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HOA work and the law

Started by ThomasD2 • 14 replies • 1949 views

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ThomasD2 (California)
Posts: 208
Posted:
Related to a previous post about meetings.
I'm in Los Angeles, 22 units in our HOA, I am the treasurer.
One HOA member owes a great deal in HOA fees. We were very remiss in not dealing with this a while ago, but are starting to now. Won't be easy!
But my real question: A board member said they felt very strongly that we could not do any other "regular" HOA business until this matter was resolved. They were quite adamant about that. Mainly repairs we have been discussing, (We do have the budget for the items. ) I said I did not think such a policy was a good idea, or ethical. But more importantly I also said I thought it was against the law. Is there a law addressing this?
TimB4 (Tennessee)
Posts: 21,062
Posted:
I'm a little confused,

Are you asking if there is a law requiring the Association to conduct business?

Is the person saying no business should be conducted until all the delinquent accounts are current, this one account is current, how to resolve the delinquent account is established or something else?

TimB4 (Tennessee)
Posts: 21,062
Posted:
I'm a little confused,

Are you asking if there is a law requiring the Association to conduct business?

Is the person saying no business should be conducted until all the delinquent accounts are current, this one account is current, how to resolve the delinquent account is established or something else?
TimB4 (Tennessee)
Posts: 21,062
Posted:
Double oops -

Posted that link on the worng thread.

Post answers Here!!
FredS7 (Arizona)
Posts: 927
Posted:
Normally a meeting would consider agenda items in order. However it is possible to make a motion to table a particular agenda item. If this passes the meeting would move on to the next item.

LarryB13 (Arizona)
Posts: 4,099
Posted:
From this thread and the other thread you posted, you have one member who has never paid his assessments. During the time this member has not paid your board must have had many meetings. Why does this board member think that the HOA must now suspend all other business and focus entirely on collecting the unpaid assessments? Does this mean that all actions taken by the board while these assessments were unpaid were not valid? If the HOA cannot collect the unpaid assessments does this mean that the board can never take any action ever again? Does this board member have any idea of just how long it can take to collect unpaid assessments?

If I default on my GMAC loan, does GM have to stop building cars until I pay up? If I write a bad check at the grocery store, does Procter & Gamble have to stop making Tide until I make good on the check?

The board member's suggestion that the board suspend all operations until they collect the unpaid assessments has no basis in reality as the reality is that it will take a period of time ranging from a month until never to collect the past due assessments. The majority needs to move on. I am unaware of any law addressing this issue.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
All

I say the BOD should not stop business but also I think this BOD Member is saying we have let this go on long enough and is just frustrated about it as I would be.

Being frustrated and maybe feeling something is wrong/fishy smelling, I just might try and limit us to addressing this issue ASAP.

CarolR11 (Colorado)
Posts: 2,563
Posted:
Your board at a duly noticed regular meeting needs to decide how to proceed with "regular" and maintenance items. No individual director gets to make that decision.

I'd say that since the repair items are in your budget, go ahead and do them. More important, your board must remember that a crucial part of its fiduciary relationship with owners is to protect and maintain the common areas of your HOA.

This requirement for the board probably is stated in your CC&Rs, which I urge you to read. You could copy the specific passage to give to other directors at your next regular meeting.

Since you're meeting with an attorney about the delinquent owner, ask the attorney about the board's obligations to maintain the common areas.

Is yours a board of three? Or?
GlenL (Ohio)
Posts: 5,491
Posted:
Thomas, this is from the Davis-Stirling web-site under deferred maintenance and speaks to your question:

QUESTION: The board claims our reserves are badly underfunded and raised our dues by 20%. They plan to raise them again next year because our manager said we have too much deferred maintenance. I disagree. When I was on the board we always minimized repairs because we have older people who can't afford high dues. Don't you agree that boards have to take into consideration people who can't afford their assessments? Can't we wait until something breaks and let insurance pay to replace it?

ANSWER: The fundamental duty of a board is to maintain the common areas. Collecting sufficient assessments to carry out that duty is required by statute. Civil Code §1366(a). Deferring maintenance for the wrong reasons can be a serious breach of the board's fiduciary duties.

Improper Deferrals. Deferring maintenance to avoid spending money or raising dues is harmful to the membership because it (i) exposes the association to litigation and potential liability for damage caused by the deferrals, (ii) lowers property values, and (iii) increases the cost of the eventual repairs (which can result in huge special assessments). In addition, it may expose directors to claims of gross negligence, breach of CC&Rs, breach of statute (Civil Code §1364(a)), and breach of fiduciary duties. Under those conditions, the business judgment rule will probably not protect the directors from personal liability.

Proper Deferrals. Planned short deferrals to (i) raise funds for making repairs or (ii) stagger repairs for scheduling purposes are considered acceptable business practices. Even so, boards must take care to protect members from any damage that might be caused by the delays.

Insurance. Boards who ignore their duties hoping to shift repair costs to the association's insurance company are in serious breach of their duties. Insurance companies will not pay for deferred maintenance. The purpose of insurance is to pay for unexpected catastrophic losses, such as fires, storms, floods, etc. Board members who think they can get a free ride by dumping their deferred maintenance on an insurance carrier are incredibly misguided.

http://www.davis-stirling.com
Studies show that 5 out of 4 people have problems with fractions
ThomasD2 (California)
Posts: 208
Posted:
It was unclear to me what they meant. She made it clear that until the matter of the one resident was resolved we shouldn't be dealing with repairs and maintenance under discussion. But it wasn't clear if that meant when a certain amount of progress was made or it was completely resolved. A lso, when a board member mentioned a particular repair, and said they thought it was of particular importance, she agreed that that was a different case. This makes what she meant about as clear as mud. I took a closer look at my CCR's and it seems like the board is ignoring its duties by ignoring "regular" work.

Quote:
Posted By TimB4 on 03/03/2012 10:40 AM
I'm a little confused,

Are you asking if there is a law requiring the Association to conduct business?

Is the person saying no business should be conducted until all the delinquent accounts are current, this one account is current, how to resolve the delinquent account is established or something else?


ThomasD2 (California)
Posts: 208
Posted:
In our CCR's it says under "Duties of the Association" "To operate, maintain, and otherwise manage or provide for the operation . . . of the common area, and all its facilities , imporvements, and landscaping, including private driveways, and any other property acquired by the Association . . . in a a good state of repair." It makes it clearer to me.

Quote:
Posted By CarolR11 on 03/03/2012 12:07 PM
Your board at a duly noticed regular meeting needs to decide how to proceed with "regular" and maintenance items. No individual director gets to make that decision.

I'd say that since the repair items are in your budget, go ahead and do them. More important, your board must remember that a crucial part of its fiduciary relationship with owners is to protect and maintain the common areas of your HOA.

This requirement for the board probably is stated in your CC&Rs, which I urge you to read. You could copy the specific passage to give to other directors at your next regular meeting.

Since you're meeting with an attorney about the delinquent owner, ask the attorney about the board's obligations to maintain the common areas.

Is yours a board of three? Or?

BruceF1 (Connecticut)
Posts: 2,535
Posted:
Thomas,

Your board member who believes that no business should be conducted until the matter of the delinquent assessments is resolved speaks hogwash!
ThomasD2 (California)
Posts: 208
Posted:
Yes , but perhaps it would be best not to announce I think the idea is hogwash. Also, just because they made the statement does not mean I have to abide by this dictum. From another posting here I was also wondering if the idea that a meeting with an attorney could be a closed meeting might be hogwash. Now I am not so sure about that, I was unclear about "executive session" meetings, but know more now.

Quote:
Posted By BruceF1 on 03/04/2012 9:45 AM
Thomas,

Your board member who believes that no business should be conducted until the matter of the delinquent assessments is resolved speaks hogwash!

JanetB2 (Colorado)
Posts: 4,219
Posted:
Hi Thomas:

The association needs to do both (1) collect the past due fees and (2) conduct regular HOA business. In fact collecting past due fees is part of conducting HOA business. You might bring to the other board members attention that failure to conduct business and properly address any and all repairs could be seen as violating fiduciary duty. Needed repairs not made end up causing property damage and potentially more costly later, especially if they already have been properly funded.

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