HOAleader.com - Tip of the Week - October 8, 2010
Published: Wed, 10/06/10
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Your HOA Can Hire Board Members; But Should You?
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In last week's tip, we discussed the legal steps your board must
take before hiring a board member or his company to provide
services to your association. This week, we discuss whether it's
a good idea to hire board members--even if you follow the proper
legal procedures.
There's a split among experts on whether you should hire a board
member for your association's work.
Elizabeth White, a shareholder and head of the community
associations practice at the law firm of LeClairRyan in
Williamsburg, Va., is hesitant. "You've got so many things boards
need to think about," she says. "One is the awkwardness. Let's
say things don't go so well with the company. The board is going
to be discussing the company's performance. We also have some
board members who want to be employed themselves and offer up
such a good deal on things like accounting services, [but then
we] find they don't have errors and omissions or malpractice
insurance or aren't properly licensed and bonded.
"Also, the very act of entering into that contract puts the other
board members at risk of breach of fiduciary," White adds. "
Finally, what if you have to sue that company? All those things
that make arms-length transactions are challenged when you have
an interested party."
Others are comfortable--and have done it themselves--with the
proper disclosures.
"If you've got somebody on the board who provides services nobody
else can do or does as well, why should your association suffer
because someone happens to be on the board?" says Donna DiMaggio
Berger, managing partner at Katzman Garfinkel Rosenbaum in Ft.
Lauderdale, Fla., who advises associations. "When I served on my
HOA board of directors, my firm represented the association. I
wanted my firm to work for our association because I think we're
the best association attorneys out there, and why shouldn't my
community have the best?".
However, even when board members' companies are hired, many of
those board members segregate themselves from the work. To find
out why that's often wise, see our new article:
http://www.hoaleader.com/members/490.cfm.
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Beware Conflicts When You Hire Board Members' Companies--Part 1
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 help? Here
in Part 1, we discuss the hoops you must go through to hire board
members and their companies. In Part 2, we discuss whether those
hoops are worth the effort.
Click here to read full article:
< http://www.hoaleader.com/members/488.cfm >
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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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