HOAleader.com - Tip of the Week - August 30, 2019
Published: Fri, 08/30/19
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HOA Board Members' Efforts to Limit Their Liability Probably Backfired
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In this week's tip, we answer a reader's question by giving a warning on paying your board members and officers.
An HOAleader.com reader asks whether it's OK if the owners just voted that the officers can't be held legally responsible for anything they do as officers, to defend any lawsuits against them, and to pay them for their work on behalf of the association.
When our reader talks about board members not being held legally responsible for anything they do as officers, the reader is referring to the practice of indemnification. Translated to this case, if there were a judgment against board members for the failure to do their job properly, the association would cover that judgment.
That's fairly common and not so troublesome.
"At least in Colorado and under the Model Nonprofit and Model Common Interest Ownership Act, volunteer board members have a lower duty or standard of care because they're volunteers — they're not professionals," explains David Firmin, managing partner at Altitude Community Law PC in Lakewood, Colo., with satellite offices in Loveland and Colorado Springs. "As such, they get fully indemnified by the association.
"It's what has to happen to ensure you continue to get volunteers," Firmin adds. "If they were fully responsible, you'd never get people to serve."
That's also the case in Michigan. "Michigan's Nonprofit Corporations Act was amended recently to put in very strong protections for what the statute terms 'volunteers directors,' which includes officers," explains Joe Wloszek, a member at Hirzel Law in Farmington, Mich., which represents more than 100 community associations; he lived in a condo for seven years and now lives in an HOA.
"Indemnification and the duty to defend are pretty standard provisions if those volunteers are unpaid."
The fact that the board members are paid does raise our experts' eyebrows. Find out more by checking out our new article: https://www.hoaleader.com/members/3974.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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Here's the Status of Condo/HOA Manager Licensure and Education Laws
Colorado was on track to renew its community association manager licensing law - a handful of states have passed such laws requiring community association managers to become licensed or get certain training - and then the governor shocked everyone and vetoed the bill.
Click here to read full article:
https://www.hoaleader.com/members/Heres-Status-CondoHOA-Manager-Licensure-Education-Laws.cfm
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Is This HOA Making Enemies Unnecessarily?
An HOAleader.com reader asks, "I live in a 360-unit condo complex. We have an association center that's underused. In fact, the only thing it's used for is events (bridal showers, baby showers, graduation parties, etc).
Click here to read full article:
https://www.hoaleader.com/members/This-HOA-Making-Enemies-Unnecessarily.cfm
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Are These Condo/HOA Board Members Truly Conflicted?
At a recent HOAleader.com webinar on board members' fiduciary duties, a listener assumed it was a conflict of interest for the board president to be a real estate agent who sells homes in the community.
Click here to read full article:
https://www.hoaleader.com/members/Are-These-CondoHOA-Board-Member-Truly-Conflicted.cfm
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The Curious Case of the HOA Mailbox Responsibility
An HOAleader.com writes, "I find that attorneys give varying answers to statute interpretation. Our Florida home is in an HOA with each home having their own mailbox by the curb. Some call this common ground, but a mailbox purpose is for owner's use. Who's responsible to repair and replace mailboxes? If there's no indication in our documents related to this, then who's responsible?"
Click here to read full article:
https://www.hoaleader.com/members/Curious-Case-HOA-Mailbox-Responsibility.cfm
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What It Means for a Condo/HOA Board to Be Transparent
Surely, your members have demanded transparency. And you've heard experts say it's a wise practice, too. Your response is probably: We're transparent! How much more transparent could we be, for crying out loud?
Click here to read full article:
https://www.hoaleader.com/members/What-It-Means-for-CondoHOA-Board-Be-Transparent.cfm
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HOA Policies: 25 Sample Policies Every Homeowners Association Board of Directors Should Consider
In this newly updated and expanded special report, we lay the groundwork for your HOA board to draft policies and procedures governing a broad scope of condo or homeowners association life by providing you with 25 sample policies released exclusively to you by HOAleader.com's expert contributors.
Click here for the special report:
https://www.hoaleader.com/public/HOA-Policies.cfm
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