Delinquency and Size of Board in a new community

I was recently elected to the board for a new community of 43 townhouses. With this election, developer has started the transition. First of all, this forum has been enormously helpful in preparing for the transition. I am following the checklist and suggestions from RogerB and others. Many thanks!

I have 2 questions related to the workings of the association:

1. Our association is made up of 3 board members. Some homeowners have indicated that they would like to see it increase to 5 or 6. Personally, I feel 3 board members may be sufficient for our small community. I wanted to see what you all think. What are some benefits/drawbacks of a large board?

2. There are fines against some homeowners for violation of rules. These fines were imposed by the management company when the board was completely controlled by the builder. I suspect that some fines were a result of vert strict interpretation by the manager. While we need to look in details, I was wondering if the new board is allowed to waive prior fines. My plan is to identify such unfair rules.....discuss with homeowners....revise the rule....and based on that waive appropriate fines. Please let me know your feedback on this.

Hope item 2 above is clear enough. I can provide specifics, if needed.
Thanks in advance.

The 2nd part of your question is rather complicated. Your HOA has to have a defined fining schedule built into your documents before they can be enforced. Most documents give the right to the HOA to place fines but do NOT provide a definition/cost schedule for those fines. It's like saying the HOA can fine someone but not having a defined violation written. That comes across to arbritary and subjective.

Plus in most states, fines can NOT be the basis for liens or foreclosures. One can't lose their home or have a lien placed on their home for not bringing in the garbage can on tuesday morning. Fines are like "Speeding tickets" for the HOA. You have to treat them like such. Consider you can't be ticketed for speeding if there are no speed limit signs posted. Speed limits have to be public acknowlegeable and defined to be enforced. Without having that definition the police may have the right to ticket you but not for speeding through air.

This is a common overlooked issue in most HOA's. It gets them in trouble alot. So discuss this issue with a lawyer and make sure where it needs to be placed. It's either in the by-laws or in the CC&R's for a fining schedule. Wherever it is put it has to be common knowledge to ALL members of the HOA and agreed upon as a violation by them as well.

Kau

I think case by case review of outstanding can be long and open to criticism. Has the new BOD considered a one time pardon of all outstanding fines?

Might be a way to set a new path/tone as the homeowners take over.

I also think 3 is a plenty big enough BOD for 40 some odd homes.

Hope this helps.

There should always be an odd number of Board members so that the Board will not be deadlocked on any issue due to a tie vote.

Regarding the rules, why not take a poll and see what sort of issues people are really annoyed about, see if the current rules address them? They may need to be tweaked or tossed altogether, and you may need to add a few to clarify issues.

I know some people might think the fines were unfair, but you said they were based on strict interpertation by the manager who was working for the management company that was hired by the builder. The building had complete control, so it seems to me any beef about the fines needs to be taken up with the builder.

Instead, why not just start anew and say from this point forward, here's the fining schedule - and an appeals process. You might say the fines will be imposed once the appeals process is exhausted and if the homeowner loses.

You may also want to check with the Association attorney to see if you can even issue fines. In Indiana, there's case law that says homeowner associations can't impose fines becuase they aren't government bodies, like the city council. Some communities have fines anyway and everyone seems to go along with it, but should anyone really get p'oed, he or she can run to the court and possibly have the fines refunded.

(So far, the state legislature doesn't seem to be inclined to change this - probably because many of them are lawyers and the best way to enforce CCRs in this state is to sue the homeowner and ask for an injuction)

KaushalV,

Many will argue that a board of 3 members is sufficient for a community of your size. However, I look at it from a different prospective, that of protecting the rights of the minority. Parliamentary procedure attempts to achieve a balance between the rights of the majority, the rights of the minority, and the rights of the individual. This has nothing to do with the size of any community.

Our original board size was three members and I successfully campaigned vigorously for that to be increased to a board of five. My reasoning is thus:

1. There may be requirements in your governing documents that state a particular board action requires a majority of board members to approve the action, and there may be other requirements that require that a 2/3 vote is required (sometimes referred to as a super majority).

2. There are instances in parliamentary procedure where a 2/3 majority is required instead of a simple majority (more than half). For example, a motion to close nominations or a motion to close debate (previous question) requires a 2/3 vote if you are following proper parliamentary procedure.

With a board of only three members, there is no difference between a simple majority and a 2/3 majority. They are exactly the same: 2 votes out of 3. With a board of 5 members, they are different. Three votes out of five makes a simple majority, whereas 4 votes out of 5 are required to achieve at least a 2/3 majority, thus affording greater protection for the minority.