Consistency Creates Opportunity

Board service can, at times, be a challenging responsibility - and Board members can become easily frustrated at the lack of trust and respect from homeowners.  Even with a good communication program in place, showing how Board decisions and actions add value to the Association, the negative responses can continue to flow. This is one of the main reasons that prevent board members from wanting to serve additional years on an association Board.

It takes a lot of good memories to make the bad ones fade.  If your Board has a history of mediocrity or poor performance, it can take several years of solid operation to erase ill-will.  You will continue to be lumped in with past Boards until you have created an enduring narrative displaying otherwise.  Four or five years of positive leadership may be required before this occurs.

During this time, fresh faces are added to the community and some long-time residents experience life-altering events (retirement, children, health) - all providing the Board with a new chance to cultivate volunteerism.  Don’t let these be missed opportunities!  

If you are always “on message” and consistently act in a positive manner, the doors will open at unexpected moments, providing that edge to boost your Association to the next level. 

All things have different growing seasons, and while the time it takes to grow a productive neighborhood is measured in years, the rewards go beyond the month-to-month and year-to-year accomplishments you gain as Board volunteers.  Strive to establish a legacy of expecting only the best from future Boards!

Cease & Desist

In the U.S. Supreme Court case of American Society of Mechanical Engineers v. Hydrolevel, the justices concluded that a nonprofit association could be held liable for the actions of its officers, directors & volunteers - even when the association did not know about, approve or benefit (as long as the volunteer appeared to outsiders to be acting with authorization).  In this particular instance, a volunteer chairman issued written responses to another company, making assertions that were not supported or approved by the association. 

Community associations must take steps to outline the authority of each agent, regulate access and use of things such as letterhead, a community logo or community website, and immediately act when it sees unauthorized activity.  A typical example is that of a former Board member who continues to interact with vendors or government officials as if he were still on the Board, directing or influencing others based on this false perception.

Appropriate responses include:

• Having the association’s legal counsel issue a cease & desist letter to the former member
• Limiting access to proprietary information
• Notifying vendors and all association members of the volunteers change to non-director status
• Placing the insurance carrier on notice

Nefarious actions are not limited to former volunteers.  Disgruntled homeowners or vendors may choose to act on behalf of the association as a means of retaliation.  It is vital that social media and other forms of public communication be frequently reviewed to detect and respond to such activity, before the situation becomes expensive.

In this Supreme Court case, the Association ended up paying $6 million (in 1982) in damages and legal expenses because of one person’s unauthorized actions – be sure your community does not face the same exposure!

Education is Power

Those who volunteer to serve on a community Board or committee are truly the work horses, ensuring core activities of the Association are addressed:

·         Business – protecting the assets of the community

·         Governance – interpreting and enforcing the various regulations

·         Community – enhancing social harmony

Without these volunteers, consistency within the community would not be possible. This consistency is important, not only to ensure fairness between neighbors, but also to protect the investment that each homeowner has made within the community!

Unfortunately, most volunteers do not understand the full scope of their duties when first stepping up to serve. It is critically important that training is mandatory and that it occurs prior to or immediately upon joining a Board or committee.  Without a mandatory program, less than 5% of members tap educational opportunities to protect both themselves and their Association.  Whether someone is too busy with “real” work or is a “one-issue” candidate (i.e. they volunteer, but intend on walking once his/her pet project is addressed) the price for not being trained is too high to be ignored.

Some volunteers join the Board or committee knowing the work that the job will require. Others learn once they actually “get in to” their term. For either individual, as we have discussed above, training is vitally important. Most volunteers willing accept training, while others are not as interested – hence the need for mandatory training. Forcing unwilling individuals to attend training sessions can sometimes be a wasted effort. This leaves the Association only a few ways to insulate itself from poor decisions or actions.  Three “must-do” steps:

·         Obtain the best liability and directors & officers insurance possible

·         Require all volunteers to sign disclosure forms about risky actions and consequences

·         Keep the community well-informed on all actions and decisions

As in any elective governance, it is ultimately up to the individuals in the community to be aware and remain involved – a sort of checks and balances system. The price for incomplete or insincere leadership will be paid for by all.

Educational opportunities extend to homeowners, too.  For example, budget season is now in session. By providing the association membership with a comparison of what each home is paying (on an annual basis) for services, as compared to what it would cost if the homeowner lived in a single family residence outside of an association,  the Board or committees can provide perspective on the reasonableness of annual assessments.  In many instances, the savings via collective purchasing power gives owners a new appreciation for the benefits of community living. This is a reminder that doesn’t hurt to be reinforced every once in a while.

Ultimately, it is all about creating a culture and expectation of constant education in the community that will diffuse conflict and give rise to responsible volunteerism.

Association Oversight

New residents often ask about the oversight structure for their new Association.  It can be a little overwhelming to determine who does what.

At the top of the organization, commonly known as the Board of Directors, is the group of homeowners who have volunteered and been elected to handle the “big-vision” of the community.  Directors usually serve staggered two or three year terms, with a couple of positions vacated and filled each year.  This also ensures the continuity of institutional knowledge (so that future Boards learn from the experience of previous members).

The Board is tasked with maintaining a long-term outlook for the community – focusing on the forest rather than individual trees.  On behalf of the Association, they contract out with various specialists to implement this vision.

The primary agent utilized to coordinate day-to-day operations is the Association’s property manager, whose position is analogous to a city manager. This individual is answerable to the corporate entity (the Association) through the representatives serving on the Board.

Typical manager functions & duties:

• Facilitating communications between homeowners and the Board / Vendors and the Board
• Composing scope-of-work for projects and soliciting quotes
• Identifying potential issues for Board consideration
• Assisting with budgeting and financial monitoring and operations
• Coordinating collections and making court appearances
• Overseeing services provided by vendors
•  Organizing community meetings
• Educating real estate brokers along with potential and existing homeowners about items impacting value and viability of the community

Another way the Board stays focused on big picture items is through the creation of committees to focus on specific areas - such as pet issues, social events, architectural controls, etc. The Board and its committees are also tasked with distributing all this information (typically done via a newsletter). These committees periodically report to the Board with actions taken and recommendations on handling certain issues. Committees provide great strength to community - more involvement provides better and more flexible solutions by tapping into the interests and talents of our neighbors.

At the bottom of the structure is the Association itself, which is only as good as the combined efforts all the parties listed above. Contact your property manager today to make your community a better home for all!

Troubled Water

Water heaters normally last 8 to 10 years. If you try to keep your heater any longer than this, you face an increasing risk of tank failure and leaking. If your home is connected with other homes (such as in a condominium or townhome setting), this risk extends to your neighbors. In multi-level dwellings, depending on which floor the water heater is located on, the average cost in damages (ex: water removal service, replacing wood floors and sheetrock, etc.) may run anywhere from $10,000 to $22,000! In these situations, the Association’s insurance only kicks above a certain level – this typically occurs only after the policy’s deductible has been fufilled. In some cases, this can be thousands of dollars later! Since Associations in Georgia are not required to carry water coverage, it is not unusual to see these deductibles set at $10,000 or even $25,000 - which means that homeowners need to make sure their HO6 policies cover this event.

While some water heaters will “warn” you by rusting out at the bottom, others experience internal failures and end up leaving a big wet surprise. If the break is big enough, the catch-basin pan that (hopefully) you have underneath the water heater will not be able to contain the flow. Of course, it’s far cheaper to go ahead and replace the water heater before it bursts.

What about tankless water heaters? They can remove the risk of a massive water event, but are not an option for everyone. If you do not have natural gas lines, it is important to find out if the wiring in your home can handle the load required by a tankless system. Many older homes were not constructed to handle the levels of electrical use that now considered standard. Depending on the age of the home, it may cost thousands of dollars to bring power levels up to a point to handle a tankless system that can provide sufficient water for all of your fixtures.

At the same time you are having your tank replaced, please please please have the hoses for your dishwasher, clothes washer, and commodes checked – as these are also prone to failure and have the potential for the same level of damage as a water heater. The best solution is to have these replaced with stainless steel braided hoses.

Only you can prevent flooding by being proactive with your appliances and hoses.

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!

Have a Degree in HOA Service?

Even several years of service on a community’s Board does not adequately prepare one in all aspects of homeowner associations.  Directors, facing financial pressures,  can cut corners rather than seeking expert advice. This usually ends up being more expensive for the community  than if they had hired a consultant (attorney, CPA, engineer, community association manager, landscape designer, insurance broker, etc.) to weigh in on the decision.

Few Associations require their Directors to take continuing education courses.  These courses do not create experts, but do build up awareness of “red flag” situations, so that costly mistakes can be avoided.  Community members benefit when Boards self-educate, as less time and effort are required to address issues before they occur. Simply put - Education is preventive maintenance.

Vendors that your Association partners with should offer the Board free or discounted education classes in their areas of expertise.  Many of the law firms specializing in homeowner association law provide training several times a year.  The same should be expected of your property management company, which also benefits by having Boards that understand potential pitfalls and how to avoid them.

As a service to the Atlanta community, Access Management Group hosts free training sessions several times a year, covering many topics such as:

*The difference in responsibilities between ownership, maintenance, and insurance

*Valid reasons for homeowners successfully refusing to pay assessments

*The Association's obligations related to handicap access

*How property violations are handled when a unit is sold

*Circumstances when a homeowner could modify his/her home even though the Board said "No"

*Fair Debt Collections and the Board

*What happens if a court-ordered settlement isn't covered by insurance

*Creating policies and procedures with your Association manager

Georgia court cases are discussed, relating to various community rules: rentals, pets, grills, water damage, satellite dishes, parking, home businesses, security/safety, handicap access, maintenance obligations.

Contact Access Management Group at (770) 777-6890 to attend the next scheduled training course!