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DOES YOUR ASSOCIATION NEED A LEGAL CHECK-UP? |
by: Jeffrey A. GoldbergEvery one knows that a medical check-up can identify and prevent a problem from developing into a major illness. But, did you know that a legal "check-up" can also be a good idea in order to prevent a small matter from developing into a major and expensive legal problem? Condominium and homeowners' associations suffer from common legal problems. If your association has any of the following 12 common "symptoms" it might be a good idea to get a check-up:
Look at the Association's budgets and financial statements for the past few years. Is the Association spending an inordinate amount on attorney's fees? If so, your Association is probably going from legal crisis to legal crisis. It may be time to take a look and consider why.
Many associations mistakenly neglect their corporate status, but this can have negative consequences. Do you know the identity of your Association's registered agent? Your Association may be missing out on very important legal notices because you don't have a proper registered agent. It is often a good idea to have your attorney serve as the registered agent.
Does your Association have a complete set of its governing documents? Are your copies the official certified (or recorded) copies? Do you have a Declaration, Plat, Bylaws, Articles of Incorporation and all amendments? Are you sure you have been using the correct documents or are the ones you use different from the official ones? Do you have an up-to-date set of rules and regulations?
Has anyone taken a look to see whether the requirements stated in your governing documents or in the applicable statutes are being followed? If you are not following some of the provisions, should you consider whether your governing documents need to be changed? Are all of the owners complying with the requirements, or should the Association consider taking action to enforce the Declaration?
Does your Association hold a regular annual meeting of its members? How do you know that the persons voting really are owners entitled to vote? Do you have procedures in place to track your membership? If you use a secret ballot, do you have rules and regulations in place to verify the results of the election?
Does your Board hold regular Board meetings at the required number of times per year? Does your Board improperly take action without a meeting? Does the Board keep an adequate record of its deliberations and decisions? Does the Board hold any closed meetings? If so, are you aware of any requirements of your governing documents or applicable statutes regarding open meetings? Do you send proper notice of the board meetings?
Do you know exactly who has access to your Association's operating funds and reserve funds? Are there adequate restrictions and accountability procedures to limit access and prevent unauthorized use of funds? Does the Association have an accountant and does it conduct audits (and not merely compilations)? Does the Association comply with budgeting and spending limitation requirements? Does the Association have an adequate budget sufficient to meet its expenses?
Is your Association current with its taxes: employment taxes, real estate taxes, and state and federal income taxes? Have you checked to see whether the assessed valuation of any real estate could be reduced in order to eliminate any property tax liability?
Has the Association adopted a policy for the collection of delinquent assessments, including: late charges, procedures for notifying delinquent owners and turning them over to an attorney for collection, and procedures for payment plans and monitoring of payment plans?
What kinds of discretionary business decisions does the Board make, and has it adopted uniform and objective standards for such decisions (such as right of first refusal, violations of covenants, architectural changes, owner requests)? Does the Board take care to make informed decisions in good faith? Are there any conflicts of interest between Board members and the Association? What relationships exist between management, board members, contractors, professionals, and others employed by the Board?
Does the Association have a plan for meeting its maintenance responsibilities and other duties (including inspections, reserves, and bidding/contracting procedures)? Has the Association performed a reserve study? Are your reserves adequate? Do you have contractor agreements written to protect the Association or do you use the contractors' bid forms?
Does the Association have procedures for compliance with the Fair Housing Act, the Americans with Disabilities Act, State Human Rights Statutes, and local ordinances regarding unlawful discrimination? Has anyone taken a look at whether any of the policies, practices or procedures of the Association may be unlawful? If your Association needs assistance with these issues, you should contact an attorney. |
copyright 1995, 1997, 1998, Jeffrey A. Goldberg
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