Tuesday, December 16, 2014

Best Practices

Boards usually consist of people of diverse professional backgrounds.  And like the professions that they come from, effective Association management has best practices and principles that should be adhered to. Your Association Manager is a great resource in this area - and responsible Board members will actively implement these best practices in the daily operations of their community.

A great way to illustrate best practices is to review these in action.  The real life examples below provide a glimpse:
  • Adam, Board President, adheres to Roberts Rules of Order. He officially calls the meeting to order. If an agenda topic needs to be reviewed he makes a motion and the other Board members  do the same. He asks angry owners to “please hold their concerns for open session” or he informs them that the forum to address their matter would be in a private hearing with the Board. If people become disruptive or extremely disrespectful, then he advises the audience that “unfortunately this business meeting may have to be adjourned if we are unable to conduct business.”
  • Jamie is a Board Treasurer. She has actively led the Budget Committee meetings the last two years. She has created a spreadsheet that identifies all of the Capital Projects for the following year. She utilizes the Reserve Study and the committee member’s feedback in order to prioritize the projects.
  • Tom is a Board Secretary who attends all of the Board meetings. He has a busy schedule but attending the Board meeting is a priority. He understands that lack of quorum would hinder the Boards ability to conduct business at Board meetings.
  • John is a Board Secretary who takes concise meeting minutes and he distributes them to the Board at least one week prior to the Board meeting.
  • Jackie has served on the Board for over three years. She often consults the Governing Documents before voting on a matter.
  • Jason has served on the Board for almost 10 years. Early in his tenure he had some fixed ideas on how the community should be run:  He did not want to raise dues and thought a lot of services should be brought in-house. He has since discovered that small annual increases to keep up with inflation and to fund the reserves are necessary.  He has also learned that hiring a third party often provides the benefits of quality work and a buffer from constant time demands on Board members.
  • Peter is a contractor who has served on his Board over the last six years.  When the Board is doing vendor selection he announces if he has a relationship with a contractor and abstains from voting.

It’s refreshing to serve on a Board in which the members are committed to injecting professionalism in all aspects of their duties.  The best Board member is an informed Board member.  Your challenge is to read and refer to your Governing Documents more often. You would be surprised at the increased depth of knowledge that is gained about your community! 

Identify the areas that your community is struggling in.  Perhaps it is high delinquency, numerous ACC violations, contentious Board meetings, aging amenities, etc.  Learn the best practices for addressing these areas in Homeowner Associations by tapping into resources such as your Property Manager, Community Associations Institute and similar organizations.  Your community is not the first to tackle these issues and certainly will not be the last. Those Boards that heed lessons from others ultimately enjoy smoother operations, and higher home values.

Wednesday, December 10, 2014

Well Driven

This is the seventh in a series of postings providing a detailed look at the governing documents for homeowners associations (HOAs).  Our final focus of the Bylaws is on Board duties and responsibilities. 

Just how dysfunctional can a Board become?  Several years ago, a dog was elected to serve on one community’s Board of Directors.  Go ahead and GoogleBeatha Lee’!
The underlying problem is that the Board is often composed of volunteers with limited experience and knowledge.  The result is that many of the basics, such as using Roberts Rules of Order to run productive meetings, are completely overlooked.  There is also very little understanding about the roles of Board officers, with each person ‘making it up as they go along’.  Phrases like ‘Fiduciary Duty’ may not even be on their radar.

None of us would permit an untrained person to drive a car, and it should be no different when placing someone in the driver’s seat of the Association’s business.  However, the disaster of a car accident is immediate and physical, while a poorly driven Association takes longer before the ‘impact’ occurs.

Compounding the problem are Board members who have been ‘cruising’ or are actively destructive or self-serving in their behavior.  You wouldn’t let someone take a ‘joy ride’ with your personal finances, and yet essentially this is what occurs in some Board settings.    
To tighten control, consider amendments that:

Permit more reasons for removal of Directors.   Normally, the only situation that allows removing a Board member is three consecutive unexcused absences.  Sometimes, but not always, he/she can be removed after becoming delinquent on paying assessments.  Barring these reasons, the entire community faces the arduous process of calling a special meeting to vote the person off of the Board.  For the effort involved, everyone decides to just wait it out until the person’s term expires.  A lot of damage may occur over the year or two until the next regular election for that position. 

To deal with a wayward Director, consider providing these additional triggers for removal:
  • If the Director misses four meetings in a year, no matter the reason
  • If he/she takes actions on behalf of the Association beyond the scope of authority and without the consent or knowledge of the other Board members
  • If the person is so contentious as to stymie the Board from conducting ordinary business.  This may require some level of court action.

Require Education/Certification. Mandate that education occur within 90 days of a new member joining the Board, and that each Director signs a statement affirming:
  • He or she has read the Association's Declaration, Articles of Incorporation, Bylaws, and Rules & Regulations
  • He or she will work reasonably to uphold such documents and policies to the best of his or her ability
  • He or she will faithfully discharge his or her responsibilities to the Association and the Association's members.

Follow this up with the requirement of continual education courses each year, and a provision for temporary suspension from Board service if these directives are not met.

Insist on a well-educated Board to steer your community along the proper path.

Be sure to share a comment below about this latest series of postings! We'd love to hear from you