Selective Enforcement ...

Started by NicoleO1 • 15 replies • 2020 views

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NicoleO1 (California)
Posts: 181

Posted:

I have served on our current board on and off for a few many years.

One of the biggest headaches I have dealt with is selective enforcement of rules.

How does one keep the focus on the business end of things??

Most recently a terminally ill lady lost her home to foreclosure. ( this is a very sad story and it
does really tug at my heart ) however with the past HOA dues over 4K I don't think this should be handled any differently than anyone else.

This discussion was split 2/2 and our 5th man not voting. We do have a fiduciary responsibility and to selectively enforce our liens is asking for trouble. It turned into a heated argument.. which qa quelled, but really this needs tobe addressed.

ANYTHING to help us with this would make a difference. Our PM remains silent and will not provide advice with is just looney. ( currently considering possible change in that as well.)

TimB4 (Tennessee)
Posts: 21,062

Posted:

Nicole,

Selective enforcement of the covenants and rules should not be done. Our Board informs our Architectural committee (they are tasked with enforcement) that the governing documents do not require the Association to enforce covenants. However, if they choose to enforce (which they always do) they must enforce it equally throughout the community.

As for assessments, the best way is to have a policy in place that is followed. However, be willing to be flexible within that policy. My Association has often waived fines if asked to do so. We have offered payment plans but insist on strict compliance with the plan. The next thing to do is make sure that the collection efforts are done in a timely manner. We actually consider any assessment for escalated collection efforts (that's what we call it when we turn the issue over to the attorney) at the 5-6 month mark. We will then typically offer the member one last option (typically agreeing to waive all fines if they pay all past due and the rest of the year in full by a certain date) saying if the option isn't accepted the issue will go to the attorney on mm/dd/yyyy.

Our full procedure is:

30 day notice
60 day notice
90 day notice (sent certified mail)
Notice of agenda item (inviting them to attend the meeting if they desire)
Results of meeting (sent certified mail) This is were we make the final offer.
Issue sent to attorney

What you need is a Treasurer that will stick to the policy you have in place. If they are unwilling to do this, then you need a new treasurer.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

In my opinion you should always have a strong lien policy for dues unpaid. A lien stays with the home until it is sold. It accumulates over time. There isn't as much of a timeline for collection except to check to see if it requires renewal every few years.

Foreclosures on the other hand are more discretionary. I do not think a HOA should foreclose at a set time. There are too many factors involved. #1 a HOA can NOT foreclose on a home of an active military member. That is against the law. HOa should not foreclose against homes already in bank foreclosure. The bank ALWAYS gets paid first and foremost even if the HOA does the foreclosing. Your doing the work of the bank essentially on your dime.

Foreclosures are "Stop the bleeding" propostions and the LAST step of collections. They do STOP as soon as the back money owed is paid plus legal costs. There is also the right of redemption up to a year after foreclosure in some states to get the home back.

I would vote to extend the lien and keep sending notices of the amount owed in intervals. A foreclosure does not always have to take place. Each circumstance is different and each treated as such.

Your PM is a 3rd pary contractor who has no say in your HOA operations. They do what your HOA tells them to do. They are doing the right thing and staying out of it. They are not lawyers either. They just manage the funds so you can afford to pursue lien or foreclosure.

Former HOA President

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By NicoleO1 on 02/01/2014 11:15 AM

We do have a fiduciary responsibility and to selectively enforce our liens is asking for trouble. It turned into a heated argument.. which qa quelled, but really this needs tobe addressed.

I agree with Melissa on this one.

You certainly have a duty to file a lien. However, the decision to foreclose would and should be on a case by case basis. I do believe that the Board has a duty to discuss the option and, if needed to discuss it at 1, 2 or 3 month intervals. However, every situation is different and based on the specifics of any situation foreclosing may or may not be the best move for the Association.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

I really really hope you and your board engaged with this person and her caretakers before foreclosing. If you let letters and lawyers handle all aspects of this, that's cold-hearted....business aside.

Onto business,

Most HOA boards have discretion to establish payment plans and logistics independent of baseline policy. You know a person is literally dying. If true and confirmed, patience will pay off for the HOA with no need to take deed from the patient. Yes, the board needs information from the account holder but should weigh that more heavily than a straight case of a dues payer who won't pay for lifestyle reasons. HOA boards have a gas pedal and a brake on the foreclosure process.

If I were your PM, I'd tell you to chill out. However, I suspect they don't want engagement on your board's thought process on this account. I wouldn't engage either. They aren't the ones being looney.

NicoleO1 (California)
Posts: 181

Posted:

Quote:

Posted By KellyM3 on 02/01/2014 7:58 PM

I really really hope you and your board engaged with this person and her caretakers before foreclosing. If you let letters and lawyers handle all aspects of this, that's cold-hearted....business aside.

Onto business,

Most HOA boards have discretion to establish payment plans and logistics independent of baseline policy. You know a person is literally dying. If true and confirmed, patience will pay off for the HOA with no need to take deed from the patient. Yes, the board needs information from the account holder but should weigh that more heavily than a straight case of a dues payer who won't pay for lifestyle reasons. HOA boards have a gas pedal and a brake on the foreclosure process.

If I were your PM, I'd tell you to chill out. However, I suspect they don't want engagement on your board's thought process on this account. I wouldn't engage either. They aren't the ones being looney.

Yes the prior board engaged on this case. WE did NOT forclose her unit, rather the mortgage company did. We did not. She defaulted on payments and moved with family.

Having a terminal illness is horrific. I know. I lost my mother a few years ago. But her financial obligations still remained after all was said and done, and I was left to settle her affairs. It's just part of life. $5000 in arrears is nothing to sneeze at. 500 maybe.

JoK2 (California)
Posts: 198

Posted:

Your right 5k is nothing to sneeze it, however I'm not sure I would consider this selective enforcement since it's gone to foreclosure, would a cost benefit analysis help solve the issue? After all, if the board does it's part and nothing comes of it, what else can a board do?

Not knowing how long it took to get to the 5K, did previous boards do the selective enforcement and you have to clean it up?

GlenL (Ohio)
Posts: 5,491

Posted:

If the Bank has already foreclosed you are probably too late to the party for it to matter, the lien should have been filed when she reached the CA threshold.

Studies show that 5 out of 4 people have problems with fractions

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By NicoleO1 on 02/01/2014 11:15 AM

One of the biggest headaches I have dealt with is selective enforcement of rules.

How does one keep the focus on the business end of things??

Nicole,

Selective enforcement is a claim recognized by the courts. An essential element, however, is that the action taken against one party is based at least in part some animosity towards him. The mere fact that some infractions escape punishment does not rise to the level of selective enforcement.

Choosing to fight some battles and turn a blind eye to others is usually within the discretion of an HOA's BOD. It's doubtful that your board has the resources to fight every battle. Much like law enforcement, you should prioritize by not only the severity of the violation but also by the likelihood of achieving a successful outcome.

Most declarations allow homeowners to seek relief for violations through civil actions, so homeowners are not without recourse should the board decide not to fight one particular issue.

Keep in mind that no owners really want all the rules enforced; they want enforcement only of those rules that others have broken. If you sought to enforce every rule against every homeowner you will not have a position on the board for too long.

Quote:

Posted By NicoleO1 on 02/01/2014 11:15 AM

Our PM remains silent and will not provide advice with is just looney.

Advice is normally sought from counsel, not a PM. Even if you seek out advice from an attorney, it is just advice and not a guarantee that the sun will continue to rise. In the end, the buck stops with you (as a board member) and not with an attorney or a PM. You need to gather the facts and make the decisions.

JohnB26 (South Carolina)
Posts: 1,569

Posted:

.....and our 5th man not voting.

that 'man' is in violation of his fiduciary duty and has left himself personally liable

he has WILFULLY failed to perform the obligation he VOLUNTEERED to perform

willful non-feasance can be interpreted as mal-feasance

(his duty was to DIRECT as his 'good businesses judgment' sees fit)

by abrogating he has failed his obligation

JoK2 (California)
Posts: 198

Posted:

Thanks John for answering my question, how does a board member not vote? Would they be able to recuse themselves prior to the vote do you think?

MissyP (Alabama)
Posts: 63

Posted:

I believe even a "non-vote" is a vote. It's how one translates what is meant by a non-vote. When it comes to HOA's, many members are so apathetic, they just pay their dues and don't care. They may be asked to provide a vote, but just toss the paper away. It doesn't mean they lost their power to vote. Although some HOA's require one to be in "good standing" with up to date dues to cast votes. Even with those not in good standing, the loss of that voting power has to be factored in with vote taking. Say that the HOA has 100 members. 80 of them in good standing. 20 of them NOT in good standing. The vote then would have to reflect 80 votes instead of the full 100. Which as you can tell can take a real effect on gathering votes and how to translate a majority in many situations.

So I think a board member can decide NOT to vote if they want. Most votes with a board is taken in a quorum. So if your board has enough to make a quorum, that vote may matter more than if your HOA board has more than a quorum in place to take a vote. More than a quorum, the vote would be tossed out anyways. Less than a quorum, the vote can't even take place. A non-voting member be it a board or member, does indeed has a vote even if they don't extend it. I wouldn't go suing anyone over it or pointing fingers. Staying out of the way, sometimes is the correct course of action.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By JohnB26 on 02/04/2014 11:54 AM

that 'man' is in violation of his fiduciary duty and has left himself personally liable

he has WILFULLY failed to perform the obligation he VOLUNTEERED to perform

willful non-feasance can be interpreted as mal-feasance

(his duty was to DIRECT as his 'good businesses judgment' sees fit)

by abrogating he has failed his obligation

Strongly disagree.

A board member has no legally enforceable duty to vote for or against anything. The fact that the rest of the board is willing to rush headlong into a vote does not obligate the remaining board member to make a decision on the spot.

Should board members be decisive? Probably, but I would rather see deliberation instead of a knee-jerk response to every issue put to a vote.

One thing about this vote has me stumped: There were five board members, two for, two against, and one abstaining. Which one was the president? The president is not supposed to vote except to break a tie. The abstaining member was not identified as the president, suggesting that the president voted and created the tie vote. Had the president not voted, the vote would have been one for one position, two for the other, and two non-votes, leaving the issue to fail due to a lack of a majority, just as it did anyway.

EllieD (Vermont)
Posts: 446

Posted:

LarryB,

I agree about taking time to deliberate, etc.

But as far as I know, re Association Boards, when it comes to voting, the President as a Director, Board Member, has a vote at all times, not just to break a tie.

JohnB26 (South Carolina)
Posts: 1,569

Posted:

the president's vote is determined by the (corporate) by-laws

if they are silent - pres votes

some by-laws specify the pres only votes to break a tie (usually found if an odd # of directors required)

my hoa - pres vote is only used to break a tie

JohnB26 (South Carolina)
Posts: 1,569

Posted:

Quote:

Posted By JoK2 on 02/05/2014 6:06 AM
Thanks John for answering my question, how does a board member not vote? Would they be able to recuse themselves prior to the vote do you think?

'recuse' would be used in a 'conflict of interest' situation

as far as due consideration before voting: if the director believes that due consideration did not occur he/she may motion to consider further and if THAT motion is defeated THEN refuse to vote (not abstain, but refuse with appropriate minutes taken) - said motion would then be a part of the minutes

the HOA is a business corporation and is required to act as such

the alternative to incorporation is PERSONAL liability of each and every HOA member

the HOA remains whether inc. or not

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