How to handle unauthorized repair by resident

One of our 10 unit condo complex's owners (ironically, the president of the board) went ahead and had a repair done without the HOA's knowledge or blessing. Our units were built in the late '70s and unfortunately have flat roofs. On every unit, there is a small depression above the living room in which rain water collects and does not evaporate within 48 hours. All the residents are concerned about the possible water leakage and damage caused by the depressions and as a group, the HOA has decided to install roof drains at the lowest spot to drain any water from the roofs. The aforementioned president doesn't know or care about the CC&Rs and went ahead and had a drain installed for about $2300. Our HOA's management company relied on incorrect minutes from the last HOA meeting and cut the president a check for reimbursement. The HOA never voted on reimbursing the president for the drain installation. It was installed without any sort of warranty or guarantee, except for the fact that the roofing company said it would come out and take care of any problems associated with the installation "after the first rain". Since we live in San Diego, the drain installation work has yet to be tested by any prolonged periods of rain.

I have a couple of questions about the reimbursement check and the repairs. First of all, should we convene an HOA meeting to officially vote to reimburse the president? If we do and the vote is to reimburse her, how does the HOA handle any problems that she might have in a year or two that resulted from the "no warranty" repair? Do we have to have a legal firm write up an agreement for the president to sign that stipulates that the HOA will not cover any further roof repairs to her unit for a certain period of time? If so, how long is reasonable? We have a reserve fund that is underfunded so each resident is going to be assessed when we choose a contractor (who provides some warranty period) and have the work done. If the reimbursement check is given to the president, she would be expected to be assessed as well. I'm expecting that the board would require her to sign something to that effect prior to giving her the reimbursement check. Thanks in advance for any responses to or opinions of this situation.

Mark,

The question of being a board member or not is asked because there are some limitations on what you can do if you are not on the Board.

1. The unauthorized work is clearly recognized so the owner, if she incurs damages from her unauthorized work, will be required to correct the damages or face a lawsuit. However, would the board do this?

2. Assess the quality of work and the company she hired. If it's time for the president to get a free roof repair, it's for the community to receive their repair - even in the face of special assessment.

3. The reimbursement was clearly improper. Using minutes as an excuse is inexcusable. The board got manipulated.

I have a larger concern that the MC cut a check without the Treasurer knowing about it.

As regular posters know, I don't believe that the MC or PM should have access to issue checks on the Associations Account. However, in my opinion, if you do have such an arrangement, the co-signer of all checks should then be the Treasurer and no check should be issued without the Treasurer's authorization. The Board needs to take action to adopt and implement procedures to keep this from happening again.

In this instance, since drains were going to be put in anyway, the Board should continue to get bids and pay for the rest of the drains to be put in (by the way, the proper thing that should have been done is a new roof installed with the defect of the low valley corrected). Once the Board has the cost for each drain, they should only reimburse that amount or less (in case the President's work was less).

Additionally, I agree with others, since the President did the work, the President should be responsible for any leaks from that drain. This responsibility should be in writing and attached to the deed so future owners are aware that they will also be held responsible (at least until the next re-roofing when the Association would then be able to better inspect the work and address any issues).

Mark,

Unfortunately, all of these measures have to be taken by the Board and should be taken quickly. As a Board member, I would also consider removing that individual from the Office of President (however, that will require someone else to step up and do that job).

As a member of the Association, all you can do is address the board with your concerns and suggest these actions. If the Board doesn't do anything about it, then you can gather support and recall the Board or simply not reelect them.

Tim

Great idea.

The small roofing company that did the repairs has been in business for 40 years. There have been few reviews of the company on Angie's List but those have been mostly favorable.

I'm not sure what communication took place between the BOD treasurer and the management company. Since the treasurer took the minutes, she may have been under the faulty assumption that the reimbursement was authorized. I don't think that the BOD decided amongst themselves to reimburse the president since the vice-president shares my concerns about the legal complexity involved with the repairs. The president should not have been allowed to vote since it was clearly a conflict of interest. The treasurer may have authorized the check to be issued but I don't know.

I know that Banks will indeed cash checks with only one signature. The Banks should not be the one's enforcing the corporations procedures.

There are check companies out there that still offer checks with two signature lines (I've just got a recent order in).

The two signatures are more than a "feel good" safety procedure. Granted, it is an internal procedure but it is a procedure that, if followed, provides some checks and balances. It doesn't take that much more time to get two signatures for the normal monthly checks. It may require a little more effort (which is what I believe a company would want) for checks that are outside the normal bills.

Without going into the details, I learned a decade ago that if I present a check to a teller at my bank and the check is not payable to me, the teller will not allow me to deposit it into my account. But I can take that same check and deposit it into my account via the ATM without any repercussions. Go figure.

Shame on the organization for not inventorying the checks prior to the President leaving.

But I understand your point. I've seen Banks cash checks even without a signature on it. They shouldn't have, but it does happen.

If you send in a check to a major corporation it will be cashed even if it isn't made out to the company or signed, etc. It just gets processed like any other check. Its automated. Banks dont care unless you complain.

Just to get things back to the OP issue. I think this is an opportune time to make sure your HOA has a policy in place for such things. It should be that if any member wants work to be done or to do the work themselves, they must present it to the board for review. If they do not and the board has no record in the meeting notes this was discussed, then no reimbursement is done. It also has to be understood by your MC, board, and Treasurer that only approved items signed off on the meeting notes or agenda are approved. That the President can't just ask for a check to be cut. They have to have some way to confirm board approval was complete. That proof is something you have to work out be it the meeting notes, an agenda, or an official form signed off by the majority vote of BOD members.

This would help with making sure people understood the HOA money is not something they can put their hands in. It's kind of hard as a board member not to want to do this. However, once you understand that the money in your HOA is EVERYBODY's money, then the concept of how to spend it comes through.