The person who takes on the role of a community association board member is a special individual with many different motivations. There are the public-spirited, the single-minded, the power-seeker, and those that are there because their spouse encouraged them. If you are familiar with the stories told at the Jewish Passover Seder, you might see a remarkable resemblance to the parable of the four sons: the wise, the wicked, the simple and the one who doesn’t understand enough to even ask a question. I will leave the comparisons to you.  While there are several different motivating factors, there is one trait that is shared by all. It’s a kind of willingness to step out there and be all you can be, to borrow a phrase or two.

            Sitting on the board puts you in a position of risk, power, responsibility and visibility that singles you out as a “player” in this world. You are willing to take risks, take action, and take responsibility. You see the value of being a part of what is happening rather than being a bystander, a part of the silent majority. You are willing to get out on the dance floor and do your best.  When you’re on the dance floor you’ve got to move your feet.  As long as you’re moving your feet, you’re participating and learning and contributing. You get better as the months pass and then you begin to lead.  You make a mistake or two and the passage of time makes it alright. Sometimes it takes a few more ticks of the clock than other times, but then there’s always the Chubb D&O policy to fall back on. Take the lead and dance like nobody’s watching.  Feel the pleasure of working with a group of public spirited neighbors trying to do the right thing for the community. Feel the pride and pleasure when things go right. Don’t look for neighborly thank yous.  The reward comes from inside.  Nobody really is watching, just your compadres across the boardroom table who shares the same risks and rewards as you.

            Put your full feelings into the job, and do the right thing. Do that which will allow you to sleep at night.  You are Solomon,  Judge Ito, and Andrew Jackson. They’ll love you or hate you regardless of how careful, so make your decisions and go forward. Recognize that this temporary situation you find yourself in is a unique opportunity to have a significant impact on your community’s lifestyle, your neighbors’ well-being, and most importantly, your own sense of self-esteem and self worth.  Don’t leave anything on the table. Don’t look back with “shoulda, coulda, woulda”.  Do what you believe is best and live with the consequences.  You’ll be right most of the time, and the miscues will resolve themselves.  Love like it will never hurt. 

Nothing can impact more owners in more different ways than a bad roof. Maintaining and eventually replacing your roof can have a critical impact on your happiness and success as a board member. Typically a roof can last 15-20 years. Slate roofs can last 100. It’s unlikely that you will be on the HOA Board during that period of high anxiety. But if you are, we can help you through the maze of experts that include a roofing contractor, manufacturer, architect, engineer, consultant as well as your manager and attorney. Everybody plays a part in what is usually the single largest capital replacement item in your history.

If you are lucky enough to not be on the Board during that time, the decisions you make during your current term will have a mighty big impact on those neighbors that are serving. The primary question might be “Did you provide adequate reserves for the project?” That’s something you can impact right now. Check with your manager and review the specific part of the reserve fund designated for the roof. How does it look based on the reserve analyst’s projections? If it seems under-funded, then make the small adjustment needed now rather than ignoring it and allowing a larger deficit that may cause a special assessment when it’s time to re-roof.

The second thing you can do is review the roof maintenance agreement. What? You don’t have one? No surprise. It’s one of those items of preventive maintenance that you don’t embrace until you find out first hand how much it could have saved you.  So many roofs fail prematurely simply because nobody did an annual inspection to repair small damage. Roofs are the best example of how a small bit of repair worth a few hundred dollars can grow into a $10,000 major repair or a $200,000 re-roof.  Your roof is exposed to the harshest climate. The sun is baking on it. The winter brings wind driven moisture. If you’re in New England, ice dams appear to create even more damage. If the elements are pounding on a well-sealed roof, there is always the challenge of how long will it hold up. But when the wind-driven rain finds a hole or a loose shingle, the real problems begin to happen, and they happen fast. You don’t want to be trying to do a roof repair in the wrong season. That’s why an annual inspection in the spring is the first essential part of a preventive maintenance plan. It’s not costly. Ignoring the problem is far more expensive. It’s not an “if”, but a “when”.

If you are on a board that is facing a re-roofing project, don’t hesitate to call in some helpers. An ad hoc roofing committee can be extremely valuable in achieving the two most important goals. 

#1 Evaluate the options available in materials and construction professionals. 

#2 Communicate what is going on to the rest of the community so that everybody knows what’s happening and how this huge amount of money is being spent.

 The committee will gather all the information from the experts and present it to the board. The board will then vote on what materials and what vendors will be used. Make it a group decision process. That way everybody has a stake in the outcome.

Two things to remember as you turn the page. Now is the time to be sure you have a preventive maintenance program in place for your roof that coincides with your reserve fund. Secondly, if you are doing a roof replacement, use all the manpower available to help you gather good information on which to base your decision. You need the advice of experts.

The noisy neighbors always seem to get the attention in community associations. You can live in a beautifully maintained well-run community where everything goes according to Hoyle 99% of the time, but then one individual decides to make a fuss about a rules enforcement issue. The whole world looks at your association like a reincarnation of Dante's Inferno where power-mad board members have run amok and Kondo Kommandos are threatening to kidnap the surly maintenance man.  At one point the media glommed on to what appeared to be an HOA foreclosure epidemic in the Midwest. There were 1000 foreclosure actions recorded in just one Texas County by HOAs. That doesn't mean that all of them actually went the distance, but that the legal threat was there.  Arizona seemed to be another hotbed of legal activity and Florida? Well, we all know about the Florida flag wavers.

This makes for exceptional headlines and fills the chat rooms of CID web sites all over the country.  There is no question in anybody's mind that many community association boards have an autocrat or two.  They are not all bad, just not as good as we'd like. The nicest thing you can say is that, like Mussolini, they keep the trains running on time. But these boards are also the exception. The majority are smoothly run with the heavy hand of a professional property manager that takes the uncomfortable burden off the volunteers. The presence of an unbalanced individual homeowner also comes with the territory.  Some more out of kilter than others. We can look back on the calendar for 2001 and find at least one shooting of a board member committed by an irate homeowner. But not more than one.

CAI and attorneys all over the country scurry around trying to make laws that would prevent this sort of craziness from spoiling the terrain.  The real fact is that you just can't carve out legislation aimed at dealing with crazy people. You have to make laws based on rational homeowners and rational boards. Otherwise the laws get too convoluted, extreme and impossible to interpret or enforce. 

One disturbing pattern that seems to dominate the court cases is the payment of legal fees. Typically, this is a righteous charge. If a person won't pay, then they certainly ought to absorb the creditor's cost to get the debt satisfied. The insanity arises when there are $1,800 worth of legal fees over a $38 debt. This is a real example that was resolved in Texas. It was over an oil stain on the driveway. The actual amount eventually paid by Mr. Chen was close to $2,400 on what was once a $38 fine. The additional money included court costs as well. There will be plenty of folks out there that say, "He got what he deserved." There was no doubt that he owed the $38. There just has to be a better way to resolve the issue aside from foreclosing on his home. I suppose people who are crazy enough to ignore all the lawyer letters and court orders need to pay thousands of dollars to teach them a lesson. It's just that the publicity makes us all seem like ogres.

There has long been a movement afoot that avows that board members responsible for a multi-million dollar piece of real estate ought to be responsible, trained, and paid.  The idea of leaving the proper running of your home up to a volunteer seems irrational.  Yet there is the prevailing practice that board members should be public-spirited citizens of the community willing to donate their time for the good of all.  Is this vision of a Mother Teresa for every community association practical?

Community associations were created in this country out of economic need: affordable housing for the masses that embraced the dream of home-ownership.  It was functional.  The economically motivated creation was followed by a “social experiment” ambience that offered us all a chance to recreate our own little communities and mini-governments.  As soon as the developer left, condominiums were embraced by society as a social phenomenon and one of the biggest hurdles faced was getting board members to refocus on the fact that they were running a small business.  Not just any small business, but one that was responsible for their own home as well as hundreds of neighborhood homes.  That struggle continues as newly elected board members are shocked to find out that they have something called “fiduciary” responsibility.  

Clearly the third stage of development for community associations is the move from social experiment back to a business orientation.  How does this evolution impact you, the board member?  As an unpaid volunteer fiduciary, the courts viewed your actions in the most lenient manner.  Board members were often found free of any personal liability for their poor decisions as long as they made some kind of reasonable effort to “do the right thing.”  They were not subject to the same criteria of business judgement that any paid staff person or executive might be held to.  Their public spirit was rewarded with a very liberal view from the bench insofar as liability went.  Certainly sounds appropriate.  Here you are volunteering 10-20 hours a month of your personal time for the good of the community and you end up getting sued for $2 million because the roofer you hired turned out to be a con-man.  Not really fair.  BUT.

Though you are not responsible, who pays the price? 

The entire association does.  Not a happy alternative.  Currently there is a legal trend emerging that says that board members will be held to the same “good business judgement” standards that other business executives are held to.  Volunteer status does not mitigate the burden they carry or their fiduciary responsibility. 

As this trend grows in popularity, would it not make sense to reevaluate the position of board members?  Will the trend reverse itself again? Possibly, but not probably.  The idea of holding individuals responsible for their actions is not a passing fad.  This evolution of the industry is likely to develop rapidly and probably reach an extreme situation where board members are frightened off because of all the personal judgements against them.  As things usually happen, the pendulum will shift back to a more middle-of-the-road position.  In any event, you should anticipate more board member liability.

The great social experiment of our era continues to mature.  Is it a social experiment, a business experiment or a hybrid?  “Governance” has become the mantra. The transitional nature of most boards is a major hurdle.

Should we anticipate the creation of the paid professionally trained board member?  Would you welcome the idea of one of your neighbors understanding the nuances of 3rd party contracts, property insurance, legal liabilities, and finance steering your neighborhood for a fee?  Would you then need a professional property manager?  Would we be creating a new career for retirees? Is this an opportunity for a young mother confined to the home because of child-rearing responsibilities to earn a legitimate income?  The opportunity to have professionally trained and experienced board members dealing with the needs of the community has to be a positive one.  Professional property managers need not worry.  There’s plenty of responsibility to go around.  

It's not Al Queda or Hamas at our gates. Not today anyway. It seems to be the ugly head of landlord/tenant/board member relations reemerging. When community associations were first blossoming in the 70's, the phenomenon was embraced by all of the newlyweds and retirees as their own private salvation and answer to the housing needs that challenged them. They fueled phenomenal growth in the production of condominiums and HOAs all over the country. Everybody loves newlyweds, especially other newlyweds. And everybody loves the grandparents that make up our Golden Age cadre, especially other AARP members. As long as they didn't mix with the newlywed group in the same community everything seemed to perk along quite nicely, thank you.  But then came the renters!

The first widely acknowledged villains of the condo and HOA world were those uncaring, lower than low, vagabond renters and their just-as-insensitive absentee owners bent on raping and pillaging the landscape of the community association. All they cared about were their rents and didn't blink an eye if the renter happened to be a bit of a different stripe who didn't always fit in with the milieu of the other homeowners. Diversity is great for America, but not exactly welcomed by community associations, especially when the diversity comes in the form of a lowly renter. One of the constants in community association life seems to be the antipathy towards renters and the absentee owners that house them. 

I don't think I can do much about that from this pulpit. It's too ingrained, too psychological, and besides, I was one of the hated minions of absentee owners. I was also a renter! But allow me a thought or two to help mitigate the cold war that seems to infect almost every community with (ugh) renters.

The perceived problem seems to be that the renters don't follow the rules. Not that every homeowner does, but after all, they are homeowners, not renters. The problem seems to be that the renters don't care as much about their homes as a legitimate homeowner. The problem seems to be that the renters are just uncooperative, not part of the community. They’re always popping up as a nuisance when it's time to pave the parking lot; it's their cars that are left parked when they shouldn't be. When the painters are ready to do the next building, it seems to be the rental units that haven't removed their screens and prepared their balconies. When the pest control people come to do their work, why is it always the rental units that haven't cleared out their cabinets and why don't we have a key?

There is an answer you know. It's too simple. It's because we haven't told them the rules. We haven't notified them of the painting schedule. We haven't notified them of the pest control program. We tow their cars more often because we haven't told them the rules.  Of course it's the unit owners' responsibility to tell them. They're the ones raking in those big fat rents. They're the ones making a profit from our community lifestyle. Let them live up to their responsibility and communicate with their tenants. We send them all the notices as we're supposed to. If they don't pass the word along to their tenants, then they will bear the burden of our wrath. We will fine them, tow them and leave them full of pests.

          In fact that is the answer in many cases.  When the idea of informing all residents of the various maintenance schedules, not just the owners, is brought up the response is a raised eyebrow.  "Why should we?" Did you ever consider including the renters in your Newsletter circulation? "Heaven Forbid!" That's for our community members only.  Did you ever think of providing every new resident with a set of the rules and regulations and the other kind of welcoming package that you offer new homeowners? I know this seems outrageous. Why should we, THE BOARD OF DIRECTORS, do what the unit owners should be doing?

The answer is simple. Because it will solve the problem. The problem with renters is that they are viewed as outsiders who are not members of the neighborhood. That's the way we treat them, and then wonder why they don't join in and become a part of the community that views them as inferior beings.

          Yes, we understand you are all volunteers offering your time up for the good of your neighbors. Yes, we understand that you resent that your selfless contribution of personal time is also benefiting those individuals who are part of the community in deed only, and that they are making a profit from your volunteer efforts. Yes, we understand that renters are a transient sort who don't contribute to the Reserve Fund and don't necessarily come from the same socio-economic level as a well-mortgaged homeowner.

          What we also understand is that the problem exists because the renters are considered outcasts in the community and treated as such. If you treat them that way, expect them to act the part. Don't communicate directly with them and they probably won't get your message. Then who has the problem? You do. 

So now you can fine away to your heart's content. But you still have a problem that creates an uneasiness and a discordant environment. Why not just treat the renters as equals? I know I know, of course they're not. But just pretend. Maybe you'll have one less car to tow, one less pest control problem. Maybe you may find a renter that's really a nice person underneath that lease. Those absentee owner landlords are a lost cause, but the renters may be worth reaching out to. Maybe one less telephone complaint disturbing your dinner. 

That question should be in the forefront of the mind of every board member. It’s not an easy one to answer. As a “fiduciary” you are spending your neighbors’ money and making decisions that have an effect on their property. You have a responsibility to act in good faith and act reasonably. 

Generally speaking, as an unpaid fiduciary, you don’t always have to be right. You don’t even have to be smart, but you can’t just ignore items that are brought to your attention. You have to exercise some level of business judgement. You can’t knowingly gamble with association funds or assets. When investing the reserve fund, the “Prudent Man” theory is often mentioned as a guideline. That concept states that the preservation of the capital is more important than getting the highest return.  

You’d also better stay away from what is called “self-dealing. That means that the association really should not be paying you for work you do for the association. When you are responsible for the work, and then also responsible for judging whether payment should be made, you put yourself in a conflict of interests that could be considered a breach of your fiduciary responsibility.   

Bringing personal agendas to the board meeting, and making decisions based on your own personal biases rather than what is right for the community is an area often pointed to as an opportunity for a breach of fiduciary responsibility.  If one board member doesn’t like his neighbor, and is shown to be selectively enforcing rules to harass that neighbor, then there might well be a case of breach. 

One has to wonder if the board members in Virginia and Florida that went to court over one of their resident’s right to fly an American Flag on a flagpole outside their home were exercising good judgement or representing the wishes of their constituents. Apparently their pursuit of these issues was not considered a breach of fiduciary duty, but many felt it was really bad judgement. 

What are the penalties for breach of fiduciary responsibility? That too is hard to define. How much does your D&O policy protect you? When doesn’t it protect you? Certainly if there are monetary damages involved, the board member might be held liable for them. Legal fees related to the defense of a charge of breaching fiduciary responsibility might rightfully be borne by the individual board member, not the association. Some D&O policies will pay for legal defense, but only if they believe the board member acted correctly. Insurance companies are there to protect you when you are right, not pay your legal bills when you’ve been wrong.

Here’s a little exercise for you from the real life chronicles of “Condo Man”. See if you can see where there may or may not be a “Breach”.

Once upon a time in a land not so far away (Framingham, Massachusetts) there existed a self-managed condominium. There is no professional property manager overseeing or guiding the actions of the board. In fact the community has been in existence since 1973 without such guidance. The board members rightfully feel quite proud of their efforts over the years. Their volunteer time is enormous and just as unappreciated as those communities that are professionally run and board member time is limited to the 2-hour monthly board meeting. These folks in Framingham put in ten times that amount of time and even more on occasion. Believe it or not, they’ve managed to stay out of any major trouble. They have well-respected legal counsel that they rarely call. They focus on saving money with the confidence that they’ve done it themselves for three decades and they can continue to do so. There is a reasonable constituency of investor units that are thought of darkly. Absentee owners are not appreciated here and renters get the same kind of prejudicial attitude you find in many communities.  Not necessarily justified, but a very real element of the environment. You can understand how a board member putting in 20-30 hours a month as an unpaid volunteer for the good of the community would feel about an absentee landlord who is actually making money as a result of the volunteer efforts of the board. It seems like one of life’s inequities, but it is reality. It is then certainly understandable that one of these hard-working self-sacrificing board members would not be very sympathetic to any problems that might occur in rental units.  It offers a very dangerous opportunity for board members to act in a way that tests their fiduciary responsibilities, because in fact they are fiduciaries for the absentee landlords as well as the owner occupants. Do they owe a different degree of responsibility to an absentee-owner?

Here’s the chronicle. You decide.

Absentee owner gets a letter in the mail stating that there is a sticky front door that is shared by him and his neighbor. The letter states that the owners must repair the door within 7 days or face a fine of $25/day each until it is repaired.  The letter is posted on a Friday of a holiday weekend, and as a result is not received by the homeowners until Tuesday with the following Friday being the deadline.

It’s important to note two things. First, the governing documents of the condominium specifically state that if there is a maintenance problem with this particular front door, the board will notify the two owners involved, give them 14 days to make the repair, and if it is not made, then make it themselves and charge back the appropriate owners for their share.  Second. The board member in charge of maintenance has had previous unhappy experience with the absentee-owner of one of the units and has stated that he does not enjoy managing rental units without getting paid.

Back to the story. The absentee-owner receives the letter Tuesday night, comes down to the property Wednesday to see what the problem is and finds the sticky door. He asks the maintenance man to fix it and bill him. The maintenance man refuses. He knocks on his neighbor’s door to see what help he can get. No answer. He tries to telephone the neighbor that night, but finds the number unlisted. He leaves a note for the board on Thursday explaining that he can’t get in touch with the neighbor to agree on a repair and the maintenance man has refused to help. With only one day left before the $50/day fines begin, he is looking for some immediate help. The board ignores the written message. The absentee-owner knocks on the neighbor’s door again with no result. He then contracts with an independent professional property manager to have the door repaired by a reputable company willing to come out and perform emergency service at a premium. Once the repair is completed in the mandated time period, he writes a letter of complaint to the board regarding their unfair deadline and non-cooperation. They write back with an apology saying they made an error and should have given the unit-owners 30 days to resolve the issue. The absentee owner had requested a telephone number for his neighbor from the board, but got no response. That request was made three more times over the next two months with no response from the board. Finally the board sent a letter telling the absentee owner that his neighbor was in jail and they couldn’t contact him either. They denied any responsibility for sharing in the cost of the repair. They told the absentee owner that he had to bear the full cost of the repair or work it out with his unavailable neighbor. 

Breach of fiduciary responsibility?  Extremely uncooperative attitude.  Deliberate breach of the provisions of the governing documents. Frustrating to the absentee owner who was inconvenienced in a pseudo-emergency of the board’s making and at risk for the entire cost of the repair that was performed. What did the absentee owner do? He decided that life was too short to make a big deal out of getting overcharged $150 and went about his business. Volunteer Board Members 1 - Absentee landlord 0.

Two months later in December, the same absentee landlord gets a call at 7:30am on a Sunday morning from his tenant. The basement is flooded and she’s afraid that the electric wires will blow up and that there will be mold and that the whole building will collapse. Twenty minutes later the absentee landlord is at the back door of the unit and goes down to inspect. Yes. There is a problem. Because the buildings contain eight units each with basements separated only by plywood paneling, the problem likely effects more than just the one unit. He calls the emergency number for maintenance for the condominium and gets the answering service. He reports the problem and asks for an immediate call back to see what can be done. After an hour of listening to the tenant rant and rave about her rugs and furniture being ruined and impending doom from short circuits and mold infestations, the landlord calls the emergency number again. The telephone answerer explains that she has passed the information on to the maintenance department with no response. After all, it is Sunday.

Waiting another hour for some support brings nothing. At 11am the absentee owner gets on the phone to contact a professional flood restoration company. The concern here is also that the problem is widespread and that just solving the problem in his unit will not really solve the problem. It’s a shared situation. By 1pm the emergency truck arrives, pulls right up to the back door to get their equipment hooked up immediately and start draining the basement. An hour later up wanders the board member who is head of maintenance and orders the emergency vehicle to get off the lawn. Parking on the lawn is clearly a rules infraction. It’s pointed out that there is an emergency situation going on and that the truck is involved in getting water out of a basement. This does not impress the board member. He announces that he is fining the unit owner and that if the truck does not move, he will have it towed.  The emergency people continue to do their job. The board member calls the maintenance man who responds within 20 minutes and is down to the property to call the tow truck to remove the emergency vehicle. By this time the flood remediation is done and the vehicle is removed. 

Here are a few points to ponder. How come an illegally parked car is enough of an emergency to get the maintenance man down to the property, but a flooded basement is not?

If the emergency vehicle must be towed because it is allegedly causing damage to the lawn on which it is parked, what kind of additional damage to that lawn might be created by a big 10-wheeled hydraulic lift tow truck climbing up on that same lawn and dragging the truck off?  Is the decision to call a tow truck a breach of fiduciary responsibility? Probably not, just poor judgement and there is no law against being stupid. Is ignoring a flooding basement a breach of fiduciary responsibility? Maybe if it was the board member who failed to respond, but the maintenance man is not a fiduciary. What can you say about the situation? Not much. Frustration and poor judgement comes with everyone’s life. The fact that this was the same absentee owner and the same board member involved in the sticky door incident might indicate a pattern. It might just be bad luck. Solve the flooded basement problem and move on. 

Not quite.  The absentee owner finds a note in his mail two weeks later fining him for the emergency vehicle and charging him for repairs made to the lawn and shrubbery around the unit. The fact that there is no shrubbery within 50 yards of the unit is the first tip-off that this is not exactly a legitimate bill. The idea of doing lawn repairs in December is another. Fining an emergency vehicle performing an emergency service that should rightfully have been addressed by the board is the third issue of concern. Fines are punitive, designed to punish people for doing bad things. Preventing damage to the building and neighbor units is not exactly a heinous crime. In fact, the non-response of the maintenance man is more in line for some kind of punitive response than the actions of the emergency crew. What does the absentee owner do? He pays the fine and the charges immediately, not wanting to make the situation worse. He writes a letter to the board explaining his feelings about the board’s responsibility and actions. He points out that there must be some mistake because there is no shrubbery and nobody in their right mind tries to make lawn repairs in the middle of the winter and what should have been done given the flood anyway? The board responds that the fine and charges stand. 

          Absentee owner smells a pattern here. He calls the attorney for the condominium and asks for some advice. The advice is to speak to the board and reason with them. The attorney can not get involved unless the board calls him.  Another request for redress by the board is ignored. The absentee owner decides that this pattern must be stopped. He files in small claims court. He also prevails upon the law firm used by the association to do a mediation of the situation at no cost to the association to put an end to what appears to be an escalating problem. The board ignores the request for mediation.

          Trial day comes up. The court clerk first offers official mediation done by the court. The board member refuses. The case is heard. The board member shows up with the maintenance man as his legal counsel. He testifies that the bill for the repairs was an error. They didn’t make any repairs. They just estimated what it might cost. He said the $80 charge was what the maintenance man charged them to come down on a Sunday to call the tow truck. In fact each one of the charges outlined on the bill to the absentee owner was incorrect. In fact he had even more pretend charges he had yet to send and he wasn’t done with this guy yet. The magistrate heard both sides and awarded the absentee owner a refund. The response of the board was to send another bill “they had forgotten to send” for almost double the amount the judge had just awarded the homeowner. 

          Breach of fiduciary responsibility?  There was no self-dealing here. The board members did not benefit financially from any of these actions. Their judgement in regard to the emergency vehicle is worth reviewing, but once again, stupidity is not illegal. The one thing they cannot do is ignore the court’s decision. They cannot go back after losing and insist they were right and try to coerce the absentee owner into paying again. Once again the absentee owner prevails upon the legal counsel for the condominium to offer a no-cost mediation hearing to try and resolve the issues. The response from the board is that they feel there is a conflict of interests and won’t participate.

          The absentee owner figures that this is not a good place for rental property owners and decides to sell his unit. The board will not issue a release, claiming fines are owed. The absentee owner loses his sale and sues the association for “lost opportunity” and after 2 years in court wins a judgement for $400,000 against the association. But should the individual unit owners be responsible for the special assessment of $15,000 each to pay for the judgement? Shouldn’t these board members be directly responsible for their actions that seemed to border on some kind of bad faith? False invoices and ignoring court judgements do not necessarily fall under the areas of protected actions. Are they not in breach of their fiduciary responsibility even though there was no self-dealing? Don’t they have an obligation to be reasonable? And what are the penalties if they are not?

          What would you have done?

Opinions on landscaping are like noses. Everybody’s got one. And they usually wait to express them until after you’ve done your annual landscaping plans. Improving the landscaping is one of the most popular reasons for homeowners to run for the board. They know best and the board doesn’t have a clue. In most areas where there are divergent and active opinions, it’s important to involve as many homeowners as possible in the process. Not everybody will be satisfied, but those who need to have their say will have it before the fact. People need to be heard. In fact landscaping has so many diverse areas that having a committee for the annual program makes good sense. Here are some of the areas the committee can cover.

Annual plantings           
There is usually an overall plan to maintain the general greenery that includes trees and shrubs. Adding some seasonal color in strategic places can really make a difference.  It’s what everybody notices and having the committee address those needs and examine the costs involved will give several homeowners the chance to express their taste and opinion in a positive way.

Irrigation           
Water usage is a major issue in all parts of the country. There are some communities on the West Coast where water sprinkler run-off is an offense punishable by city fines. Water is expensive and irrigation can have a huge impact on the common area water bill.  There are so many advances in technology in this field that it requires real study. Your neighborhood techie will have a field day examining all the options. There are satellite systems, regular clock oriented systems, computer systems that evaluate the ground moisture, systems that can tell if it’s raining or not and just as many different kinds of sprinkler heads. Give this chore to a detail-oriented person or group to look into. It will pay big long-term rewards.

Landscaping Manual           
Most communities have a Maintenance Manual for their building and its mechanical systems. The Maintenance Manual catalogs all the working equipment, identifies manufacturers, warrantees in place, service record and service schedules. It guarantees continuity in maintenance in an environment where board members change every year and the community manager can change every three or four years. Who is going to remember all the details? It makes sense. It also makes sense to have a similar book for your landscaping.

The first step is to catalog all the shrubs and trees. Then have a professional nursery person estimate replacement cost. You’ll be astounded at what your landscaping is worth, and the community will pay much more attention to the asset. Then write down the maintenance schedule for each item. When to water? When to prune? When is eventual replacement expected? It’s really part of your Reserve Study.

Pest Control           
Dealing with all the little folk that occupy your green space is a separate responsibility. Understand pesticide use and the liabilities involved for you the board member. Are there children in the community? Are there pets? Are they likely to be effected by pesticides? A regular program of pest control that addresses termite prevention and other ongoing threats is an integral part of your landscaping program. 

As you can see, there are plenty of details that need examining. There are usually plenty of people willing to contribute their time and opinion in this most visible area. Take advantage of your neighbors’ time. The more people who are involved, the less likely you are to have a revolution when the program is completed.

Evaluating your investment in “curb appeal”

Aside from “location, location, location” there is only one other constant in determining the market value of your home: curb appeal. That first impression the prospective buyer gets when approaching sets the tone for everything that follows.  The old axiom about judging a book by its cover is easily translatable to real estate.  Even the brainiest of us human beings are simple sorts when it comes to emotional reactions. First impressions are strongest and cosmetics are critical.  Investing a few extra dollars in the appearance of your community will return more dollars to your pocket when it comes time to sell. A $10,000 landscaping facelift at the entry to your association could translate into a $5,000 increase in market value for each of the 100-1,000 homes.   

Landscaping is more than just shrubbery and well-maintained lawns. It includes signing, irrigation, fountains, brickwork, tree-care, and pest control.  For hi-rises, “landscaping” can translate to Interior Decorating of the front lobby and common areas..

Signing can have a major impact on a newcomer.  The quality and tastefulness of the signing is the first subliminal message a visitor gets. The clarity and effectiveness of directional signing on the grounds creates another subtle impression. Visitors who get lost and confused are not happy people.  They would be less likely to want to live in a community where coming home is a mystical maze.  Making sure those signs around the property are large enough to read and concise in what they say is the first thing. Making sure they are freshly painted and properly displayed is an essential part of your preventive maintenance program, or should be.

Your irrigation system is a modern convenience we take for granted and often neglect.  The convenience and effectiveness of a mechanically timed system designed to cover all the necessary green areas is an example of life in these here United States.  A broken sprinkler head can turn that pleasant idyll into a costly nightmare. Broken sprinkler heads can cause a myriad of problems.  The area it’s supposed to cover goes dry and brown. Result is ‘ugly’.  A broken sprinkler head or line can cause an enormous waste of water. If you’re still living in the ‘50s when the cost of water was insignificant, welcome to the 21st century where it has become an expensive natural resource. Take a look at your water bill then your sewer bill to get a feeling for the losses you can incur from waste.  Now where does all this wasted water go? No place good, that’s for sure. It can create muddy areas of over-watering, sinkholes that swallow up small cars and large household pets, or puddle around the foundation of the building where it penetrates basements and first floor units.  A broken irrigation system is insidious and costly. Nobody wants to buy a home with a water problem. Here again we have a preventive maintenance situation. A regular inspection of all sprinkler heads should be standard operating procedure. Monitoring the water bills each month will also tip you off to any hidden problems in the lines.

Trees are enormous assets that are often overlooked.  Try shopping around for a replacement for a mature tree. You’ll realize that your landscape inventory of trees might well rival the value of the buildings themselves. Most landscapers are not arborists. They might have a familiarity with most of the trees on your property, but you deserve the advise of a tree-care professional at least once every two years.  While a healthy tree is an attractive asset that adds value to your property, a diseased tree is an eyesore and a safety hazard. The strong winds that we all know are coming can tear off a heavy limb or uproot a sick tree. Where it lands can be problematic.  A semi-annual check-up by a licensed arborist is another important preventive maintenance item often ignored.

Fountains and attractive masonry or brickwork are hallmarks of prestige properties.  The addition of an attractive aerating fountain can be a big plus as long as it’s properly maintained.  Well-designed fencing creates eye-appeal.  Walkways that are now concrete or macadamized might take on a whole new look if they were brick or cobblestone.  It generally will cost nothing to have a company come out and make a proposal for what they might do to enhance the curb appeal of your property through some selective fountains or brickwork.

Pest control can be the hidden danger that surprises you with overnight problems.  In New England it was grubs and the moles that ate them. Beautifully maintained lawns were destroyed in a matter of weeks.  Tens of thousands of dollars were required to replace them. In Florida there was a plague of army worms that left unsightly holes and craters in your lawn. California seems to have a pest a month that keeps all the pest control professionals on their toes.  If you don’t have a regular pest control contractor to look after your preventive maintenance areas, you’re inviting disaster. Nothing can be more dramatically expensive to replace than your landscaping. Keeping it pest free is relatively inexpensive as long as you keep up with it. Termite infestations are not the only house-killers. Leave it to the pros and avoid what could and will be a disaster for those left unprotected.

Most of the items mentioned can be dealt with at a very low comparative cost. Preventive maintenance is the key in almost every area.  “Comparative” is the key word.  To get an immediate understanding, just ask what the going rate for replacement sod is and then do a quick calculation on just one small area of your grounds. You’ll be up in the thousands of dollars in no time.  The cost of mature trees is stunning. Keep what you’ve got and consider a regular annual investment in improved shrubbery, fencing, or other decorative plantings that add so much to the eye appeal and the resultant market value of your home.  The math is easy.

       Insurance offers one of the best examples of how a community association board can work most effectively with their community manager and the professionals involved. 

Keep in mind the two major points: 

#1 Insurance is way too complex for anyone other than an experienced insurance professional to fully understand.

#2 Your job as a board member is “governance” not management.

       There are many questions you should be asking that have answers we can all grasp. When you hear those answers, digest them amongst yourselves. Use your community manager as a mentor. The management professional admittedly has a bit more experience than you, but is still not a licensed insurance broker. Then you come to a decision that will allow your professional insurance vendor to implement a program that fulfills your fiduciary duty. 

Here are a few guidelines, kind of like a cast of characters.


Your Broker
      Your insurance agent is really not too much more than a salesperson that should understand the products being sold well enough to explain them to you. Some brokers/agents work for only one company. These are companies like State Farm. Others call themselves “independent”, and represent many insurance companies. There are pros and cons as to whether to work with a dedicated agent or an independent. I’ll let them make their own cases to you. Just know that there is a difference.
       Warning: Don’t ask four independent agents to bid your policy. They will all probably go to the same carriers and the same person sitting at the same desk at each one of the insurance companies will be reviewing your policy. For some reason, they don’t like this and some may just refuse to give you a quote because they feel you are spinning their wheels. This doesn’t mean you shouldn’t get competitive bids. Just make sure you let the competing agents know so they can avoid that kind of frustrating duplication.

The Underwriter 
       The underwriter is the insurance company. Names like Travellers, Prudential, State Farm, Allstate, Chubb, etc.  Their purpose in life is to collect your premiums and not payout claims. That’s how they make their money. They are not on your side. Don’t feel badly. It’s just business. The brokers are the ones who should explain what “exclusions” mean. If you need a priority of things to focus on, then put “exclusions” at the top of the list.

The Public Adjusters 
       The public adjusters are there for you when you have a claim. Regardless of what the brokers may imply, they are not. They are there for their employers, the insurance companies. They will offer you sympathy, empathy, emergency assistance, but very rarely cash. The public adjusters are the professionals who go to war with the insurance companies to get you paid every penny you deserve. They can be very clever.

The Insurance Adjuster
       This is the person who decides how much you will be paid as a settlement for your claim. This person’s job is to minimize the insurance company’s payout. They are human beings with heavy workloads. Smaller claims can often be settled on the telephone. If you and the property manager can provide complete documentation for your claim it will be to your benefit. Make it easy for the adjuster to reach a conclusion. As much as they need to put their employer first, they also want to close your file.

The Community Manager 
       Your manager should help you make sense out of everything and ask the right questions. Managers will frequently have an agent of choice. That’s because some agents are better communicators than others. One of your jobs after you buy your policies is to communicate what you’ve done to the rest of the community, and then work with them during the year when they sell their units or need to buy their own insurance. A broker who is unresponsive to these requests can make things very difficult. Your community manager is not an insurance professional. Please don’t pretend that he or she is. All they can do is help you ask the right questions, and then follow your orders.

       As long as you know who is on your team, and what you can expect from them, the rest is up to you. Read the articles we offer. Learn about the many different kinds of coverage and the changing laws in regard to your responsibility. Good luck.