HOAleader.com - Tip of the Week - April 28, 2023
Published: Fri, 04/28/23
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HOAleader.com - Tip of the Week - April 28, 2023
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In this week's tip, our experts opine on a recent news report that a Florida condo board has set in their reserve study a life span of 50 years for their roof.
Perhaps they truly believe their roof is made of materials that will last that long. Or what seems possible, and perhaps even more likely, is that they're working hard to avoid having to fully fund reserves now in an effort to keep their and other owners' monthly assessment costs low.
If the second possibility is correct—that this action is knowing and intentional—could this board be committing a breach of their fiduciary duties?
Michael Crew, CEO of Alpharetta, Ga.-based Homeowner Management Services Inc., who has been in the community management profession for 30 years and whose firm represents more than 200 associations in metro Atlanta, has never had a client plan for a 50-year roof life span. But he's clearly in the camp thinking this is an intentional fudging of the plan.
"No way," he says. "Fifty years for a roof's life span is ridiculous. That board is totally out on a limb there."
Scott D. Weiss, CCAL, a community association lawyer at Ortale Kelley in Nashville, Tenn., who represents more than 650 condos/HOA communities throughout the state, also questions the board's decision. "Could that be in good faith?" he asks. "I don't know that anybody could make an argument that the life span of a roof is 50 years. I don't know what kind of roof would last that long. If it's a shingle roof, no way. But I suppose there could be commercial products with big buildings that do have long life spans."
Alex Noland, CCAL, founder of Noland Law PC in San Francisco, which represents 200-plus community associations throughout California, is also curious as to the board's intent. "If they knowingly do this to avoid raising fees, I think they could be sued," he says.
"Every state has some form of the business judgment rule," explains Noland. "It's the standard of care you have to use as a corporation, which is what HOAs are. One element of meeting that standard is seeking and relying on the advice of experts."
That's also Weiss's baseline for measuring this board's action. "I think they could be exposing themselves to liability," he states. "I can't say it's a breach without knowing more. But pretty much every state has a form of the business judgment rule, and they're very similar, sometimes even identical. I think: How can you say you're protected by the business judgment rule if you've done something not in the interest of the association?"
Other state statutes could apply to this board's action. Find out more in our new article: https://www.hoaleader.com/members/4693.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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The 50-Year Roof Life Span: Hello, Condo/HOA Breach of Fiduciary Duty Lawsuit!
A Florida condo board seems to be saying "wink, wink, nudge, nudge" as they've included in their reserve study a life span of 50 years for their roof. Perhaps they truly believe their roof is made of materials that will last that long. Or what seems possible, and perhaps even more likely, is that they're working hard to avoid having to fully fund reserves now in an effort to keep their and other owners' monthly assessment costs low...
Click here for more:
https://www.hoaleader.com/members/50-Year-Roof-Life-Span-Hello-CondoHOA-Breach-Fiduciary-Duty-Lawsuit.cfm
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New Report Highlights Investor Takeover of Condo Community
You've heard our experts raise this issue before, but a new report has put the issue back in front of our experts. In this week's tip, we ask our experts about a new The New York Times report on yet another condo community that was gobbled up by investors and eventually deconverted, pushing the final owner holdout to sell, which they claim would be at a big loss from their fair market value
Click here for more:
https://www.hoaleader.com/members/New-Report-Highlights-Investor-Takeover-Condo-Community.cfm
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HOA Owner Wins Board Seat Then Puts House on the Market: Should You Care?
We recently got a question from a manager, not a board member. But we're happy to help everyone involved in our condo/HOA world. Here's the query: "I'm the property manager for a historic condo building in center city Philadelphia. We recently ran our board elections but after the vote found that one of the owners running recently put his unit up for sale...
Click here for more:
https://www.hoaleader.com/members/HOA-Owner-Wins-Board-Seat-Then-Puts-House-on-Market-Should-You-Care.cfm
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Is Your Condo/HOA Board Taking the Investor-Control Risk Seriously Enough?
The New York Times reports on yet another condo community that was gobbled up by investors and eventually deconverted, pushing the final owner holdout to sell, which they claim would be at a big loss from their fair market value...
Click here for more:
https://www.hoaleader.com/members/Your-Condo-HOA-Board-Taking-InvestorControl-Risk-Seriously-Enough.cfm
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Giant Trucks Are Increasingly Ramming Into Condo/HOA Parking Restrictions
In this week's tip, we cover the latest corporation to take aim at the hard-working and dedicated volunteers who oversee condo and HOA communities. First it was HOA Cynthia, a Geico ad poking fun at an HOA president who was all up in her neighbors' business. We can't find that original video on any of Geico's online channels, but you can watch it here
Click here for more:
https://www.hoaleader.com/members/Giant-Trucks-Are-Increasingly-Ramming-Into-CondoHOA-Parking-Restrictions.cfm
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