Creating a Policy

Started by PeterB1 • 7 replies • 1488 views

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PeterB1 (Florida)
Posts: 257

Posted:

A local (Florida) attorney published an article today, suggesting that a policy be created. Specifically, he said "I recommend that the Board have a uniform collections policy that will authorize the President ... without the need for further board action."

My question is - how does a Board of Directors create a policy? Is that a 'standing rule', a 'resolution', a motion passed at a meeting, or other? How do we insure the continuity of that policy?

Thanks.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Peter,

Most CCRs give the board the authority to create a rule w/o a vote of the members. The Collection Policy could be a rule or a resolution. Either would be a continuing policy for future boards to adhere to and either could be amended or rescinded by the current or any future board.

Whether a rule or a resolution, when adopted it should be sent to all members of the assn so they will know exactly what happens if they become delinquent in paying their assessment.

The board should also have an "Enforcement Policy" which outlines the steps that will be taken to enforce the covenants. This, too, can either be a rule or a resolution and after adopted it should be sent to all members of the assn. The Policy should state the following:

1) how many notices will be sent; i.e., friendly reminder, 2nd notice, 3d notice, final notice
2) the amount of the fine for each notice
3) what action will be taken if the final notice does not result in a cure of the violation
4) what the appeal process is

TimB4 (Tennessee)
Posts: 21,059

Posted:

Peter,

Prior to creating a policy on collections (and if not already in place) the Board should adopt a policy on how the policy resolutions will be created. Our Association provides that any policy resolution needs to be published to the membership and a meeting held for the membership to comment and/or voice concerns prior to the Board voting on the resolution.

Tim

SusanW1 (Michigan)
Posts: 5,202

Posted:

And if you word the policy to say "may" i.e. may establish, may collect, etc. then it gives the board permission to do so, but not forced to do it.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Susan,

Excellent point!

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By SusanW1 on 05/25/2010 3:38 AM
And if you word the policy to say "may" i.e. may establish, may collect, etc. then it gives the board permission to do so, but not forced to do it.

Susan,

This is a good point; however I don't think it should apply to the whole collection policy. Certain statements/actions should be prefaced with "shall" and certain statements/actions should be prefaced with "may".

Shall =
1)all annual assessments shall be collected by the assn
2)each monthly/quarterly/yearly assessment shall be due by ---------
3)a late fee of XXX shall be charged ---------

May =
1)the assn may record a Notice of Delinquent Assessment and Lien ------------

TimB4 (Tennessee)
Posts: 21,059

Posted:

Mary,

I'm not sure that the late fee should be a shall. Most boards have the authority to waive fees but not assessments and this is based on individual issues. Stating that a late fee shall be charged removes this waiver authority from the board.

I would also expect that the Covenants state that members shall pay assessments which would indicate the the BOD cannot waive them.

Tim

MaryA1 (Arizona)
Posts: 7,043

Posted:

Tim,

Regarding the late fees; IMO it's OK to state in the policy they "shall" be charged. Stating such would not preclude the BOD from waiving them at a later date. The policy only states they shall be charged; it doesn't say anything about waiving them. In my experience they are not waived until the member has had a meeting with the board and explained the reason for the delinquency.

I agree, assessments cannot be waived.

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