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Community living: How board pays for roof is a business decision

How board pays for roof purely a business decision

Q: Our condominium does not have reserves and now we need a new roof. The special assessment will be more than $6,000 per unit. The president does not want to approve a special assessment but would like to increase the fees each month for the next year to fund the new roof. I did not think that we could contract for work if we did not have the funds in hand. Also, would it be realistic to ask a contractor to wait for 12 months for full payment?

A: A replacement roof is strictly a business transaction. The lack of reserves was also a business decision. How you pay is also a business decision made by the board as is if they can contract with a roofer to accept delayed payments. The question is: Have the members learned a lesson about no reserves? Reserves are critical and you now face payments in a bad financial cycle. I hope your members have been wise enough to keep their own reserve accounts because banks are not lending money as they once did.

Barring members from association meetings breeds distrust

Q: I live in an HOA. Our board this year appointed a financial oversight team to work on our budget. When I asked to attend the committee meeting, I was told that they were closed to residents. Do the directors and members have a right to attend these meetings?

A: It mystifies me when I hear that a member is denied the right to attend association meetings. There is no subject or matter that is so secret that it should not be open to the members in any meeting. When members are denied the right to attend meetings, it opens the door to confusion and that leads to disbelief or untrustworthy attitudes. No one person has all the knowledge and a committee does not have all the answers. Boards, committees and members must learn that they need each other and open discussions will provide better solutions.

When rules are in place but not enforced, home values suffer

Q: What would happen if our documents are not obeyed? Our association is about 20 years old and we have had boards that did not enforce the rules. Homes are now beginning to look shabby. We are not the pristine community we once were.

A: From a government point of view, an association has certain infrastructures that must be maintained. If the board and the association fail to maintain these common areas, the board may find themselves in front of a judge to defend against government orders. Your association's home values are dependent on compliance with deed restrictions and zoning codes. A failure of the board to correct a violation of the rules can cause a huge devaluation of homes in the community. Rules that are not enforced can be lost and unenforceable. Use them or lose them.

Changing community documents is time-consuming and expensive

Q: The documents of our present covenants were created by a builder and for the builder. There are certain areas in our community that are owned by the city, such as the streets and a park. We maintain and operate the other common areas. Since the covenants are old and were created for the developer, we would like to change them to reflect the members' needs and wants. We have asked the board to study the modification of the documents but they have failed to act on the request. The board rarely listens to the members' requests. How can we get them to change and revise these covenants?

A: I am rarely in favor of modifying or changing the documents. All members purchased their property under the rules and regulations and deed restrictions found in the documents. If the documents are modified, some owners will lose key amenities for the reason they purchased. It is very time-consuming and expensive. If you are not happy with the current board, then work to elect new directors. To change or modify documents, you must engage an attorney to draft and work with the board to develop the changes. The members must vote to approve the changes and then the documents must be recorded. Some documents require lenders — first mortgage holders — to approve changes and modifications. It is not only the members that vote to change the documents but maybe the lenders as well. Remember, when you change your documents you change the deed restrictions and can take away some rights of the owners or add obligations. If done incorrectly, it can prevent title transfers or lenders will not lend money for mortgages. Even worse, some lenders may demand payment of existing mortgages.

Richard White is a licensed community associations manager. Write to him at 6039 Cypress Gardens Blvd., No. 201, Winter Haven, FL 33884-4115. Please include your name and city.


Community living: How board pays for roof is a business decision 09/24/10 [Last modified: Friday, September 24, 2010 3:06pm]
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