Rent Real EstateAsk The HOA Expert
Question: Our Board President’s wife is paid for cleaning the clubhouse and the President owns a landscape company which is performing landscape services for our homeowner association. Are there any concerns we should have with this arrangement?
Answer: Yes, you should have plenty to be concerned about. Directors are elected volunteers who serve for no pay. A director"s wife earning money from the HOA essentially flows money back to the benefit of the director. So, no family members should be employed by the HOA since there is a conflict of interest. (On a side note, it"s generally not a good idea to hire any member of the HOA. If it doesn"t work out, a neighbor (and possibly friend) will have to be fired and there are bound to be bad feelings. The motivation for hiring an insider is to save the HOA money. But this often results in improper withholding, making cash payments and other illegal dodges that exposes the HOA members to liability. Anyone working for the HOA should be a legitimate employee or contractor.)
Hiring the President’s landscape company is a blatant conflict of interest. If the Board truly feels this company is the best to do the work, the President should step down from the Board and act solely as a contractor. To do otherwise is contrary to the fiduciary responsibility owed to the members. The Board is elected to protect the interests of all members. Hiring spouses and self-enrichment from contracts does not self that charge.
Question: We are reviewing our Rules & Regulations for possible revisions:
What is the HOA’s responsibility for repair and maintenance of the garage interior?
Should garages be used for storage which does not leave room to park cars?
Should owners be allowed to store ladders, refrigerators and other curiosities on their patios?
Should auto repair be permitted inside and/or outside the garage?
Should homeowners be asked to approve each revision before it is adopted or to approve the document as a whole?
Answer: Lots of questions here. Quick answers:
The HOA is not responsible for interior repairs to garages (or units) unless the governing documents say so or damage was caused by structural problems that are the HOA’s responsibility.
Many HOAs restrict garage storage if it displaces vehicles. For aesthetic reasons and since guest parking is usually limited, I recommend you do the same.
For aesthetic reasons, typically only patio furniture, barbecues and related decorations are allowed. All other storage should be confined to the unit or garage.
Minor repairs like oil changes are okay but major overhauls should be confined to the garage.
The Board is authorized to enact rules and regulations that are in keeping with the governing document. Rules of the kind you mention can be enacted by the Board although they should be circulated to the members for comment before doing so. If the proposed rule contradicts the governing documents, the members must vote to amend the governing documents.
Question: My neighbor and I have shared a fence for eight years. Our new manager had it removed stating “it did not comply with the governing documents”. Don’t we have rights?
Answer: Even if the Manager was technically correct about the fence violation, removing a long standing structure without notification and right of appeal is unconscionable. Since the fence had been there for years, you probably have a prescriptive easement and a right to keep it. Eight years is a pretty strong defense. I suggest that you go directly to the Board about the issue. Besides demanding that the fence be rebuilt, I suggest that you voice concerns about the Manager"s judgment. Maybe there are other cases of Manager bulldozing which need to be addressed. Depending on how the Board reacts dictates your next course of action. If the Board restores the fence and sanctions the Manager, hurray! If not, it may indicate a "regime change" is needed. That’s where you come in. Either run for the Board or vote in those that are more reasonable.
Question: Our manager just quit citing that he manages 27 associations and that ours is too difficult to manage. What is a reasonable workload for an HOA manager?
Answer: Normally, a dozen HOAs for one manager is considered a full load, assuming that the manager has no assistant, full management services are being provided to each client and that the manager is attending Board Meetings. Of course, the number of units in each HOA is significant. If large and complex, a couple of HOAs is a boatload of work for a manager. A manager with an assistant could manage 20 smaller 20-100 unit HOAs but 27 HOAs would kill anyone but Superman/woman. However, I detect that there are issues with your particular HOA that broke your manager. You don’t give details, but one dysfunctional HOA client can require more effort than a dozen healthy ones.
In healthy HOAs, the Board and Manager act as a team where the Board has oversight and the Manager executes the business according to Board policy, budget, governing documents, Management Agreement and good business practice. It can be quite a juggling act at times to determine which authority takes precedence. The Board should allow the Manager to execute the job without interference unless there is a compelling reason to do otherwise. For example, the Manager is charged with enforcing rules and collections. A member who is being leaned on for rules (or liened on for money) by the Manager may attempt to cloud the issue by complaining to the Board about the Manager without real grounds. Boards that bite this bait can undermine the Manager"s authority. A Manager without real authority is an exercise in frustration and will not likely want to continue for long. Unless the Manager has demonstrated repeated poor judgment or management ability, he/she should be allowed to make the call and expect to be supported by the Board.
Another reason Managers bail out is nitpicking from the Board by micromanaging day to day management activity. Requiring the Manager to justify why things were done adds considerably to the huge volume of urgent work an HOA Manager is supposed to complete. Adding this to the stack is enough to break anyone. It is, of course, appropriate to question a manager’s procedures at a Board Meeting when all directors are present. But if the Board does not demonstrate trust in the Manager, most Managers will not want to stay very long. Manager turnover is sometimes necessary but should be a last resort.
For more Ask the HOA Expert Q&A, see Regenesis.net.