Tuesday, August 21, 2012

Lines of Authority

What is the legal relationship between homeowners, Board members, and community association managers?  Not knowing responsibilities between these parties can lead to confusion and costly mistakes. Consider the below expectations, followed by true/false explanations.  

  • A homeowner calls up the manager with a demand and states, “I am your boss (and/or) I pay your salary.” 
False. The manager is an agent of the Association as a corporation, and answers solely to the designated officers of the Board of Directors. While a level of customer service is expected when interacting with homeowners, the manager cannot bend or break directives from the corporation.

  • A homeowner requests a meeting with the manager to view and agree to replace dead landscaping.
Usually False. Unless the Board has extended authority to the manager on a particular item, any such request would need to be channeled to the Board for consideration.

  • The Board expects the manager to carry an Errors & Omissions policy.
Partially True. While the Georgia Real Estate Commission does not require E&O coverage for this profession, some community association management firms, such as Access Management Group, do choose to carry E&O. However, the only assurance that a manager is covered at all times is to specifically include him/her in the Association’s Directors & Officers (D&O) policy. Management contracts typically stipulate this as a requirement for engaging their services. Boards may not realize that their actions might place a management firm at risk and vice versa. Including mutual indemnification and hold harmless contract clauses between the management company and the homeowner association benefits both parties, removing a barrier to productive partnership, and relying on an insurance carrier to mediate disputes. 

  • The homeowner expects the manager to issue a violation notice against his neighbor for loud noises.
Normally True. The trigger for when the Association (and the manager) become involved is typically established by the governing documents, or by Board resolution. In the instance of a noise complaint, the Board may have established a requirement that multiple neighbors complain prior to intervention.

  • A delinquent homeowner demands that the property manager provide clarification of the account charges.
May be True or False. Prior to be turned over to collections, the manager would be the person to go to for such account information. Once the situation is in the hands of a collections attorney, neither the manager nor Board is able to provide account balance information. At this point, the attorney is the party to contact, and will have the most current and accurate account balance.

  • The homeowner demands a Board member’s telephone number.
Usually False. Board members expect a level of privacy, with communications channeled through the manager. While mailing addresses may be required, the forum for homeowners to speak directly with Board members is at a community meeting.

  • The Board expects the manager to put together the budget.
Normally True. Although this is the Treasurer’s duty, often the Bylaws authorize this function to be delegated to the manager. However, the Board is ultimately responsible for the final approved version.

  • The Board expects the manager to take record meeting Minutes.
Normally False. Besides introducing a bias, the governing documents do not normally authorize this delegation. Instead, the manager is usually tasked with facilitating the meeting in general and assisting the Board president directly with various issues raised in the meeting.

  • The manager expects the Board to have reviewed all paperwork prior to Board meetings.
True. A Director is negligent in his duties if he has not prepared to carefully weigh and consider items brought before the Board.

The above issues generate the most common confusion, but always feel free to consult with your community association manager to address any particular situation. They are there to help!

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