HOAleader.com - Tip of the Week - September 15, 2017
Published: Fri, 09/15/17
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Here’s What Happens When a Condo President Blows Off Her Governing Documents
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In this week’s tip, we address what to do if you can’t get your fellow board members to act when you think their action is necessary, even critical. Can you just go it alone and later claim you were acting in good faith, so you’re not liable for any decisions that went awry?
That’s the issue in Palm Springs Villas II HOA Inc. v. Parth, ongoing litigation in California over whether a board president is protected from liability when she doesn’t follow her governing documents but claims to be acting in good faith and using her best judgment.
The case involved a California condo association, Palm Springs Villas II, which had a five-person board. During the events in dispute, Erna Parth served as the condo’s board president.
The association claimed Parth breached her fiduciary duties by failing to adhere to the business judgment rule and failing to follow the condo’s governing documents.
One aspect of the dispute arose over roofing repairs handled by Parth for the association. On the roofing front, the issue was the cost and quality of work, all done allegedly without proper approvals.
In 2006, the board hired a roofing consultant to vet and do other work related to the roofing companies that were bidding on the roof work. However, when the board sought approval from owners for a special assessment to cover the roofing repair costs, the owners voted down the request.
Parth then located a contractor, Gene Layton, who later testified that he held a contractor's license for a company called Bonded Roofing and that he had a relationship with Warren Roofing, which held a roofing license.
It’s not clear which company Parth retained—that appears to have been in dispute in the case—but she did retain one of those two roofing companies on her own without consulting either the board or the roofing consultant the board had hired to oversee the roofing process. Later facts also appear to show that Parth didn’t research the relationships between the two roofing companies at issue and whether the roofer she’d hired was licensed.
There was a June 2007 board resolution that indicated the board hired the roofing company to work on a time and materials basis. But the roofing company representative later testified that he’d never met with the board or submitted a bid before beginning the work. Likewise, the association had no records of a written contract with any roofer.
Despite that, the condo association paid Warren Roofing more than $1.19 million for work. And it was allegedly sub-standard.
That’s not the only action Parth took without following her condo’s governing documents. Find out how the court viewed her claim of no harm, no foul, because she was just doing right by her condo association in our new article: https://www.hoaleader.com/members/3603.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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California Case Highlights the Risk of HOA Board Members Going Rogue
What if you can't get your fellow homeowners association board members to act when you think their action is necessary, even critical? Can you just go it alone and later claim you were acting in good faith, so you're not liable for any decisions that went awry?
Click here to read full article:
https://www.hoaleader.com/members/California-Case-Highlights-Risk-HOA-Board-Members-Going-Rogue.cfm
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Do Your Job as an HOA Board Member--and No More--for Your Own Protection
In this week's tip, we give a warning to a reader that taking on too much authority may leave board members at risk of liability they truly don't want to assume.
Click here to read full article:
https://www.hoaleader.com/public/Do-Your-Job-as-HOA-Board-Memberand-No-Morefor-Your-Own-Protection.cfm
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What's an HOA Treasurer to Do (We're Serious: What's the Job Description)?
An HOAleader.com reader writes to ask for a high-level description of the treasurer's role in operating the processes that provide the data necessary to prepare financial statements and a more complete description of the other board members' responsibility to understand enough about financial statements so that they can make informed decisions about financial matters.
Click here to read full article:
https://www.hoaleader.com/members/Whats-HOA-Treasurer-Do-Were-Serious-Whats-Job-Description.cfm
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What to Do If an Owner Violates Your Condo's Pre-Sale Owner-Approval Rules
An HOAleader.com reader writes, In our condominium association, new people who purchase or rent from an owner have to go through an approval process that includes a background check. This has been the process for 17 years.
Click here to read full article:
https://www.hoaleader.com/members/What-Do-Owner-Violates-Your-Condos-PreSale-OwnerApproval-Rules.cfm
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