Our New Utah HOA Law App Helps Associations Follow the Law

December 6, 2012

Up until a few years ago, it seems that a board could get away with not referencing the Utah statutes that apply to HOAs.  Especially in non-condo HOAs, there just weren’t a lot of issues addressed by Utah law, except the procedural and corporate issues set out in the Nonprofit Corporation Act.

But today, the landscape is different.  Many day to day issues, such as adoption and enforcement of rules, spending reserve money, records, providing payoffs, insurance, budgets, and so forth are now addressed in the law and their requirements are not optional.  They must be followed or an association risks expensive litigation and other disputes, especially in today’s  increasingly litigious climate for HOAs, where a technicality or trivial failure of association procedure can lead to a major and costly headache.

As part of Kimble Law’s commitment to provide real value to its clients and to help all community associations operate effectively and properly, we brings you a free app for your smartphone and tablet that provides quick reference to the laws that apply to your association.

Now the laws are available right in your pocket, no Internet connection required!  The statutes are formatted and indented for easier reading than the state’s own website, plus search and bookmark functions make it much easier and quicker to use.  Certain federal regulations applicable to HOAs, such as Fair Housing Act and satellite dish regulations are also included, together with summaries and explanations of those requirements.

Utah HOA Law App Now Available.  Access the Web App online, or download the app to your mobile device today for free!

Click below or search Utah HOA Law in the Apple App Store or on Google Play.

Utah HOA Law for iPhone, iPod:

Utah HOA Law for Android:
Android app on Google Play


Exposing Common Myths in HOA Operations

October 25, 2012

By Curtis G. Kimble.

We frequently hear about and see associations acting on myths that seem to persist despite being clearly incorrect. Here are some of those myths and misunderstandings and the truth behind them:

1. An association can deny a request of a members to view the records of the association.

False.  An association member is generally entitled to view and inspect the records of the association upon making a proper request (with limited exceptions, such as for confidential or privileged records).  An association must either maintain its records in written form or in another form capable of conversion into written form within a reasonable time.  Every association should have a records retention policy to ensure the association keeps records for the proper period of time, to provide for the proper disposal of records, and to assist in making and complying with records requests.

2.  An association can require pre-approval for, or prohibit, small satellite dishes installed on owners’ porches, balconies and patios.

False, except  an owner (or installer) cannot drill through an exterior wall to install the dish.

The FCC has adopted a rule applicable to “Over-the-Air-Reception Devices” (“OTARD”).  OTARD prohibits HOA restrictions that impair the installation, maintenance or use of small satellite dishes in areas that are within the exclusive use or control of the dish user (such as limited common area).

The rule prohibits restrictions as to such areas that:  (1) unreasonably delay or prevent installation, maintenance or use;  (2) unreasonably increase the cost of installation, maintenance or use; or (3) preclude reception of an acceptable quality signal.

The rule does not apply to common areas (such as the roofs and exterior walls of a condominium building).  It only applies to areas within the exclusive use or control of the dish user.  So, an association can certainly restrict or prohibit satellite dishes from being installed on common area roofs and walls.  Additionally, the association can regulate dishes on limited common area to some degree.

Contact us for assistance adopting a satellite dish and antenna installation policy if you don’t already have one in place.

3. A director must abstain from voting on matters that the director has a conflict of interest in.

False.  As long as the underlying transaction being voted on is fair to the association, a director can have a conflict and still vote.  (Utah Code Sec. 16-6a-825).  However, it is highly discouraged that the director vote for several reasons, not the least of which is the difficulty in establishing that a transaction is fair and defining exactly what fair is.  If the conflicted director simply abstains from voting after fully disclosing to the board the material facts as to the conflicting interest transaction, then most conflict of interest problems will be cured.

4.  The association president has authority to make decisions and take actions on behalf of the association.

False, except to the extent the president is authorized by the board or by the bylaws to make decisions and take actions.  All powers of an association must be exercised by or under the authority of the the board and the business and affairs of the association must be managed under the direction of the board.  (Utah Code Sec. 16-6a-801).  The president has no independent authority to exercise the powers of the association or manage the business and affairs of the association.

The bylaws may authorize a person to exercise some or all of the powers that would otherwise be exercised by the board.  (Utah Code Sec. 16-6a-801).  And, the board can delegate certain authority of the board to a person (including the president).  (Utah Code Sec. 16-6a-819).  But, otherwise, the president and any other officer have no more authority than any member of the association.  It’s very important a board clearly authorize a president to perform the actions and make the decisions they expect him or her to carry out.  This authorization should be in a board resolution or reflected in the minutes of a board meeting.

5.  A board can adopt a rule about any issue they deem necessary.

False.  The board must have authority to restrict or regulate the specific subject of the rule.  This authority usually comes from the law or from the CC&Rs.  A general provision in the CC&Rs granting the right to adopt rules does not give a board the unfettered authority to restrict rights of individual owners, especially as to units or lots.  On the other hand, a board will usually have authority to adopt reasonable rules to govern use of the common property, to govern the use of individually owned property to protect the common property, and to protect the members’ use and enjoyment of their own property and the common property from interference caused by use of other individually owned lots or units.

An association should have a qualified attorney review a proposed rule before it is adopted, and have the attorney review existing rules periodically to ensure the rules are authorized under the governing documents and the law and that they don’t open the association to discrimination claims or present other problems.

6. The law regarding rental restrictions in the Condo Act applies to all condo projects, or the  law regarding rental restrictions in the Community Association Act applies to all community associations.

False.   Those laws don’t apply to the vast majority of associations out there.  Each of those laws only apply to associations where the original declaration is recorded after May 12, 2009.  So, if the community is older than 2009 (if the original CC&Rs were recorded before May 12, 2009), the rental restriction requirements in those two statutes do not apply to that association.

UPDATE 2015:  The two referenced laws (Utah Code 57-8-10.1 for condos, and 57-8a-209 for non-condos) apply to all HOAs who, on or after May 12, 2015, (1) adopt a rental restriction or prohibition, or (2) amend an existing rental restriction or prohibition.

7. The Utah reserve analysis law requires an association to have reserves.

False.  There is no state or federal law requiring a Utah homeowners association to have a reserve fund.  In fact, the law specifically requires an association to provide an opportunity for homeowners to vote on whether to fund a reserve fund.  Of course, many lenders, as well as FHA, require reserves.

Your Single Family Definition Could Land You in Hot Water

October 3, 2012

By Curtis G. Kimble.

The U.S. Department of Housing and Urban Development (HUD) announced recently that it is charging a Florida homeowners association (HOA) and its management company with violating the Fair Housing Act by telling a family of eight that they had too many people living in their townhouse and threatening to evict them if they didn’t reduce the number of occupants based on an occupancy policy that permitted only six people to live in a four-bedroom home.

The federal Fair Housing Act makes it unlawful to deny housing or impose different rental terms and conditions based on disability, race, national origin, color, religion, sex, or familial status. Overly restrictive occupancy policies may unlawfully discriminate against families with children by preventing them from living in a home.

“Homeowners associations and management companies have an obligation to ensure that their occupancy standards do not violate the Fair Housing Act,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD is committed to taking action against anyone who unlawfully denies housing to families because of the number of children in the family.”

If a federal judge finds discrimination did occur, the homeowners association and the management company could face up to $16,000 in fines plus damages.

This issue frequently arises as a result of the enforcement by an association of a requirement in the CC&Rs that a unit or lot be occupied by a “single family.”  If the definition of “single family” is too restrictive or narrow, the association could be faced with a discrimination claim and hefty fines from HUD or from the Utah Anti-discrimination and Labor Division.

HUD will look at and often defer to a local ordinance for permissible restriction on occupancy.  In the case above, the county permits up to eleven occupants in the townhome.  So, the Association was not able to point to that ordinance as a defense.  HUD also looks at the size of the unit and number of bedrooms to determine if an occupancy restriction is discriminatory.  In this case, the Association only allowed one and a half people per bedroom.  At least two people per bedroom should be allowed generally (although other factors are relevant, as well).

Pay to Play, Literally?

In a separate matter, HUD charged a Massachusetts condominium association and property management company with discriminating against families with children.  HUD accused them of unlawfully charging fees to parents for allowing their children to play in the common area.

The families were informed by the Association that they were being fined $10 a day for two days for children playing in the common area, $10 a day for two days for allegedly causing damage, $25 to reimburse for the damage and $437.50 for attorney fees. Prior to this, the families had not received any fines or warning, and when an adult resident was having a party on the common grounds, no fine was issued.

It’s illegal to impose different rules and restrictions on families with children, unless they are directly related to issues of safety or health, but even then, caution must be exercised.  Always consult a qualified attorney when adopting or enforcing restrictions that may trigger a discrimination issue.

FHA Has Revised its Requirements for Project Certification

September 13, 2012

By Curtis G. Kimble.

The Federal Housing Administration (FHA) today released a revision to its condominium project certification requirements.  There are a few changes to certain requirements that have been preventing or hindering associations that I’ve helped from obtaining FHA certification.

One change will certainly help regarding delinquencies.  Now, no more than 15 percent of all units may be more than 60 days delinquent.  Previously, the requirements prohibited 15 percent of the units from being 30 days delinquent, which was far too strict.  The change to 60 days is much more realistic and logical.

The fidelity insurance requirements have been adjusted slightly for professionally managed associations and may make it a little easier to comply with these requirements.

Finally, the requirement that no more than 10% of the units could be owned by one person or entity has caused difficulty for many associations.  That requirement has been changed for established projects.  A single person or entity may now own up to 50% of the total units as long as 50% of the units in the project are owner-occupied, principal residence units.

So, the changes provide some limited and welcome relief, but not much, and they definitely don’t provide the broader changes or relief many associations were hoping for.

Remember, certification expires every two years and you’ll want to plan ahead a couple of months at least to arrange for applying for re-certification.  Contact us to help your condominium association obtain certification or re-certification of your project.  While it can be challenging to obtain certification, it’s certainly possible for just about every association, and the benefits are well worth it.

A Tip for Free Association Governance Resources

July 13, 2012

By Curtis G. Kimble.

For those that might not be aware, Community Associations Institute (CAI) is a national organization that provides information and education to community associations and the professionals who support them.  Their mission is “to inspire professionalism, effective leadership and responsible citizenship.”  CAI offers a variety of resources to HOAs, including boards, property managers, and people who own, rent or are considering a home in a community association.

CAI has recently published a document called From Good to Great.  It includes the full text from three CAI initiatives—Rights and Responsibilities for Better Communities, Community Association Governance Guidelines and the Model Code of Ethics for Community Association Board Members.   Those who want to see industry standards on homeowner rights and responsibilities, community association governance principles and ethics for association board members can now find it all in this free brochure called From Good to Great.  Click here to see it.

Also, visit this link  for information that can help you better understand the nature, benefits and obligations of living in an association and for additional links to free information and resources from government agencies and nonprofit organizations.  There’s a particularly helpful tip sheet on “Preventing Fraud and Embezzlement” in an association available at that site, as well.

Don’t Forget to Conduct a Reserve Analysis by July 1!

June 12, 2012

By Curtis G. Kimble.

The deadline for all HOA and condominium boards in Utah to conduct a “reserve analysis” is fast approaching.  By July 1, every  board (except developer-controlled boards) needs to obtain or perform a reserve analysis if no reserve analysis has been conducted since March 1, 2008.

A reserve analysis is an analysis to determine:

(a)     the need for a reserve fund to accumulate money to cover the cost of repairing, replacing, and restoring common areas and facilities that have a useful life of three years or more, but excluding any cost that can reasonably be funded from the general budget or other funds of the association; and

(b)     the appropriate amount of any reserve fund.

So, each board must:

  1. determine which improvements have a useful life of 3 years or more, then
  2. determine what the cost is for maintaining those improvements over the next several years, and then
  3. determine what they think the appropriate amount of the reserve fund should be.

There are no requirements in the law as to who has to perform the reserve analysis.  So, a board can perform the analysis or it can engage a professional to perform it.  There are several competent reserve study professionals serving the state of Utah.  There are also websites that will create your reserve study for you based on your input, and some will allow users to run “what if” scenarios with their components and funding plans.  A simple Google search will lead to those sites (I cannot vouch for the quality or value of such online services since I’ve never personally used them or analyzed their results).

There are many options when it comes to fulfilling the requirements of this law.  Each association should find the option that works best for them.

Don’t forget the law also requires each board to, annually, present the reserve study to the homeowners at the annual homeowner meeting or at a special meeting of the homeowners, and provide an opportunity for homeowners to discuss reserves and to vote on whether to fund a reserve fund and, if so, how to fund it and in what amount.  The association must also prepare and keep minutes of the meeting and indicate in the minutes any decision relating to funding a reserve fund.

Can an HOA Board Draft their Own CC&Rs?

June 1, 2012

By Curtis G. Kimble.

I am routinely asked if I will review amended governing documents (CC&Rs, bylaws, etc.) which the board, their manager or another person has drafted in order to save money over having an HOA attorney draft them.

While this method can sometimes save some money if the association is just looking for a legal review to determine if any of the provisions are contrary to the law or fatally ambiguous or deficient, unfortunately, the new documents typically just exchange an old set of problems for a new set of problems and can even leave the association with worse documents than the original ones.

What about if a board drafts the documents and a qualified attorney reviews and revises them as necessary?  Unfortunately, that doesn’t work well either for several reasons.

1.  This approach is almost never more cost-effective.  It usually takes more work than if the attorney simply drafted the documents from scratch.   All of the drafting done by the board (or other person), down to even the individual words and punctuation (because certain punctuation can have a big effect on the meaning of a provision), not only has to be carefully and painstakingly reviewed to determine if the language would be interpreted in court in the way intended, to ensure that it complies with applicable laws and regulations, and adequately establishes the legal foundation of the development and the association, but also has to be analyzed together with the rest of the document and the other governing documents to ensure they are all consistent.  Then, revisions, comments and explanations have to be drafted and then conveyed to the board.  All of that is extraordinarily time consuming, and that’s often just the beginning of the revision process.

2.  This approach is never more efficient.  It results in the attorney spending the vast majority of time analyzing language written by someone else to determine what its effects will be in different circumstances, how it will be interpreted by a court, and whether it adequately accomplishes its goal.  One of the biggest problems with that is the attorney does not necessarily know what the underlying goal or intent is.  If the language is unclear at all, the attorney either must seek clarification from the board or must guess from the language itself, and then revise it to more clearly state what the attorney thinks was intended.

This would not be a big deal with a one page document.  But an association’s CC&Rs and bylaws are long, complex documents – and necessarily so.  If there is one thing I’ve learned, it’s that it is better to address potential questions and issues in the documents now and have those documents be a few pages longer, than for the association to be dragged into a long, drawn-out lawsuit over an issue that could have been addressed in the documents but wasn’t.

3.  Things get left out.  Because of the inefficiencies and constraints of this process, important remedies, clarifications, standards, and other language will inevitably be left out that may have otherwise been included if the attorney drafted the documents.  If the board drafts the documents, the attorney assumes the board knew what it wanted and what it didn’t want, and therefore that the documents include things and don’t include things on purpose.

4.  I can say with certainty that the inevitable result with this approach is that much of the language is left by the attorney “as is,” or is revised just enough to be satisfactory, rather than improved to an ideal level, because the budget of the association simply doesn’t allow for the attorney to revise every word and comma necessary in the 50 to 80 page document, or because of the other inefficiencies and constraints of this process.

As a side note, the CC&Rs and bylaws are together a 50 to 80 page document regardless of whether or not they are actually 50 to 80 pages (if they are shorter, they may be inadequate).  In other words, 50 to 80 pages are necessary in virtually any HOA to properly institute all of the provisions (rights, obligations, remedies, procedures, etc.) that should be in an association’s governing documents in order to adequately establish necessary obligations and rights, address common issues of dispute, include policy and procedures that help the association comply with current laws and regulations (both state and federal), and make clear the association’s ability and authority to operate and govern balanced against the rights of its members, all based on current case law, statutes, and local and national best practices.

As if board members and managers don’t have enough liability to worry about, the unauthorized practice of law also exposes them to potential liability.  Drafting a complex legal document defining, granting and restricting the legal rights and obligations of people other than the person drafting it, and which is recorded against the real property of people other than the person drafting it, constitutes the practice of law. As all states do, Utah specifically prohibits the practice of law without a license.

“To leave these issues up to laypersons that aren’t aware of or up to date on the many sources and intricacies of these issues should be unthinkable to any conscientious board.”

But not only that, CC&Rs are the source of broad, complicated contractual rights and obligations that involve property rights and obligations that are tied to the land directly and can affect the ability of owners to sell and finance the purchase of the properties within the association. To leave these issues up to laypersons that aren’t aware of or up to date on the many sources and intricacies of these issues should be unthinkable to any conscientious board. The first goal of drafting any legal document is to avoid expensive court battles over the interpretation and meaning of the terms of the document. Someone who has defended and enforced governing documents in court is able to draft documents effectively by knowing how that document will be interpreted and enforced by the courts.

In an illustration of how intricate and complex contract interpretation can be, the Iowa Supreme Court examined whether a $200,000 special assessment for garage repairs was void because the board failed to obtain preapproval of the repairs from two-thirds of the members in Oberbillig v. West Grand Towers Condominium Association.  The following phrase was in the association’s CC&Rs: “The board shall not approve any expenditure in excess of $25,000, unless required for emergency repair, protection or operation of the Common Elements without the prior approval of two-thirds of the total ownership of the Common Elements.”

Does the word “emergency” refer to all three words “repair, protection or operation” or does it just refer to and modify the word “repair”?  In other words, does an expenditure in excess of $25,000 for the protection or operation (in a non-emergency) of the Common Elements require a two-thirds vote of the members?  The court applied a legal doctrine of interpretation called the doctrine of the last preceding antecedent to rule that no vote of the members was necessary to levy a $200,000 special assessment for the protection or operation of common elements in a non-emergency.

I’ll spare you the boredom of an explanation of the doctrine of the last preceding antecedent.  Suffice it to say, legal documents, especially documents that govern the rights and obligations of dozens or hundreds of homeowners now and for years into the future, should not be drafted by a layperson that is unaware of how seemingly insignificant words and punctuation will affect a court’s interpretation of the document.

Additionally, an HOA attorney who routinely assists boards and property managers with the many issues that face associations on a daily basis knows what problems can and should be addressed in governing documents and how best to address them to minimize problems in the future.  Importantly, they’ll also know whether something properly belongs in the CC&Rs rather than in the rules and vice versa.  They know what works in other associations and what doesn’t.  They know what can lead to hate and discontent and they know what helps promote balance and harmony.

This isn’t to say documents shouldn’t be carefully tailored to an individual community. They definitely should be.  That is why form documents or documents taken straight from another community are never acceptable.

Every board should be careful to recognize the importance of their governing documents.  They should work closely with their attorney to ensure the documents match the needs and desires of the membership.  The attorney will need the input and direction of the board, but the board and manager should stay away from the drafting.

Using Social Media in Homeowner Associations

May 11, 2012

By Curtis G. Kimble.

I attended a great event today held by the Utah Chapter of CAI where we had a panel of HOA professionals discuss and respond to questions about the use of social media in homeowner associations.  I moderated the discussion and offered a legal perspective.

To me, social media is anything technology based that creates a community of some form and allows for a degree of interactive communication.  Social networking sites such as Facebook and Twitter are obviously social media, but any form of instant, electronic communication, such as email or a website, has benefits and risks that are worthy of consideration by an HOA.

It became quite clear in the discussion today that utilizing various forms of social media, or even just one form, can be an extremely valuable and effective tool for communicating and conveying information, encouraging owner involvement, and building community.  It can be much more effective, cheaper and easier than traditional methods such as newsletters, sporadic word of mouth and hard copy mailings.

An open line of communication with owners is arguably the single greatest factor in minimizing disputes and creating satisfaction and harmony within a community.  The goal of any board should be to reach as many owners as possible.  To do that, an association should consider any widely used method of communication.  Social networking sites can be great for quickly and easily sending out bits of information, meeting reminders, notice of community events and success stories.  Nothing beats the convenience of having the association’s governing documents right there on the association website or of submitting and receiving requests for maintenance or complaints through an electronic form on the website.

However, it’s critical that social media is created, published and updated correctly, carefully and reasonably diligently.  For instance, if governing documents are posted online, care should be taken by the association to ensure they are always up to date and that they are accurate and complete copies.

Social media can even be an effective way for members of an association to engage in conversation.  Facebook and other platforms allow owners to post comments, questions, pictures, and other content.   But, this is also where the legal issues exponentially increase.  Associations that maintain social networking sites are subject to the same liability risks as any other company or person that distributes information.  Risks include potential liability for claims of libel or defamation, copyright infringement (for reproducing content without permission), plagiarism, interference with contractual relations, emotional distress, and invasion of privacy, among others.

Federal law offers some protection from these claims where the content was posted by third parties, but if such law applies, it will only be a defense for the association and won’t prevent the lawsuit from being filed and having to be defended by the association in the first place.  It’s important to use a disclaimer on the site, use privacy controls, and review comments before they are posted.

A good social media policy is essential and should, at a minimum: define and limit who can access or post on the site; prohibit false, offensive, disparaging or potentially defamatory posts or publication of any confidential or private information; establish the board’s right to remove posts or content that violates the policy and the right to revoke access to users who violate the policy; and establish appropriate disclaimers (the views expressed do not represent the official position of the association, and so forth).  In the end, the risks should be able to be mitigated by the association, depending on their approach.

Social media isn’t a mere trend or something will go away if you ignore it.  Rather, if you ignore it, the risk is that you will be ignored as younger generations and an increasingly faster paced world demand the convenience and benefits of social media as a primary form of communication.  So, as an effective and valuable tool, every association should consider using social media and determine if it could provide a benefit to them, but it must be used correctly and with care.

Cockroaches, Fires and Grossly Offensive Odors – Hoarding Affects Everyone in a Condominium

April 25, 2012

By Curtis G. Kimble.

It seems to be coming up more and more often – hoarding and the problems it causes in condominiums and other attached housing.  One condominium association I recently spoke with has a unit owner whose hoarding is preventing the effective treatment of a major cockroach problem in the building, which in turn is preventing an adjacent unit owner from being able to rent or sell her unit and is causing others to have to treat and spray for cockroaches at least weekly.

A court of appeals in Tennessee recently approved a board’s request to force the sale of a unit and ruled that the unit owner’s hoarding, and the nuisance and health threat it created, violated the association’s CC&Rs  (4215 Harding Road Homeowners Association v. Harris).  The court unanimously agreed that a forced sale of the unit was not only the appropriate remedy, but “the only remedy” possible since the owner refused to correct the problem and because of the impact on the other residents of the “grossly offensive odors” and other problems the hoarding created.

Before filing the suit, the association had a professional bio-hazard cleanup company that cleans crime scenes and gross filth and hoarding situations come in and spend nine hours one day and fifteen hours the next cleaning the unit.   Multiple odor bombs had to be set off and three commercial dumpsters were filled with massive amounts of filthy debris, molding paper products and rotting food.  Bleach had to be used to clean the mold off the walls and windows and then the unit was repainted.  The property manager personally did thirty-eight loads of laundry for the unit owner.   Other residents pitched in, some paid for the unit owner to stay in a hotel and others brought her meals.

But that solution only lasted a few months before the residents that shared the unit owner’s HVAC air stack were again faced with nauseating, unbearable odors.  This time, the unit owner refused to allow the association to help remedy the problem, despite repeated attempts.

That particular association had a very unique provision  in their governing documents which specifically authorized the association to sell a unit as a remedy for persistent and serious violations of the CC&Rs.  So, this remedy won’t be available to most associations in Utah, but other remedies are available to an association or to an affected unit owner (almost all governing documents prohibit nuisances, for instance).  The Tennessee case highlights the importance of the fact that no single unit owner can be allowed to affect the safety, quality of life and enjoyment of property of the remaining residents.  As discussed in this blog post, hoarding fueled a recent condo fire in Arizona, as well as several others.

As with any enforcement issue, the board, or an affected owner, should start with the least threatening and most amiable methods possible.  In-person conversations, phone calls and letters should courteously explain the problem and ask for compliance, and should only escalate from there if necessary.  The unit owner needs to understand the broad consequences and effect of the problem, including health and safety concerns.  At least two or three letters should be sent clearly identifying the issue and what is needed to cure the problem so there is a paper trail documenting your efforts.

If those efforts are unsuccessful, it’s important to obtain evidence of the problem.  Subjective, general assertions from a neighbor or witness won’t count for much.  It’s important to have specific details described in writing.  And photographs are always best.  Keep a detailed record of everything that transpires relating to the unit and the problem.  If the health department or fire department will come out and issue citations (I’m not necessarily saying they will), that will help a great deal in documenting the problem for a court action.

It’s important to remember that hoarding reflects an illness that needs to be treated with sensitivity.  But, it’s also important to remember that the actions of one person can’t be permitted to destroy the right of every resident to use and enjoy his or her unit.  Use common sense and consult your association attorney as necessary.

Taking Advantage of Committees in Associations

April 5, 2012

By Curtis G. Kimble.

One of the most powerful but overlooked tools at the disposal of an association board is that of committees.

HOA boards can face a number of issues and be pulled in many directions that would tax any full time, paid board.  But HOA boards are volunteer and are not full time.  To deal with this and to avoid board member burnout, many associations elect a large board – 5, 7 or even 9 members.  However, having a large board presents many difficulties.  It is often difficult to find enough willing and able people to fill a 3 or 5 person board, and larger boards are that much more difficult to fill.  Additionally, it is no small task to schedule and gather together a large board.

Committees are an invaluable tool in HOAs where volunteers sufficiently capable of dedicating the time, attention and skills required to serve on the board tend to be hard to come by.  It is often effective for an association to have a small board and then any number of committees in order to extend the board’s reach, ability and effectiveness.  This allows the benefits of a smaller board without necessarily sacrificing the distribution of workload that comes with a bigger board.  It also helps reduce board member burnout.

For purposes of this discussion, I’ll break committees into two types: committees of the board, and regular committees.

Committees of the Board.  A committee of the board is a small subset of the board and is composed solely of board members.  It has the full power of the board to make decisions and take actions to the extent specified by the board or the governing documents (CC&Rs, bylaws, etc.).  In this way, a committee of the board is like an officer of the association, except instead of just one person, it’s made up of two or more people, all of which must be board members.

While a committee of the board has the power and authority of the full board as to issues within its purview, it is also subject to the same requirements as the board regarding meetings, action without meeting, notice, waiver of notice, and quorum and voting requirements.

Regular Committees.  Regular committees do not have to be composed of board members.  They are established by the governing documents or by the board and they are composed of the members established by the board or the governing documents.  They can be temporary, ad hoc committees, or they can be more permanent, standing committees.

Regular committees do not have the power of the board to make decisions or take actions, i.e., they may not exercise any power or authority reserved to the board by the law or the governing documents.  At the same time, regular committees aren’t bound by the same requirements as the board regarding meetings, action without meeting, notice, waiver of notice, and quorum and voting requirements.  The board or the governing documents establish any rules of procedure for the committee, if desired.  Regular committees provide the advice, service, and assistance to the association and carry out the duties and responsibilities for the association specified in the governing documents or by the board.

With any committee, it is important that, through a board resolution, the board clearly specify the committee’s name, purpose, responsibilities, term, number of members, and designation of the members of the committee, unless those items are spelled out in the CC&Rs or bylaws (which is common for an architectural control committee).  When appropriate, usually with ad hoc committees, there should be a specific termination point by which the committee should have met its objectives.

Examples of committees include, but are not limited to, maintenance committee, nominating (or elections) committee, architectural control committee, budget/finance committee, communications committee, rules enforcement committee, newsletter committee, and social committee.

Committees have many purposes and benefits.  They can prepare members to serve on the board, they let prior board members remain active as association volunteers, they allow members to be active and involved in association issues and operations, and they allow the board to take advantage of the wide range of talents and expertise available via the members of the association.  They can help the board by gathering information and making recommendations.  Finally, committees broaden the board’s knowledge and awareness of the “pulse” of the community, that is, the homeowners’ opinions, attitudes and desires for the direction of the community.

If used effectively, committees can greatly enhance the operation and governance of any homeowners association.

Some Topical Updates on HOA Issues

March 16, 2012

By Curtis G. Kimble.

On our Facebook page, we share information, articles, links, and developments in condo and HOA issues, in addition to our more detailed posts on this blog.  For those of you who don’t subscribe to our Facebook page, I thought I’d pass on some recent links and news we’ve shared recently:

  • Condo Association Settles Lawsuit with Veteran over Service Dog  By Erin Alberty | The Salt Lake Tribune

“A Park City condo association will pay $20,000 to a disabled veteran, ending a legal conflict over whether the man should be forced to pay fees to keep a service dog that helps him cope with depression and anxiety.

The U.S. Justice Department sued the Fox Point at Redstone condo association and its management company in November, alleging that Thomas Burton, a combat veteran of the first Gulf War, was forced to move out of his rented condo because the association would not waive its pet fees and insurance requirements for Burton’s service dog . . .”   Read more here

  • Who Prepares Your Association’s Tax Return?   by Lisa Magill, Florida Condo and HOA Law Blog

“A Las Vegas HOA is currently fighting with the IRS over the question of whether $2 million held in the HOA’s savings account is subject to income tax at the rate of 30%.

Associations are generally organized as not-for-profit corporations (some older associations are not incorporated) and therefore must file tax returns like other not-for-profit corporations. Associations are not entitled to tax exempt status like charitable organizations. To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in the Code. To be tax exempt under IRC 501(c)(4), a homeowners’ association must operate for the benefit of the general public, i.e., it must provide a community benefit – not a benefit to the owners or residents . . .”  Read more here

  • Although written in Virginia, the same principles apply in Utah:  Is It Time for Your Community Association to Audit Its Governing Documents?  By Susan Bradford Tarley.

“Many communities were established 20-40 years ago with governing documents that worked well for the developer, and for the most part the community association. However, many of these governing documents are outdated. Virginia and federal laws pertaining to community associations have changed substantially. If your board of directors has not engaged in an audit of your communities governing documents in the past 5-7 years, it should.

When should documents be amended?  Although there are many reasons for amending documents, these 7 reasons are the most common: . . .”   Read more here

If you would like to see more information, links and updates on condo and HOA issues in addition to the posts on this blog, be sure to like us on Facebook and you’ll see our Facebook posts in your Facebook feed.  A direct link is on the right of this page, or our page can be found here Richards, Kimble & Winn on Facebook

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