Question: We have just circulated our proposed budget for member review and several members have commented that our dues are already higher than other HOAs in the area. Have you ever done a survey of fees so we have something for comparison?
Answer: Assuming your budget is formulated with factual information, the result will be what is required to pay for real operating and reserve costs. However, there are many homeowner associations that do not fund their budgets properly. Many put nothing in reserves even though this generally should account for 20-40 percent of the total homeowner fee. Still others self manage in a foolhardy attempt to save money. It doesn't. It costs plenty in substandard service, inadequate maintenance and falling market values. Besides, who wants a 24/7 job with ongoing criticism and no pay for very long?
So a comment like "We charge higher fees/dues than XYZ HOA" is meaningless without knowing the particulars of XYZ's budget, the extent of their amenities and maintenance responsibilities, if they are self managed or professionally managed and a host of other variables that can skew the bottom line dramatically. So, no, I've not done such a dues study because there are simply too many variables for it to be meaningful. But here is a good and honest response to inquiring members:
"Our budget is barely adequate to fund a reasonable level of maintenance, services and reserves that the members expect and state statute requires. The Board has considered and explored options to reduce costs without cutting the quality of service and has made some cuts where possible. But quality of service is necessary to sustain the value of our homes and cutting quality will only cut our market values and salability. The proposed budget is the result of careful analysis and we need every penny to get the job done properly."
Question: Our Board recently announced that it plans to conduct business by e-mail. Can the Board do that?
Answer: Unless the governing documents are properly amended by an appropriate vote of the members to allow conducting non-emergency business by e-mail, it is not permitted. E-mail meetings effectively shut out members from the decision making process. Members are entitled to attend meetings and audit discussions. While it's okay for your Board to exchange information by e-mail, business decisions should be formalized at a regularly scheduled meeting open to all members.
Even if the Board could get support for an e-mail initiative, I don't recommend it. E-mail is very useful but face-to-face meetings allow a better quality of discussion and debate. If the topic is already agreed upon, e-mail is probably fine but if it needs discussion and has great implications, e-mail just won't do it justice. Any topic decided behind closed doors (or in cyberspace) will invariably be perceived in a negative light by the most disgruntled HOA members.
However, there are some cases when transacting business by e-mail is justified. Some HOAs are composed largely of second homeowners for vacation purposes (on the beach, in the mountains, etc.). If a majority of the owners normally live in distant places, getting together for meetings is problematic and expensive. In those cases, a compromise of, say, two site meetings a year supplemented by e-mail is reasonable, particularly if you have a local management company or site manager who is looking after day-to-day issues.
Question: Our HOA has been operating for over five years, during which time no member has ever been cited for violating the rules or architectural restrictions of our association. The new Board would like to begin enforcing future violations and issue citations to those members who have been in violation for a number of years. Can this be done?
Answer: The Board can request that old violators come into compliance but unless they are willing, it will be an uphill battle that the Board should probably compromise on. Five years is a long time and most courts likely would view it as silent consent on the Board's part or a prescriptive easement (passing of time legitimized the installation). The case is stronger if the installation is unsightly, dilapidated or causing damage to buildings or grounds.
The Board should prioritize the violations according to severity and deal aggressively with the most blatant. If there is resistance, the Board will need to decide whether legal action is prudent or cost effective. Less offensive violations can often be dealt with by getting the offender to sign a recordable document that identifies the property, describes the violation and states the offending installation must be removed when the property is sold. Most owners view this as getting their way while the Board can inform other members the installation is temporary. Prospective buyers are notified via their title policy of the violation.
Question: The directors met in executive session to discuss our Board President who was away on vacation. It is felt we need a change and the majority want him to resign but are afraid of the embarrassment and conflict it might cause. We're thinking of having the management company break the news. What would you advise?
Answer: There are several issues. Directors of the Board typically only can be removed by a vote of the membership. But officers of the Board are appointed by the directors. So a majority of the directors may remove a President from office. Once divested of his office, he may choose to quit the Board voluntarily. If he does, the remaining directors will have a vacancy on the Board that needs to be filled. That is usually done by appointment by the remaining directors or at the Annual Meeting if it is coming up soon.
The management company is not the appropriate party to ask the President to resign. This is like hiring a hit man to do the dirty work. If the directors have a problem with one of their own, they (or one of the directors appointed to do it) should speak to him in person and in private to avoid unnecessary embarrassment. The issues should be discussed frankly, honestly and diplomatically. If he can't make a case why he should be allowed to stay and refuses to step down, the Board can remove him from his office by a majority vote. (All this applies, of course, unless your governing documents read otherwise.)