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October 31, 2007

What if One Board Member, or a Minority, Want the Board to Follow the Law?

Yes, it is true, in some associations the boards will "manage and administer" for years without help, and then someone will come along with an understanding that running an association in a void, without any concept of what is legally required, is a dangerous proposition. That person, who may even run for the board, becomes the "conscience" of the board, and starts advocating for all kinds of changes. The other board members resist, and maybe even threaten to resign, because they do not want the change, they do not want to learn new things (can an old dog learn new tricks easily?), they do not want to spend more time on things that might usurp important family or work time, they do not want to become a "target" because they are not doing things right, or they just do not like the newly instituted "debate" that occurs at every meeting on how to do things. And the new person in the picture is tagged the "resident bitch" (woman) or "disgruntled person" or "troublemaker" (male or female). Even if the person trying to interject new processes is not immediately tagged with a bad rap, the board members who now realize maybe they do not know what they are doing start to lose sleep at night and have uncomfortable and mixed feelings about the newly proclaimed "expert". It is unsettling and understandable that the comfort level in "running the association" just deteriorated.

Who is right? What should a board do?

Here is what I believe may be the best course of action:

1. Let the "newbie" bring in information for better processes, review it, and if it comes from a credible source, utilize it to improve procedures.

2. Be pragmatic. If you find out you are doing or have done things wrong (now or in the past), put a plan in place to do them right the next time around, and analyze (with knowledgeable professional help if you find out you have done something potentially seriously wrong) how to get the practices revamped to do things right.

3. Assign board members to find information on specific topics. The web is prolific, but be careful about the resources you use. Make sure the person is really an expert in their field, and knows HOA law and practices, and be careful about really unbalanced information (that for which no source or resource is mentioned) or that which is one-sided (obviuously biased toward one group or another or negative in the extreme). And if it seems to good to be true, it probably is.

4. Understand some things:

** That change does not happen overnight ...
** That your association still needs you (volunteers are hard to come by) ...
** That good faith is a critical element in all things (no one is perfect) ...
** That bringing someone into the mix that is willing to help you set things right is a plus ...
** That there are some resources available, like my website and others ...
** That suing or being sued is very undesirable and there are usually other ways (at least 95% of the time, whether you believe it or not) short of litigation.

Think about it like this: There is a speed limit on all streets and highways in California. It's my guess that about 90% of the people try to push the envelope. I think that most push a little, rather than alot, and go up to 5 mph faster than the posted limit only. They are breaking the law, right? They are bad people, right? Wrong. Those going 100 mph are in the "bad people" or at least "ill motivated" group. There are those in between. So what is the punishment for exceeding the speed limit? I think it is probably well established (somewhere) that most who exceed the speed limit by 5 mph or less feel fairly confident they will not get a ticket, even if stopped. I would bet most think a warning is the most they would get. And that seems like a reasonable conclusion, unless they are going 5mph in a school zone where the mph is 15, or driving through an HOA complex where children are out and about. On Interstate 5, where the speed limit is 70 in places, 75 will probably not get you stopped and ticketed. Clearly though, if you are going double the speed limit or over 100 you deserve a ticket, and over 100 mph you probably deserve jail time.In between, it might be a slap on the wrist or low level penalty. You might get a "bye" if you are speeding someone to the hospital, but maybe not, as you are endangering the lives of others.

So how in the world you say does this apply to HOAs? First of all, because of a huge void in the information train in California, it is impossible for probably 90% or more of the boards to follow the law because they do not know it. The State of California has done little to remedy that. More than half of the HOAs in California are 25 units and under, and cannot even afford management. More than 80% are self-managed and 50 units or under. And even when the most illustrious find the laws, they cannot understand them. (I get alot of relieved feedback from visitors to my website at http://www.californiacondoguru.com).

And then there is the difficulty in the law exactly fitting the practicalities of an HOA. The new elections law is a perfect example - some of the most knowledgeable HOA attorneys in the state do not even agree on how to interpret and apply it.

And then there is the issue that the smaller associations lose some of the "community spirit" when it gets to be all about the laws and technical requirements for everything. For example, I was at an HOA meeting the other day where more than half of the owners were present. The Board had to bring up several expensive cost items, and talk about the possibility of a $5,000 to $10,000 per unit assessment. It was suggested that at the next meeting, they would come up with the plan, based on bids and prioritizing, to fund the expenses and take a vote - 100 percent of the people in the room were behind the board in this effort. So I, being the only HOA professional for miles, had to tell them that they could not vote like that - that they had to use a double envelope, secret ballot system, appoint an inspector of elections, distribute the ballot at least 30 days prior to counting, call another meeting for counting the ballots, that they needed good election rules that would cost them $500-$750, blah, blah, blah, .... Truly, I felt like the "big, bad wolf".

The moral of the story is:

**Try to stay under the speed limit (translation: learn what the laws are and follow them)
**If you push the limit, do it minimally, and if you get caught, have a good "story" up your sleeve as to why you did it (good faith is not always enough, but its a step in the right direction).
**Don't push the limit to the point that you endanger others (or here, the assets of the others)
**Improve your driving by developing good driving skills
**Don't wait until the situation has reached the level of disaster to do something about it (most HOAs in California are seriously underfunded. It is easier to save and pay than pay as you go when there are big expenses involved in maintaining infrastructure.)

And remember: No one is perfect, and for every problem or screwup .... there is a solution or legitimate "fix".

Posted by Beth Grimm at October 31, 2007 10:06 AM