything may have been addressed and ever-changing laws favor a regular review process.

A review of governing documents not only may reveal concerns or potential concerns with the existing provisions, but may also help to identify provisions that aren’t in the governing documents but should be. In many cases, associations end up seeking legal counsel for disputes based on issues that are not addressed in the governing documents. With years of experience in assisting associations with legal issues, a qualified community association attorney can spot common omissions that cause problems so that a volunteer Board doesn’t have to deal with them later.

Some of the more common issues I deal with include the following:

• Non-conformity to state and federal law, including fair housing
• Provisions inhibiting FHA project approval
• Weak tenant enforcement procedures
• Unclear or inconsistent architectural guidelines
• Provisions unnecessarily restricting Board authority
• Lack of borrowing provisions necessary for lenders to fund a loan
• Missing or incomplete collections policies
• Missing or unenforceable due process procedures
• Difficulties with Board makeup, qualifications and election
• Missing provisions relating to voting procedures
• Ambiguities in maintenance and repair provisions

Any one of these issues can potentially cause problems for a Board of Directors. In more cases than not, governing documents that weren’t specifically for an association contain more than one provision that may be of concern.

I offer a governing document check-up for a flat rate of $500. This includes a review of the Declaration, Bylaws, Rules and Regulations and architectural guidelines, a written recommendation letter identifying changes or additions, and a check of your corporate status with the Washington Secretary of State.

FHA Condominium Project Approval

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FHA Condominium Project Approval for Condominiums:

What is It, Why do We Want It, and How do We Get It?

 Fair Housing Administration (FHA) condominium project approval is, in simplest terms, a process of review and confirmation that a condominium meets guidelines established by the US Department of Housing and Urban Development (HUD).  For those of you that are one sentence in and already confused, FHA is part of HUD.  For our purposes, the difference between the two doesn’t really matter when we’re talking about guidelines and approval.

Where a project meets these guidelines and is approved by the FHA, purchasers may be able to obtain loans that are insured by the FHA, which is the largest insurer of mortgages in the world.  Because lenders have less at risk in FHA-backed loans, they can offer more attractive terms and loan to a broader base of borrowers.  This increases the pool of potential purchasers for a property and helps keep market value high.  The FHA does have loan limits, so for very high-end luxury condominiums, FHA approval may not be a practical concern; for most condominiums, however, FHA approval can be very important to sellers and purchasers alike.

In recent years there have been numerous changes in FHA requirements that may affect your association’s ability to obtain approval.  Many of these changes were driven by market conditions, and it is a certainty that the requirements will continue to evolve in response to changes in the market.  Unfortunately, this means that some things that were previously acceptable–or even recommended–will now cause an association to be rejected for approval by the FHA.

Beginning in June 2009, FHA approval changed drastically, with more major changes in June 2011 and September 2012.  Significantly, since 2009 condominium project approval expires every two years, so if your association did not reapply for approval since these changes went into place, approval prior to that point has since expired.  You can check your condominium’s current status and expiration date on HUD’s website here:  https://entp.hud.gov/idapp/html/condlook.cfm.

Some of the primary considerations for FHA project approval are:

  • Restrictions on a unit owner’s ability to sell or lease his or her home
  • Pending litigation
  • Pending special assessments
  • Delinquencies
  • Budget and reserve funding
  • Owner occupancy ratios

For a more complete list of factors, we look to HUD’s 2011 Condominium Project Approval Guidelines, as well as their September 2012 clarifications and modifications.  More are sure to follow.

Associations can be approved by the FHA in two ways.  The first is through a lender.  Sometimes, this may be triggered by a particular transaction.  Some lenders can certify condominiums under a specific FHA process where the association provides the necessary information to the lender, who then processes the application itself.  This is fairly uncommon, and carries with it time pressures as it is typically the result of a pending transaction.

The more typical route to approval is applying through the HUD Review and Approval Process.  HUD has a lengthy checklist of required materials to be submitted with the application.  Usually an association will have its management company or an attorney submit the application, since it is a complicated and confusing process.  An experienced attorney may also be able to spot and cure issues that would prevent approval, which can prevent the added time and expense of reapplying.

Although it can seem like an overly-complicated, mysterious process, FHA condominium project approval is something that most condominiums should obtain and keep current.

Welcome to the Board

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I wrote this for the January 2013 WSCAI Journal.

Welcome to the Board of Directors

So you’ve been elected to the Board of Directors—congratulations!  You’re in for a rewarding experience where you can help to foster a sense of community, protect and preserve property values, and connect with your neighbors in a way that you may never otherwise have.  You also just became the director of a corporation responsible for hundreds of thousands, if not millions of dollars of property.  Best of all, you volunteered for all of this, including the meetings, budgets, decision-making and enforcement that come with it.

By preparing for your upcoming term and knowing the basics before you jump in, you can avoid some common pitfalls and hazards faced by many board members.  Knowing the ground rules and familiarizing yourself with the roles of Board members and officers, the contents of your governing documents, and the obligations of the Board will help you ensure that you’re off to a good start.

Understand Expectations.

The community association’s primary function is to protect and preserve the value of the property in the association.  Boards of directors help to accomplish this goal by maintaining and repairing the property, operating the association, and enforcing the governing documents.

Board members can have various roles on a board of directors.  In most cases, the members elect the board members, and then the board members choose the various officer positions from amongst themselves.   Typically, a board will have a president, vice-president, secretary and treasurer.  Non-officer board members are usually referred to as members-at-large.  Although not all associations are the same, most board members serve terms of one, two or three years.  Officer positions are usually served one year at a time.  In some associations, one person is particularly well suited for a particular position, so the Board chooses to have them serve in that position throughout their term. Other boards like to share the duties by shifting the officer positions each year.

Regardless of your position, it is a good idea to understand what your role is, and what the roles of the other officers and directors are.  Discuss your understanding and expectations with your fellow board members at the outset of the year.  If your association is professionally managed, discuss the manager’s role and how you can best take advantage of their training and expertise.  Remember, boards determine policy and make business decisions. Managers implement the board’s directives and take care of day-to-day operations.

Educate Yourself.

The most important thing for a new board member to understand is the association’s governing documents.  These documents provide detailed guidance to the membership on the authority of the association, operating the corporation, including holding meetings and elections, and the rules for the members and their guests.

The primary document for most modern associations is the Declaration of Condominium (for condominium associations), or the Declaration of Covenants, Conditions and Restrictions (for homeowners associations).  These documents typically set forth the definitions and respective maintenance responsibilities for units, limited common elements and common elements.  They also provide the framework for the association’s authority, including assessments, maintenance, architectural restrictions, and enforcement.  They can be thick, written in legalese and certain provisions may be somewhat complicated or confusing.   Don’t worry—if you are unsure of how to interpret a section of the Declaration or the board does not agree, you can always seek advice.

Bylaws should provide guidance on the operation of the corporation, including the manner of holding association meetings and elections and the terms, qualifications and elections of board members.  Bylaws usually also set out the respective roles of the officers of the board.

Rules and regulations provide specifics on community expectations, as well as a description of the consequences for violations, including a published fine schedule.  Reasonable and consistent enforcement of the rules is a critical role of the board of directors.

Other resources including educational seminars, written materials, and consultants such as managers, accountants and attorneys can also be invaluable sources of information on how to best function as a successful board.  When you are confronted with a difficult decision, being familiar with your governing documents is critical.  Adding the experience of expert consultants and others that have been in similar situations will give you more confidence that you are considering the most relevant information and making the right choice.

Use Consultants and Committees.

All of the details of the governing documents and operating your association may seem like a landslide of information to take in all at once, but there’s good news:  you’re not on your own.  In fact, our legislature has recognized that you shouldn’t be on your own.

Board members are protected from potential liability by the “business judgment rule.”  For non-profit corporations such as associations, this rule states:

  A director shall perform the duties of a director, including the duties as a member of any committee of the board upon which the director may serve, in good faith, in a manner such director believes to be in the best interests of the corporation, and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.

  In performing the duties of a director, a director shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by:

     (1) One or more officers or employees of the corporation whom the director believes to be reliable and competent in the matter presented;

     (2) Counsel, public accountants, or other persons as to matters which the director believes to be within such person’s professional or expert competence; or

     (3) A committee of the board upon which the director does not serve, duly designated in accordance with a provision in the articles of incorporation or bylaws, as to matters within its designated authority, which committee the director believes to merit confidence; so long as, in any such case, the director acts in good faith, after reasonable inquiry when the need therefor is indicated by the circumstances and without knowledge that would cause such reliance to be unwarranted.  See RCW 24.03.127.

For board members, this means that relying on consultants, such as attorneys, accountants and managers, is a reasonable approach for a volunteer board member.  Similarly, relying on a committee that has acted within its authority and in such a manner as to merit the confidence of the board is also reasonable.  In short, not only do you not have to do it all yourself, but the legislature has recognized that you are entitled to reasonably rely on others.  Take advantage of this and utilize consultants and committees to help you consider issues, weigh options, and make recommendations to the board.  Remember, only the board of directors can make a decision, but it is entitled to rely on the expertise and reasonable recommendations of others.

Be Reasonable.

Most importantly, the board of directors must act in a reasonable manner in operating the association and enforcing its governing documents.  This means putting the interests of the community first and setting aside any personal bias.  It also means carefully considering important issues and not rushing to judgment on unpopular requests.  The board’s first priority is the good of the community, not any particular agenda.

With these strategies in mind, you have the tools to not only succeed as a member of your board of directors, but to keep a volunteer position from becoming a full-time job.

 

I’ve got bad news and more bad news… delivering unpopular messages to the members

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At the Washington State Community Association Institute’s annual CA Day I presented a seminar called “Don’t Shoot the Messenger.”  I’m told that  more people signed up for this session than any other.  As much as I’d like to believe that it’s because I’m extremely popular and entertaining, I’m pretty sure that the real reason is that in the current economic climate, there’s plenty of bad news being delivered.

As we approach budget season and annual elections, the volunteer Board position may seem more like a full-time job.  In this market, where the typical story is higher delinquencies and lower property values, the dread of homeowners’ reactions to more bad news makes that job even tougher.  In addition, as reserve study laws have become more stringent, Associations are increasingly finding themselves with reserve studies that suggest that increased assessments may be a foregone conclusion.

So how should a Board approach this season, and how can a manager help them through it?  There’s no perfect approach, but some general guidelines may help.

Improve Communication

One of the biggest complaints in community association is poor communication.  Owners may feel uninformed and issues such as increased assessments, major repair projects or changes in policies may be unexpected burdens in an already uncertain and stressful environment for homeowners.

Those of us familiar with Board meetings know that the Board would love to have more participation and attendance.  As a Board member, you may be tempted to meet criticism about communication with, “Well, if you’d come to the meetings you’d know what’s going on.”  This may be true, but it won’t solve any problems or make your job as a Board member or manager any easier.

Communicating information in a regular and timely manner can help to avoid backlash when the Board needs support in passing a budget, amending a set of governing documents, or another difficult vote.  Newsletters, websites, blogs, discussion groups, town-hall meetings and neighborhood barbecues can all help improve communication in a community.

Get Out in Front

 When an association needs to provide approval of an action, the meeting at which it is being considered should not be the first time that owners get an explanation of the issue or an opportunity to ask questions.  Consider scheduling town-hall meetings, at which no formal business is conducted, to allow owners to ask questions and get answers.  A letter in the format of Questions and Answers explaining the issue, the reasoning for the Board’s recommendations, and the impact of the action can help ease owner concerns in advance.  Forming committees to consider changes and make recommendations to the Board gets more owners involved at earlier stages in the process.

Use Your Experts

As a Board or manager, you have no doubt consulted with your experts—reserve consultants, accountants, lawyers, contractors—before reaching an important decision.  Rather than try to explain the issue yourselves, consider inviting the appropriate expert to a meeting, where owners can ask questions directly.  As a Board member, this type of meeting may only come up once or twice during your term of office.  As general counsel to dozens of community associations, I attend these type of meetings once or twice a month.  I’m used to taking the heat, fielding the tough questions, explaining the details and helping owners understand why one approach may be more advantageous than the alternatives.  Move that target off of you, and onto your consultants.  After all, they get paid for it.

You may still be forced to be the bearer of bad news, but with these general guidelines, you can reinforce a sense of commitment, transparency and community even in difficult situations.

As another resource on this topic, I came across this Forbes article called “The Ten Commandments of Delivering Bad News.”  You can read it here.       I thought it was helpful, and hope you do as well.

Your questions and comments are always welcome.