Avoiding Fallout from Internal Storms
Experts weigh in on strategies for avoiding the most common mistakes made by HOA Boards.
By Selena Chavis
When condominium homeowner associations (HOA) think of storm readiness, most immediately think of strategies for hurricane preparedness and securing the physical and external elements of buildings and units. But, it’s the internal storms that can develop when mistakes are made, important areas are overlooked or decisions are not executed well that have far greater potential to leave disaster and chaos in their wake.
Experts offer tips on how to avoid some of the most common mistakes made by HOAs and how to avoid facing the aftermath of the destruction they can leave behind.
- Communicate, communicate, communicate. It’s typically the number one complaint heard by an association board—members feel like they are simply not getting enough communication or their voice is not heard. “One of the most important things to ensure that condo associations govern fairly is to make sure they have open lines of communication, “said Suzanne Blankenship, an attorney with Coastal Association Law Group in Pensacola who specializes in community association and condominium law. “The law errs on the side of openness.”Meetings should always be open, agendas should always be provided in advance, and members should have the ability to voice their concerns, she added.
Daniel Craven, an attorney based in Gulf Shores, noted that there are many avenues now available to HOAs to communicate with members, leaving no room for excuse. “I do think in this information age that boards are doing and can do a better job with communication.”
- Become well-versed on your governing documents. While the concept of following your own rules may seem like a “no brainer,” one of the pitfalls many HOAs make is moving forward without a clear understanding of what the rules are that govern their actions.“Something may seem like a good idea…if you were your own small business, certain steps and actions would seem easy to do,” Blankenship said, warning that taking action that would otherwise “make sense” is not always that easy within the legal parameters of a condo association. “If you are a condo association, you have to follow your own rules and the law. To follow your own instincts without making sure you are following your own documents and the law is a dangerous proposition for boards.”
Craven noted that he sees this problem occur more with small boards where the same people may have been entrenched for years. “They ignore their own condo documents because they have always done it ‘that way’” he pointed out. “Then someone new comes in with outside experience and realizes no one knows the rules or follows the rules. This creates problems.”
Because how you interpret the documents matters greatly from a legal perspective, Craven emphasized the importance of seeking legal counsel. “The declaration may say one thing, but the articles may say another,” he said. “Most people don’t know that if there is conflict the statute has the highest authority.”
- Follow legal guidelines for meetings. In the state of Florida, if a quorum of board members is present, then the gathering is classified as a meeting, said Blankenship.Often, board members will get together to “discuss” various topics, but if three or four members of a board represents a quorum, they need to be following the rules from a legal perspective, emphasized Blankenship. “You have to be careful about meeting just to discuss things,” she said. “If a gathering constitutes a meeting, it needs to be open to membership.”Blankenship pointed to problems that surfaced with a number of boards along the Gulf Coast in the aftermath of Hurricane Ivan. Associations felt they needed to act quickly, and often “meetings” were held and decisions made without getting input from the full membership.
- Be careful who you hire.When making the choice to hire staff or a vendor, sometimes the best option may seemingly come from within the membership or the board. Experts caution about moving in this direction, though. “I tell them ‘if you want money, then get off the board,’” Craven asserted. “That’s a major conflict of interest and creates distrust among the owners.”
- Seek out legal advice BEFORE a decision is made. While much more difficult for smaller associations that lack the resources of their larger counterparts, experts firmly express the importance of maintaining legal counsel relationships to ensure nothing goes awry. Craven said that associations end up with much bigger problems when decisions are made and legal counsel is sought after the fact. “It ends up being more costly in the end,” he said.
- Guard against the opportunity for theft. The goal of any association is to stay out of court, Craven said. That means that there should be openness to the way finances are handled, such that there is never any reason for suspicion.In her 15 years in the business, Blankenship said that she had not seen theft as a problem until the last few years—likely due to struggles in a difficult economy. “Associations should purchase a fidelity bond and tighten up security as to who is authorized to sign checks,” she suggested. “Any checks over a certain amount should have more than one signature.