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.