HOAleader.com - Tip of the Week - April 26, 2019
Published: Fri, 04/26/19
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Watch Out Prior Board Members: This New Condo/HOA Board is Coming After You!
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In this week’s tip, we answer a reader’s question about whether it’s proper for a new board to troll through prior board expenses and even attempt to force former board members to reimburse for those the new board finds questionable.
“To a limited extent, reviewing a prior board’s expenses is a bit like going down the rabbit hole,” asserts Molly Peacock, a partner at Rees Broome in Tysons Corner, Va., who’s represented condos and HOAs for nearly 15 years. “I think if a new board wants to look at prior expenses, then we probably should address a more fundamental point: What is and isn’t reimbursable? We can do a case study about these expenses we think exist, and we can go through and educate ourselves or have a better process for reimbursement.”
This type of questioning, however, isn’t unheard of. “It’s not unusual when there’s been a lot of controversy in the election process, such that people are claiming a previous board or member has misused funds,” says Barbara Holland, CPM, regional manager for FirstService Residential in Las Vegas. “It’s also not unusual if there’s been a recall. All of the sudden, you have the eager beaver new board member who wants to be a Monday morning quarterback and see whether expenses the association paid were valid or not. The idea of someone looking at that isn’t unusual. Hopefully, it doesn’t happen very often.”
Holland adds, however, that it’s important to look at contractual relationships first. You need to check whether any of the disputed fees were required to be reimbursed under any of the agreements the association has entered into. “Most management companies do have something in their contract that pertains to legal work they do,” she says. “In our case, we follow the lien, release the lien, and do a demand statement as opposed to using an attorney or collection company for those services.
“So look at those contracts if there is one that might apply here,” she advises. “Maybe that association was going to reimburse the manager for certain types of legal work they did or was required to indemnify the manager for some claims. If there’s isn’t a contract between the manager and the association, shame on that board.”
Also check the association’s minutes to find out if this expense was properly approved. “This question is a perfect example of: What were the instructions to the manager, or did the board have in the meeting a motion in executive session to have legal research conducted on whether the homeowner should receive a letter over potentially defamatory remarks?
“In some ways, this is kind of dangerous because you’re setting a precedent of investigating prior boards,” Holland warns. “People jump in looking for something, and it takes a lot of time of management, especially if they’re going back more than a year. Management has to find the answer, and it might very well be, ‘Yes, we contacted the attorney, and they were doing the research. And the board did produce a motion to go after these people.’”
Let’s assume for the sake of discussion that these payments weren’t proper association expenses. Should this board demand prior board members or the manager pry open their wallet to pay them back? Hear our experts’ thinking on that in our new article:
https://www.hoaleader.com/members/3901.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Good or Bad Idea? New HOA Board Reviews Prior Board's Expenses and Might Seek Reimbursement
An HOAleader.com reader writes, "This is a Florida HOA, not condo. Four of the five board members are new. In searching the records, it was found that the old manager was reimbursed for legal expenses, which, at the time, was defended as being necessary to fight Department of Business and Professional Regulation complaints filed by resident A.
Click here to read full article:
https://www.hoaleader.com/members/Good-or-Bad-Idea-New-HOA-Board-Reviews-Prior-Boards-Expenses-Might-Seek-Reimbursement.cfm
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Preventing and Reducing Anger and Tension in Your HOA
Join us for an in-depth webinar on May 23 led by two community association management experts. In just one hour, you'll receive practical and useful information that will help you lower the tension on your board and among your owners.
Click here to read full article:
https://www.hoaleader.com/products/preventing-reducing-anger-tension-a.cfm
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Rentals in Your HOA or Condo Getting You Down?
What HOA Boards Need to Know About Regulating Rentals
Did you miss Wednesday's webinar on this incredibly challenging topic? It's not too late! You can order the on-demand webinar. Have your entire board watch this one-hour presentation with Q&A session on how to create a smart--and enforceable--rental policy at your HOA. You'll hear two community association lawyers with decades of hands-on experience in advising associations share their best advice.
Click here to read full article:
https://www.hoaleader.com/products/regulating-rentals-hoa-webinar-b.cfm
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What to Know About Banning Religious Services in Your Condo/HOA Common Areas
It's so common for owners to ask to use your HOA common area for religious meetings. It's also common for there to be complaints, either that your common area--let's say it's your meeting room or clubhouse--is either improperly being denied use for religious services or that it's being monopolized by a group of owners for their religious services. What if you ban all religious services in common areas? Then you risk owners filing a religious discrimination lawsuit in response.
Click here to read full article:
https://www.hoaleader.com/members/What-Know-About-Banning-Religious-Services-in-Your-CondoHOA-Common-Areas.cfm
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Tips and Best Practices for Handling Harassing Calls and Emails to Condo/HOA Board Members
How to address the anger that seems to be escalating at community associations? That was a hot topic at a recent gathering of community association lawyers. One lawyer said that she recommends clients have a form response for some owners' communications: "We've received your email, and you won't receive further communication from the board."
Click here to read full article:
https://www.hoaleader.com/members/Tips-Best-Practices-for-Handling-Harassing-Calls-Emails-CondoHOA-Board-Members.cfm
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