1st HOA meeting & election of Board tonight - questions...

What a mess!!

What stage is the "turnover"?

Did the new board have a lawyer look over all the paperwork?
Do you have the financials in front of you? Did he ever establish a Reserve Fund?

Sounds like some contractual obligations need to be fulfilled on his part.

Never mind who HE brings to the meeting, your board needs legal counsel.

The new members can amend bylaws. An Ad Hoc committee can be formed to make suggestions. This can be done later. Sounds like you've got other issues to deal with.

Valerie,

I know it seems overwhelming, but just take things one at a time. Once your board is in place, the developer must relinquish all documents, contracts, agreements, etc., to the legally elected board.

You have several issues that need to be addressed, and you need an attorney who specializes in association law, and a veteran manager or management company to help you prioritize, and to develop a long-term strategy about all of it.

One of the first agenda items ought to be: What do we do about existing violations of the covenants, restrictions, rules and regulations? The answer is going to be something like: research the current statutes, get legal advice, research what other associations in your state have done to deal with this problem, etc.

My advice: Don't try to solve all of these problems at once. And don't jump at the idea of grandfathering, just to keep peace, either. Carve all of your issues up into bite-sized chunks, and make each one an action item that goes into your board packages.

Do you have a manager or management company picked out?

Rob

Hi Valerie:

You need to check with your local government planning department and see what was approved and if they have a bond or escrow not yet released. You might do this today before the meeting.

Also, you might ask if any variances were given to homeowners regarding the CCR rules.

Are you single family homes or condominium?

Valerie,

Our association just went through this process last year. The developer had been employing a management company for 10 years that was supposed to be enforcing the covenants but they had only done it haphazardly. We also had roads that did not have a the final cap on them as well. The accounts were also a mess, however we did not know this until well after the turnover meeting.

We elected the board at the turnover, and the board then asked for some time before they signed the documents to accept the responsiblity for the subdivison. This time was used to get our heads around the mess we were getting. The developer had deeded a detention basin to the HOA that wasn't a previously deeded common area.The basin was a non-functioning mess. We met with city engineers to see if they would take control of this and they said No. We then had to make the decision as to whether we would accept it and fix it or require the developer to. Subsequent meeting with the developer's legal counsel told us that he would not be putting anymore money for anything in the subdivision. Our choice was to bite the bullet and incurr the expense or face a legal fignt, while homes downstream continued to flood. We accepted the basin and did the work

While meeting with the city, we got them to accept responsiblility for our roads. The developer still had a bond on some of the streets and he worked with the city to finish those. The city then "took over" our streets and will do all future maintenance.

We had several detacted garages and sheds built that did not meet standards, however we had no records from the developer or the management company as to what had been "approved" or what had not. Based on the recommendation of the new lawyer the board hired, we did grandfather in those structures and immediately developed a guide of standards that we posted on the website and mailed to let the members know that the standards would be enforced going forward--basicially a notice that the covenants would be enforced from this point on--the past was the past and "that there was a new sheriff in town"

Our biggest mistake was foolishly we felt that we should keep the previous management company on as we did research and learned about the subdivision. We thought that they knew the history and had the documentation that we might need. Not so. They started out "playing nice" but once they realized that we wanted to go through the books, the past architecutral records, letters etc. they started trying to keep us at arms length and basically lying to us about everything. We dealt with them for 6 long months and then terminated the contract and hired a new firm. After managing our subdivision for 11 years they only turned over 2 half filled file boxes of documents to the new management company. We are missing years of bank records. It took months for the new accountants to sort through the current accounts. The previous management company had an inhouse auditor--so this is the first time that a "real" audit has been done. We still have questions about the money trail....

Sorry about the long post but I just wanted to impress on you to take your time and get legal advise before you make decisions. This is the time for your new board to learn and then to set up the framework for your HOA going forward.

Hi Valerie:

Rob and Sharon are right … take one step at a time and do not make rush decisions. Tonight just worry about elections and start a list of items that potentially need to be addressed or put in place. These can be potential agenda items for the next meeting. This way the new board members can review, research, and have time to think about certain consequences regarding any decisions. This also will give time to consider committees and homeowner involvement for the committees. Now is the time to build a great “team” as those HOA’s who have homeowners involved, generally have less fighting and issues down the road.

Many of the HOA’s in my area are better financially down the road if they initially self manage. The money they save helps to build the reserve fund and later after they have their reserve built they start utilizing a management company to take some pressure off the board, if desired.

The one other item that is important is to set up finances properly from the beginning to insure someone cannot stick their fingers in the HOA pie. The individual noted below posted on another link and is an accountant. This is also how I recommend to everyone to set up their financials, while nothing is 100% effective this method does make individuals think twice about messing with the HOA money.

GaryL3 from another post:
One thing associations can adopt which I recommend, as well as always having two signatures on a check, is to segregate the record-keeping with custody of the assets. Anyone that has access to the bank account should never have record keeping responsibilities. It's just a standard internal control. If there's money stolen, then it's gonna have to be by collusion. It's also not a bad idea to have an audit committee that reviews the backup to every transaction, i.e., no check written without an invoice and approval.

janet - greta advice and thank you. I will be printing and highlighting these replies for sure!