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Condo Association Management Blog
Property managers' responsibility to HOA and Condo Association boards
Posted on Wed, Sep 08, 2010 @ 06:46 AM
Email Article
My question is about community property managers. How much guidance must a community property manager give a condo association or HOA board? If the property manager knows that something should or shouldn't be done by the board, does that manager have a duty to speak up. Even if the specific subject is not mentioned in the management contract?For instance, let's say that the property manager sees that a board member is going to do something risky or something that would violate the governing documents, should or does the manager have a duty to speak out and inform the board member of the situation? And, along the same lines, if a board member asks for the assistance of a community property manager to violate a governing document provision, does the manager have the duty to refuse to participate in the action?
Tags: Property Management, Boards
Comments
Questions such as you pose are best referred to your condominium lawyer if the Board lacks the understanding to base their decision upon.
Further as a member of the assembly at a Board Meeting it is your perogative to raise a point of order when you believe a rule or the bylaws or even your state condominium act are being subverted.The Board must allow you to make your point.
The manager has a responsibility and duty to the community. It does not matter if they are a portfolio manager with a management company, an independent contractor or an employee; the contract or employment is with the community.
The board should be utilizing the manager for advice as well as implementation of tasks assigned by the board. As any contractor or employee, the manager will need to determine if they will participate in unethical behavior or direction. They can refuse (and be fired or lose the account), but another option is to clearly put in writing the issue and present it to the whole board. Managers should not be doing anything that is not covered in the management agreement that is not in the best interest of the community unless directed so by the board as a legal board action. If one member asks something, the manager can defer by stating "that item needs a board vote/approval." They may even want to kindly explain why it is not ethical or why it is problematic.
The manager is not an expert in everything. They are often not an accountant, engineer, architect or licensed attorney. Their advice and input should be prefaced with this and the manager should be directing the board to the appropriate expert.
I disagree that the manager should not be involved in policy decisions. The manager must often implement those decisions and deal with the consequences of those decisions. The decision is the board of directors, which they are elected to make those decisions. The manager should assist by educating, informing, assisting in research and in pointing the board in the direction to make reasonable and informed decisions. Their experience should be presented in making a decision.
For example, a community has an individual with a medical condition and requests to have a parking space assigned to them that is closer to their unit than their garage. They have documentation from medical professionals, have been licensed as handicapped/disabled by their state. The board is unsure of what to do and divided on the issue. What should the manager do?
They should advise the board to review this with their attorney and in fact, ask their attorney to bring in legal counsel conversant in disabilities and the legal ramifications. They should also discuss this with their insurance agent and see the potential liabilities involved for the community.
If the manager stayed silent, the board and the community would not be served.
The manager should not make policy. The manager should present to the board when an issue may need a policy decision or assist the board when the decision they make is not in the best interest of the community from a legal, moral, ethical and financial standpoint. They may think they are making the best decision for the community, but may not have all the relevant information.
Anytime something is against or prohibited by the documents, the manager has a duty to remind the board of their duties and point out the potential problem or conflict and relevant section of the documents and in most cases, recommend that the association's legal counsel review. Remember, the documents are not the only source. Maybe they are outdated. Maybe state statutes have made that portion irrelavent or inapplicable.
The board is elected to manage and administer the affairs of the Association, and they depend on professional and knowledgable people to assist them in performing this task.
The Property Management people aren't allowed to pay a bill over 750 without board approval.
Today I reviewed our Master Policy - at least what the Board determined I could see and dumped at my front door. Won't go into that now.
I'm amazed. Our Board has also indemnified the Property Management Company from everything. We are also covering two cars and up to 25 employees on our Master Policy. Do all Master Policies cover this? This company is a mom and pop operation.
In addition, the policy states that we are a Frame Building, but we are almost completely Brick.
Am I crazy to think there is not a problem here. No wonder they won't let us into the office to review the full Master Insurance Policy file. No wonder our insurance dropped about 10,000 when they changed companies.
Any suggestions on how to handle this with a Board who has provided me with their attorney name and a Property Manager who has also provided me with their attorney name.
Am I misreading something here?
Thanks for your opinions. I talked to the Attorney Generals office and they sent me a book on Sunshine Law but I don't think that covers us. We are in Missouri.
Thanks for everyones help.
Went to the insurance companies office the other day, not the guy that sold us the policy, but the actual Master Policy company has it's regional office about 4 blocks from where we live. They gave us a copy of the Declaration Page - which the Board neglected to give us when they dropped off several hundred pages.
Went thru everything again one more time this weekend. Today I re-read again, By Laws, Rules Regs and Indentures. There's no question - the Board must give us access to review all these business documents. They picked out what they wanted and dropped off the info at my front door. So they are breaking the law. It will just cost us hiring an attorney to actually get a look at what we are entitled to. We know the law. They know they can stall.
No matter what, the Board has the final say in everything - we can protest, have a hearing, but they make the final decisions, even if not in the best interest of maintaining the building.
And per By Laws, the only way we can contest anything is if it is a legal/statutory or code issue. They control everything. Shame on us for letting this happen.
The Master Insurance Policy reflects we are a Frame building. The Dept. of Revenue individual owners records reflect this building as Brick. The original plans submitted by the builder show Brick and Frame. If you look at our building, the decks are wood and the bay windows have siding on them. That's about it for framing. The rest is a brick veneer from what I can tell.
The County Assessor's office appraiser pulled their original file from 1987 at the time the original builder documents were being done and they have brick written on their documents.
That's where we are today.
Also, because the Board has refused to allow us access to see the business records related to this insurance policy - we have held them each personally liable in our correspondence. Just got an email that one of the Board members resigned - of course we were the only ones that he didn't notify.
Mold is now growing in our front lobby. There are no laws against mold growing anywhere.
We are very lucky that the city we live in is working with us to get this cleaned up - but they can only do so much.
Thanks again for comments and just plain old listening.
A downkload copy of your state's version of the condominium act.
Even if you are a pest the office should be giving you what you ask for.
Is this the norm?
You should also check your state condo act to find if a managementn company,such as you hired in Florida, is required to hold a state license and liability insurance of their own.
Almost all contracts call for indemnification, but nothing prevents the Directors from crossing out the offending clause. The Property Management Company should have its own insurance. However, the Directors might indemnify for the deductable when there are false allegations, errors not intentional, and for immature, unsophisticated owners who would sue at the drop of a hat.
Charles - I know you keep referring us to the Condo Stats - but the only way we know how to deal with this is thru an attorney - the Board has ignored the Stats.
Still The Lover?
Sooner Than Later?
Smiling Through Lunch?
mike
I've been handling the Insurance via a reputable broker for 15 yrs.From time to time we've had to change Insurers and my broker and I review the entire contract - we reveiw annually regardless, in order to make sure we are properly covered due to market changes. Going thru that currently. Many policies also do commercial businesses - so things pertinent to covering 'employees and vehicles' are in the initial contract. We delete when we can - usually not a huge savings. Sometimes the insurance company won't delete the verbage, but they don't charge us either.
Our Broker makes sure every owner gets a copy of the Master Policy with all specs. This is required by the owners internal insurance company and their mortgage company. Mold may be a tricky issue depending on your area and insurance company. We are in a wetter NW climate. A few years ago the insurance companies ammended policies to state mold was not covered for any reason. Mold is terribly damaging - I would think your HOA would fix and then pursue insurance - I've seen it in private homes - mold in one area and in weeks it can be in walls carpets etc - so a small fix becomes a major ! expensive job.
Maybe a health dept. issue?
I wouldn't work or serve as Director or officer for any company, not for profit, or condo that would not indemnify me. Anyone who would is careless to say the least.
Criminal acts are not covered.
The IRS agent suggested we file a complaint with the Attorney Generals office and the first part of the complaint should state that we feel the Board has hired an attorney that we feel has a conflict of interest in representing the Board because he worked in the Attorney Generals office recently.
In terms of getting the master insurance policy information and all business records relating to it - we will be including this in the complaint, three different incidents, we still have not been allowed to review the business records relating to the policy - originally there was a huge issue of whether the policy was handled legally, signatures, gaps between policies, etc. My own agent met with me the other day and is beyond himself - he can't believe what the Board and Property Manager who referred me back to the Board has done to us. He told me if the Agent who handles the Master Policy doesn't respond to him, he will file a complaint with the Division of Insurance in Missouri.
Our water leaking problems are still going on. You'll all love this. The Board finally agreed with each other to bring in a "structural engineer" to do a walk around. Guess they didn't like the answer they received in terms of how to fix the water leaks. Just heard they are having an architect come look at it instead. It's like the 5+ attorneys the Board themselves has gone thru - they don't like the answer so they find someone else to sob to....
There's a great book called "The Abusive Relationship" by Patricia Evans. It certainly exemplifies what we are all dealing with and has some really good ideas on how to handle these controlling crazy makers, wherever we run into them in life.
Personally, I think now that I want to leave our Board in power. We seem to be running the Agenda by involving the City - which they have to answer to. No one wants any legal liability and there are certainly many things here that are not on the up and up - what comes around goes around. One rape or accident with them having ignored security issues and I doubt they'll have much support from their D & O insurance when the emails and documents are brought out in the open.
The President said first replied to this request stating "Your email is adequate for the items to be added to the agenda for the board meeting being held on October 18."
Then she sent me another email later last night stating: "You list has not been review...at a glance some items will probably be tabled".
The 3rd Board member resigned recently since the President is making Unilateral decisions. After talking to him yesterday - it appears the 2nd Board member is covering up so for the President so noone knows there are issues on the Board.
Of course, most of us know would like to be rid of both of them.
Question is -
1. What are the rules about Agenda items being placed on the minutes?
2. Can the President choose only what she wants to discuss?
3. Can owners come to the meeting and "talk/discuss" these items?
4. Or, are these items to be brought up - the President tells us what she wants to tell us, and nothing is open for discussion?
I think I have been able to rally about 6 owners to come to this Board meeting and we need to understand what legally we can say or rights have have at Board meetings. I know if they have a legal issue or want to discuss an "individual issue" we can't be there.
I will re-read Roberts Rules of Order as that is basically how we have tried to handle the annual meetings.
Thanks for ideas. We live in Missouri and totally know our rights. Still haven't been allowed access to our business records in the office after multiple requests to the Board - almost three months later. Hate to spend that much money on a retainer for an attorney.
Thanks so much.
There are severaol versions of Roberts one can find so I suggest you use the latest-RONRR Roberts Orders Newly revised edition 2010.
Your problem is how you can force the President to follow these rules.One approach is to use the pre emptive "point of order", Under Roberts such a point is raised when a member of the associations stands and advises the Chair he wishes to make a point of order. The Chair mkust recognize this member who then states what rule be believes is being violated. The Chair mjust rule on the issue and if the ruling is not accepted the member may appeal the chair's rule.The there must be discussion at the end of which the assembly votes and simple majority rules.
What do your bylaws say about impeachment?? That coukld be another route to try.
I think it is in the best interest of the insurance company to help us because if something happens we are going to be in big trouble and I'm sure they won't want to pay out. They are aware of the situation as I went to them finally as I couldn't get the Declaration page from the Board.
Two of the three Board members would have to be impeached. We will sit down with the 3rd one on Friday - he is only temp until the December meeting.
I have two Roberts books - one is the new one. I knew them cold at the last Board meeting - but the President doesn't go by them and the past meetings have been awful.
Maybe the first thing to do is vote that we use them so everyone is on the same page. Am sure the President won't agree to any of this. And she yells at everyone.
We need a Board who understands that this is an asset and a business per se. The management company needs to be gone along with their friends and family - we are an annuity to them. Every contract needs to be bid out - the management company has followed Board rules and nothing is good here. Too many good people looking for work.
We are getting there. Slow and surely.
I may bring an attorney with me on Monday who knows the rules better than I do - but I hate to come in and set the tone like that. Then the President will scream that the Board now has to waste "our money" defending themselves. And they do spend it. We are a deep pocket apparently. He also specializes in not for profits which we are.
Best to you all.
I'm the small HOA with 7 owners.
We are on the verge finally of getting a managment company. No one is interested in affairs- until money is brought up which is finally now. Our siding is literally falling off the building and owners even after I've had contractors out to speak at our meetings etc- 4 owners still refuse an assessment - putting all owners in danger of a water breach. We require a 5 vote majority.
Up to 1998 - our condo was mismanaged and had old owners take off with funds too. I've been doing 12 years - managed to get 2 new roofs done took most money left in our funds- so an assessment is a must. Loans are out since 2 owners are chronically late paying dues too risky.
Here's the connection of the two.
I researched, checked references, interviewed etc and after months came up with an awesome company. One owner who is now selling - brought in a company the day of the meeting so no way to even check. I have reservations about the pick. Bossy, will tell us what to do etc were comments made - and no access to our bank account which will switch over to their bank. Only 9 months in business too. Promised the world at the metting and swayed the usual 4 owners who are in denial. This same owner, who brought in this company - real estate agent also tryed to make we sign a Re-Sale Certificate he'd prepared , stating we have no assessments. True, not set up officially yet, but I've been trying for years and is documented in all reports/ meeting notes etc.. The Re-sale Certificate is part of WA law to protect people buying into the condo. I couldn't with any integrity sign it. Found out later from my Managment pick the real wauy to write up and realtor was way out of line. Now tie in the 'abusive and control issues' and you have a owner who 'beats up' several owners ( one of the 4 group) who just 'glaze over' talking about business many times badger them until they vote with 'the controlling owner' - this happened again must voteand one vote is in question but looks like this 9 month old comapany may get in despite serious objections of 3 of us who are business savy..After a week of email discussion - we finally agreed to a re-vote.
Any help or suggestions about picking the managment comapny I can use will be very welcome!!
Now so far - solid experience, excellent consumer reviews, great price,control over our funds and our own personal web site etc was not good enough for the 4 and they picked the new company - which will cost us $100 more a month and has less to offer. I think there's a lot of - he's a man and I'm not - going on. I don't care about that but sadly it really seems to work around here. I still want to protect all of our investments and stay professional.
Thanks again for any suggestion!
Condos are ANNUITIES for owners that don't get involved. Our property manager hires her family.
Be very, very careful.
USE YOUR municipality building codes to get some of your work done. Walk in, show them pictures. They don't want your place falling down. After you ask nicely several times for "normal" repairs which save money in the long run, go to the city.
The articles I have been reading recently reflect where owners take the Boards to court- but they are so well indemnified along with the property management companies - I didn't see one article where an owner didn't win, but at costs so high in legal fees that they had to sell their condos.
We are working to gather a "tea party" per se of owners before the annual meeting. If we don't have agreement with the owners as to who wants to take a new board forward we are "SO" doomed.
Our by-laws, declaration, and MO state condo act all back us- but the associations lawyer represents the Board as the bottom line, not the owners.
Good luck. Keep records and take pictures of every incident with a date stamp. It's the only thing that has worked here.