HOAleader.com - Tip of the Week - May 27, 2011
Published: Fri, 05/27/11
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Who Should Decide Whether Your HOA Sues?
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Want to get HOA attorneys riled up? In this week's tip, we
discuss a question that does just that: should require that your
manager should be the one approving whether your HOA decides to
bring a lawsuit.
There are all kinds of reasons not to allow your HOA management
company to dictate whether your HOA's attorney will file any
legal action. The most important may be that it's your
responsibility as an HOA board member to make those decisions.
"We have not run into any such arrangements and would have
difficulty representing an association that would yield such
an essential power to its agent," says Nathaniel Abbate, Jr.,
a partner at Makower Abbate & Associates PLLC in Farmington
Hills, Mich., who represents associations.
"We do see associations that give their management company
guidelines to direct us to commence litigation under certain
circumstances or to accept payment arrangements that fall
within board-authorized parameters. But it makes no sense for
an association--the board of directors of which is usually
expressly committed with the power and discretion to file suit
on behalf of the association--from relinquishing that important
power. It could be argued that such an arrangement is an
abdication of the board's fiduciary duties, and it places a
potential roadblock between the association and its legal
representative."
It's the potential abdication of the board's fiduciary
responsibility that also troubles Lisa A. Magill, a shareholder
and association attorney at Becker & Poliakoff PA in Fort
Lauderdale, Fla. "The board of directors bears responsibility
for corporate action or non-action," she explains. "While
certain tasks may be delegated to management, fiduciary
responsibility rests with the board. Board members must make
decisions they believe to be in the best interests of the
association, with the care of a reasonable person. It's
perfectly reasonable and acceptable for board members to ask
their managers about experiences with various types of lawsuits
and to make decisions in light of that expertise, but the
ultimate decision-making is up to the board."
For even more information on who decides whether your HOA should
file a lawsuit, see our new article:
http://www.hoaleader.com/members/580.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Should Your HOA Manager Approve All Lawsuits?
There are reports that some HOA management companies have
arrangements with the attorneys of the HOAs they both represent
that prohibit the attorneys from beginning legal action without
the management company's approval. Here, we explain why it's a
really bad idea for your association to agree to such an
arrangement.
Click here to read full article:
< http://www.hoaleader.com/members/580.cfm >
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Can You Make Retroactive HOA Rule Changes? Discussion Forum
Follow-Up
A reader asks: "If a tenant is trying to sue the HOA for allowing
families to violate the CC&Rs by installing wood floors, can the
HOA simply 'retroactively' change the CC&Rs to accommodate the
families with wood floors? Nineteen out of 20 units have violated
the CC&Rs. What power does the HOA have to change the CC&Rs after
the complaint/violation?" Here, we offer our reader some answers.
Click here to read full article:
< http://www.hoaleader.com/members/579.cfm >
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How and When Should You Bid Out Homeowners Association Work?
At most HOAs, bidding out work is an on-the-fly type process. It'
s not uniform, and sometimes the process works better than at
other times. Why does that matter? Because when your bidding
process doesn't work well, your HOA is probably losing money.
Instead of an unplanned process, your board should have
guidelines covering when it will request bids for work and how
the bids will be solicited and reviewed. Here, we show you how.
Click here to read full article:
< http://www.hoaleader.com/members/576.cfm >
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HOA Management Companies: A Practical Guide for Homeowners
Association Boards
In this exclusive HOA management special report, we offer insight
and guidance on finding a good HOA manager and determining
whether you need an onsite manager, must-have and must-not-have
contract language, and tips for responding when your management
company isn't doing its job, including guidance on when to cut
ties or work toward a better relationship. We also educate going-
it-alone boards on best practices for self-managed homeowners
associations, and much, much more.
Click here to read full article:
< http://www.hoaleader.com/public/568.cfm >
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"Force-Placed" Insurance: What Your HOA Board Must Know
In this week's tip, we warn you of the possibility of surprise
insurance costs if your HOA has taken out a loan. It's called "
forced-placed" insurance, and it can be costly to your HOA.
Click here to read full article:
< http://www.hoaleader.com/public/571.cfm >
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