HOAleader.com - Tip of the Week - October 1, 2010
Published: Fri, 10/01/10
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Can Your HOA Hire a Board Member?
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In this week's tip, we discuss the legal steps your HOA board
must take before hiring a board member or his company to provide
services to your homeowners association.
When you recruit people to serve on your HOA board, experts
recommend that you look for people--like lawyers and insurance
brokers--with expertise that can help you make good decisions.
Can you take that concept a step further and hire those board
members or their companies when your association needs such help?
For example, if one of your board members is an association
attorney, can you hire that board member's firm to represent your
association in a legal matter? What about hiring a board member
who's a CPA to file your association's tax returns?
"This comes up continuously," says Elizabeth White, a shareholder
and head of the community associations practice at the law firm
of LeClairRyan in Williamsburg, Va. "Often boards think it's a
really good idea. The board member thinks he or she's providing
valuable information, and the rest of the board may think so, too,
unless somebody pops up and asks some questions. Before you get
to the question of 'Should you hire a board member?' the question
is 'Can you?'"
Typically, it's permissible to hire a company owned by a board
member or a company that employs a board member. White explains,
"Associations are going to be held to the business judgment rule,
which essentially asks: What would a prudent business person do
under similar circumstances?"
White continues, "In many states, the rule has been codified in
the nonstock corporation act [which applies to nonprofit
corporations, like associations]. In Virginia, you have to go
through a series of questions and analysis." Many states have
comparable rules.
To learn the questions your board should ask, see our new article:
http://www.hoaleader.com/members/488.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Discussion Forum Follow-Up: Shifting Common Elements to Owners
What if some of your homeowners association common elements
benefit only some residents? Can you amend your HOA's governing
documents to make the maintenance of those common elements the
responsibility of only those owners?
Click here to read full article:
< http://www.hoaleader.com/members/487.cfm >
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Registration: Does Your HOA Need It?
Some condo and homeowner associations require that homeowners
register to vote in HOA elections, register their pets, register
their cars, and who knows what else. Why is registration
necessary? What should be registered? Can you charge registration
fees? Here's the scoop.
Click here to read full article:
< http://www.hoaleader.com/members/486.cfm >
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HOA Elections: Do You Need an Independent Election Inspector?
With money tight and delinquencies on the rise, tensions are
running high at some associations. That can lead to disputes over
election processes and results. Can you hire an election
inspector to oversee the integrity of your elections? When might
you need an inspector? How can you choose? Here's a primer.
Click here to read full article:
< http://www.hoaleader.com/members/485.cfm >
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HOA Strategic Planning: How to Perform True Strategic Planning
Does your homeowners association you have a strategic plan? We
don't mean just a budget and reserve study, but a full-blown plan
for where your board would like your association to be in 3, 5,
or 10 years. In this week's tip, we offer insight for smart
strategic planning for HOAs.
Click here to read full article:
< http://www.hoaleader.com/public/484.cfm >
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You've Done HOA Planning; Have You Done Strategic Planning? 5
Questions Your Board Should Answer
The best way to manage your condo or homeowners association is by
planning rather than reacting. But how can your HOA board develop
a strategic plan? Here, we discuss what your board should know
about strategic planning and provide tips to help you effectively
plan 3, 5, or 10 years down the road.
Click here to read full article:
< http://www.hoaleader.com/members/483.cfm >
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