Don’t cut off utilities for delinquent assessments
The reasoning goes, “We’ll see just how hard up they are – we’ll cut off their water and then see how soon they pay.” However, even if this is allowed under your governing documents, you are taking on significant risk by doing this. What if there is a fire, and the owner can then point to the lack of water as the reason the building burned down? You might imagine many other scenarios where utilities are needed to address emergencies. Instead, review your governing documents to see if you have the ability to suspend rights to use common area amenities like pools or clubhouses when payments are delinquent. If you don’t have that ability, work with your community association attorney to prepare a proposed amendment.
Don’t discriminate against children
Sometimes, we will see good intentions go awry when rules meant to protect children actually end up discriminating against them. For example, we have seen rules along the lines of “Children shall not play in the courtyard past 8:00 p.m.” While it may be true that you have to address a problem in your courtyard, specifically targeting children in this way would be seen as discriminatory under the federal Fair Housing Act and perhaps various state statutes. You need to ensure that your rules are written in a way so as to apply to everyone equally.
Don’t fine without due process
A trailer is parked in a driveway, and two days later, a $50 fine notice is sent for violation of the governing documents. Cha-ching! Boy, this enforcement stuff is easy, right? Actually, you should not be demanding payment of fines until the owner has had a chance to appear at a hearing before the board, ideally pursuant to reasonable provisions set forth in an enforcement and fine policy prepared by the association’s attorney. Otherwise, the owner may be able to successfully challenge the fine in court by showing that the association violated their Constitutional due process rights, state statutes, and possibly the governing documents as well.
Don’t allow conflicts of interest
For as long as anyone can remember, the President’s nephew’s business has been doing the landscaping. They actually charge less than anyone else, but there are regular issues with the quality of service. The President should not participate in deliberations or decisions about whether to hire a new landscaping company. Also, the Treasurer, who happens to be a CPA, should not be allowed to be in charge of the official audit of the association’s financial records. Don’t create conflicts of interest in the name of saving a little money.
Don’t fail to act because “the money isn’t there.”
Actually, the money is there, but usually the board is reluctant to raise regular assessments or propose an additional assessment because it may anger people, and they think they will be recalled or lose the next election, or be otherwise ostracized by their neighbors and friends. Remember your fiduciary duty to the association, which includes supporting efforts to pass additional assessments from time to time, in order to act in the best interests of the association. You have to be willing to communicate the association’s need for additional money to the members clearly and consistently as those needs arise. Work to gain the members’ understanding through multiple avenues – use your website or email newsletter (or take the opportunity to begin one), hold informational meetings where questions can be asked, or write letters directly to the membership, perhaps with assistance from your association’s manager or attorney. Don’t forget to emphasize that you are in the same boat and have to pay the additional assessment, too.
The many boards of directors of associations that we represent have been wise to follow the above advice with respect to governing their associations, but the above mistakes are some of the most common that we come across. If none of the above applies to your board, keep up the good work! Otherwise, it may be time to consult with your experienced community association attorney about how to improve your governance of the association for everyone’s benefit.
This article first appeared in Community Association News, published by The Michigan Chapter of Community Associations Institute.