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Read It Now - Community Associations Institute, Utah Chapter
UTAH UTAH CHAPTER A S S O C I AT I O N S I N S T I T U T E Community Living A NEWSLETTER FOR COMMUNITY ASSOCIATIONS, MANAGERS AND SERVICE PROVIDERS HOA BOARD COMPENSATION GUIDELINES 11 WINTER INSPECTION TIPS 12 WHAT NOT TO SAY 14 ALSO IN THIS ISSUE... 4 CHAPTER NOTES 10 OPEN MEETINGS; YAY OR NAY 13 ON THE HILL: LAC UPDATE 15 CASE STUDY: CEO OF THE HOA ISSUE 4 2013 FROM THE PRESIDENT PHENOMENAL EDUCATION BY PETER HARRISON, ESQ PRESIDENT UTAH CHAPTER OF CAI AMAZING EDUCATION CONTINUING INTO 2014 Hello All, 2014 CALENDAR OF EVENTS JANUARY 9 LEADERSHIP LUNCHEON/ANNUAL MEETING TRAINING 23-25 CAI LAW SEMINAR @ LAS VEGAS 18 OGDEN LEGISLATIVE UPDATE FEBRUARY 1 LEGISLATIVE LUNCHEON, UTAH STATE CAPITOL MARCH LEADERSHIP LUNCHEON 6 PROPERTY INSURANCE: BEST PRACTICES PARK CITY LEGISLATIVE UPDATE 20 20-21 M-203 IN SANDY APRIL 10 LEADERSHIP LUNCHEON DUE PROCESS: MOCK HEARING 19 SALT LAKE LEGISLATIVE UPDATE MAY 8 LEADERSHIP LUCHEON: FAIR HOUSING 14-17 CAI CONFERENCE @ ORLANDO 2 Utah Community Living JUNE 5 BOUNTIFUL ROUND TABLE 12 ANNUAL MEETING & GOLF SOCIAL AUGUST 17 2014 PLANNING RETREAT - TBA SEPTEMBER 4 LEADERSHIP LUNCHEON - TBA 10 GOLF TOURNAMENT AT SOUTH MOUNTAIN 25 CAVL NETWORKING OCTOBER 2 LEADERSHIP LUNCHEON - TBA 23-25 M100 IN SANDY 28 LEHI ROUND TABLE NOVEMBER 6 LEADERSHIP LUNCHEON - TBA 8 ESSENTIALS OF VOLUNTEER LEADERSHIP UCCAI LEADERSHIP CURRENT LEADERSHIP OF UCCAI 2013 - 2014 BOARD OF DIRECTORS COMMITTEES LEGISLATIVE ACTION COMMITTEE PETER HARRISON, ESQ. COMMUNICATIONS/PUBLICATIONS LaMond Woods, CIRMS – Chair Bruce Jenkins, Esq. – Vice Chair John Richards, Esq. – Secretary Val K. Weight – Treasurer David Houston, CMCA, AMS Jerry Jensen, CMCA, AMS Ray Kimber Michael Miller, Esq. John D. Morris, Esq. Keith Schoen Jason Sucher Justin Rae Jill Candland Sarah Crawford, CMCA, AMS, PCAM President Business Partner JOHN MORRIS, ESQ. President-Elect Business Partner DOUG SHUMWAY, ESQ. Secretary Business Partner JERRY JENSEN, CMCA, AMS Treasurer Community Association Manager ROBERT BAIRD Membership Committee Liaison Pepperwood HOA RYAN BONHAM Advanced Community Solutations At Large ANDY SWANNER Servpro At Large NATIONAL DESIGNATIONS & ASSIGNMENTS AAMC FCS Community Management CCAL Lincoln Hobbs John Richards Bruce Jenkins CIRMS Béat Koszinowski LaMond Woods NATIONAL FACULTY MEMBERS Lincoln Hobbs Michael Johnson PCAM Sarah Crawford Dale Gifford Shelley Grover Michael Johnson Kamarie Naase Cindy Spillane Cat Ann Coltrell John Morris, Esq. - Liaison Quinn Sperry, Esq. - Chair Megan Deming Eric Harker Sterling Jenkins Ryan Newton Dale Gifford, CMCA, AMS, PCAM, RS Jenai Reid MEMBERSHIP Doug Shumway - Liaison Patsy Young - Chair Michael Johnson, CMCA, AMS,PCAM Mel Shepherd Connie Quintana Alisa Shosted Brandon Myers EVENTS Andy Swanner - Liaison Tyler LaMarr - Chair Tanner Blackburn Tod Bean Joe Walters Robert Rosing EDUCATION Ryan Bonham - Liaison Cindy Spillane Burke Nielsen Sam Bell Brent Bowthorpe Diane Gaskill Sara McConkie Ryan Connelly Corry Snow SOUTHERN UTAH Jerry Jensen, CMCA, AMS - Liaison Greg Gardner, CMCA, AMS - Chair Bruce Jenkins, Esq., CCAL David Houston, CMCA, AMS Keith Schoen RS Dale Gifford Bruce Jenkins Utah Community Living 3 CHAPTER NOTES COME JOIN US IN 2014! EVENTS AND SPONSORSHIP OPPORTUNITIES BY MINDY KNUDSEN UCCAI EXECUTIVE DIRECTOR 2013 DIAMOND SPONSORS VIAL FOTH ER I NGHA M LL P L AWY ERS 2013 PLATINUM SPONSOR Utah’s Premier Full Service HOA Painting Company 4 Utah Community Living Attending events is one of the great opportunities you have as a Chapter member of UCCAI. There are colleagues and new associates to meet, vendors who can aid homeowners in their quest for improving their communities and Boards, new business associates who can help vendors further their own business needs, great food and company – and these are contact you can make while socializing before you even sit down to hear the event topic. In 2014 we’ve added 3 local legislative events, in addition to the annual event at the Salt Lake City Capitol. We’ll have a legislative preview and post-legislative update event in Ogden, a post-legislative event in Park City and another in Salt Lake. Each of these events will feature members of our Legislative Action Committee, who will telling you just how local legislation will be affecting Utah communities this year and what LAC members are doing to aid your community. It should be extremely beneficial to take advantage of these events. Other changes to the event calendar include a round table in Bountiful to be held in June and a homeowner networking event in September where Board members and homeowners can come collaborate, discuss their needs and problems, and get direction from Chapter experts. Topics for this year include annual meeting training with a mock annual meeting, property insurance best practices, due process with a mock hearing, fair housing and others. If you are interested in speaking at any of these events and have a working knowledge of these topics or any other you feel would benefit the Chapter, please request a speaker RFP form at info@uccai.com. Our education committee, headed by committee liaison, Ryan Bonham of Advanced Community Services, works hard to provide quality speakers and topics and welcomes new speakers with fresh ideas. Top speaking priorities are given to those who turn in these forms. You can register for all these events at www.uccai.com. Chapter members receive a discount on luncheons and sponsorship package holders also receive free luncheon passes. Thanks, Mindy Knudsen NATIONAL HEADLINES NEW MORTGAGE STANDARDS CAI APPLAUDS PROPOSED MORTGAGE FINANCING RULES CAI NATIONAL FALLS CHURCH, VA Community Associations Institute (CAI) is expressing support for proposed federal rules that accomplish two important CAI goals: helping more homebuyers obtain safe mortgage financing and stimulating a housing market that has struggled since home prices began falling in late 2006. Both will provide more stability to community associations across the country. as "qualified residential mortgages." Consumers are protected from fraudulent lending schemes since only loans that meet strict lending standards are eligible for the QRM designation. They also benefit lenders that originate QRM-compliant mortgages because these loans are eligible for preferential regulatory treatment and are more likely to be sold in the secondary mortgage market. CAI filed public comments Oct. 30 urging regulators to adopt practical mortgage standards that will protect homeowners, potential homebuyers and common-interest communities. The 32,000-member organization expressed support for key aspects of the revised federal regulation known as Qualified Residential Mortgage (QRM). All QRM-compliant loans must meet stringent lending standards recently adopted by the Consumer Financial Protection Bureau, meaning lenders must verify that borrowers have the ability to pay all monthly mortgage-related costs—including community association assessments. This will mean lower homeowner delinquency rates, fewer foreclosures and more financially stable community associations. In addition to protecting consumers from unscrupulous lending practices, the newly proposed rules are expected to accelerate the housing recovery by generating a greater flow of private capital to the mortgage market. Importantly, the proposed rule gives common-interest communities limited lien priority on foreclosed homes. That means associations would be able to collect all or at least a portion of the money that is owed to them after a foreclosure. "This is welcome news for tens of thousands of community associations and the tens of millions of Americans who call them home," said CAI Chief Executive Officer Thomas M. Skiba, CAE. "We appreciate regulators considering various perspectives and applaud them for developing these important consumer protections. This is how the process should work, with regulators being open and responsive to the views of critical stakeholders." CAI and other groups raised serious concerns about the first QRM rule proposed in April 2011. The Dodd Frank Act of 2010 charged federal financial regulators with developing standards to establish lower-risk mortgage loans, known As part of the Coalition for Sensible Housing Policy, CAI worked with a broad coalition of consumer advocates, real estate interests and lenders to develop consensus-based rules that would protect borrowers and support a still-nascent housing recovery. "We’re pleased we could be a part of a process that is so important to millions of homeowners and would-be homebuyers," said CAI’s Dawn Bauman, CAE, senior vice president of government and public affairs. "We and our members have worked diligently to play a positive and constructive role in mortgage financing. These proposed rules rewards those efforts." With more than 32,000 members dedicated to building better communities, CAI works in partnership with 60 chapters, including a chapter in South Africa. CAI provides information, education and resources to community associations and the professionals who support them. CAI’s mission is to inspire professionalism, effective leadership and responsible citizenship—ideals reflected in communities that are preferred places to call home. Visit www.caionline.org or call (888) 224-4321. Utah Community Living 5 Your complete legal source for HOA, PUD and condominium expertise. Good representation in community association law requires not only a firm grasp of the law, but also practical experience that can only be gained by focusing in the industry. At Morris Sperry, we have that experience. With a short consultation, we think past the problem that you thought you had, to the problem that you really have and the solution. The result is a tremendous value for you and your association. UTAH COMMUNIT Y ASSOCIATION L AW HOA | CONDOMINIUM | PUD | TOWNHOME F u l l -se r v i c e hom e ow ne r asso c iatio n l aw fir m , pr ov iding r e pr esen tat ion , a n a l y si s, a n d a d voc a c y on be hal f o f c o m m unitie s. Pho ne : 801.355.9594 THE BOARDWALK ‘TIS THE SEASON! HOLIDAY DECORATIONS AND LIGHTING IN OUR COMMUNITIES CINDY SPILLANE, PCAM, CCMC COMMUNITY MANAGER DAYBREAK COMMUNITY ASSOCIATION The 2013 Holiday Season is upon us. As usual, this time of year brings joy, excitement and lots of twinkling lights and displays. As a community association, it also brings to “light” (pun intended) that many of our governing documents are either ambiguous or completely silent on the subject of decorating for the holidays. In these situations, it is important to have your Board of Directors establish a Holiday Decorating/Lighting Policy. In creating your policies, keep in mind the following: • How may lights be installed? – Do you want to allow lights to remain on the exterior of the houses all year long or be removed after the holiday? The answer to this question may have an impact on how someone chooses to install their lighting – remember to include reminders to remove any clips or other hanging tools. • When may the decorations be installed/go up? – In Utah, this is a very important question due to our inclement weather conditions during the winter. For instance, you may want to allow the installation of decorations that take a ladder or climbing on a roof to be installed as early as November 1st to help your residents avoid climbing on their houses in snow/ice conditions. • When may the “twinkling” begin? – If your Board chooses to allow early installation of holiday decorations, you can still delay the turning on of these decorations to a period, say 15 days before the holiday. Make sure to include motion display activation and not just limit your policy to lights. • How long can the decorations stay on? – Choose a “turn off” time frame, i.e. 15 days after the holiday. • When do they have to come down? – Again, for safety reasons, your Board may want to consider allowing the decorations that again require climbing on a ladder/roof, to stay on the house until March/April – but, not be turned on during this time. As leaders of our communities, we definitely want to help our residents and Boards enjoy the holidays, but not necessarily all year long. A clear decorating policy will help you make this happen. Wishing everyone a safe and very happy holiday season! 8 Utah Community Living UCCAI MEMBERSHIP FOURTH QUARTER MEMBERSHIP STATUS SEPTEMBER 7, 2013 - DECEMBER 5, 2013 NEW MEMBERS MRS. AMANDA AL-SHAWAF, CMCA RENEWED MEMBERS MR. BRUCE S. BOLLINGER RENEWED MEMBERS, cont’d MS. MOLLY HIME Volunteer Community Leader Individual Manager Popular Association Banking Advantage Idaho WorldMark Residential Association Management, LLC West Yellowstone Sunwest Management, Inc. Boulder Mountain Property Management Swains Creek Pines Lot Owners Association Advantage Idaho The Lakes Master Homeowners Association Advantage Idaho The Reserve at Springmill Section II HOA Big Sky Hidden Village Owners Association, Inc. Traverse Mountain Master Association Big Sky Hidden Village Owners Association, Inc. Treo Community Management Big Sky Hidden Village Owners Association, Inc. Union Bank Homeowners Association Services Boardwalk Association Management WorldMark by Wyndham MS. LORENA OTT MS. PAM ISHAM, CMCA MR. JEFFREY M QUAYLE MS. VALERIE A. SANDOVAL, CMCA MR. JASON RICHARDS, CMCA MS. SHERI LYNN THOMAS, CMCA, AMS MS. TRACY STRICKLAND MS. KATHLEEN HANSEN, CMCA, AMS MR. DICK SCOTT MR. ROBERT PAUL MATTISON, CMCA MS. DEBI BUCHANAN BOARD MEMBER MS. LAURA JENSEN MR. EDWARD RAMIREZ MR. CHAD R. HILL MS. KRISTEN RAMIREZ MS. JENNIFER SEALS MS. CINDY TUCKNESS MS. KIMBERLEE SIBLEY MS. DELORES FERGUSON, CMCA, AMS, PCAM MR. SCOTT WOOD MRS. TIFFANY OLSON Advanced Community Services Advantage Idaho Boise City Property Management Country Park Villas FCS Community Management FCS Community Management Golden Spike Realty Property Management Systems, Inc. Red Rock Financial Services SimTek Fence REJOINED MEMBERS MRS. DANIELLE DRAKE MS. KAMARIE NAASE, CMCA, AMS, PCAM MS. IRENE BRIGGS MS. KATIE CHAMBERLAIN MR. BUFFY MAYERSTEIN MR. KARL KARREN, CMCA, AMS MRS. KATI RIDING MS. TRACY STEPHENS MS. SHERALYN CARTER HOPKINSON, CMCA, AMS Capital Consultants Management Corporation Community Association Management MR. JACK CHRISTENSEN Eastside Enterprises, L.C. MS. SARAH CRAWFORD, CMCA, AMS, PCAM FCS Community Management MS. PATRICIA JESSIE Community Association Volunteer MR. RICHARD W. JONES MR. ALAN D. SEILHAMMER Association Capital Bank MS. SHELLEY GROVER, PCAM MR. BRENT BOWTHORPE Class One Disaster Recovery MS. MITZI SMITH MS. TERRI MUCHMORE Kier Property Management & Real Estate, LLC MS. SYLVIA TAGLE MR. CAMRON HAMILTON Vial Fotheringham, LLP MR. BLAIR LIERD Helgesen, Waterfall & Jones HOA Solutions HOA Solutions Ian H. Graham Insurance Peak 2 Peak Management Company, LLC 9 Utah Community Living ON THE HILL OPEN MEETINGS: YAY OR NAY? OPINIONS FOR AND AGAINST THE UPCOMING UCCAI OPEN MEETING PROPOSAL AGAINST: AN OPEN MEETINGS LAW IS UNNECESSARY Harold Burnahm, Homeowner and Board Member In the strongest possible terms, I am opposed to the UCCAI Legislative Action Committee proposed open law bill being submitted to the Utah legislature for the 2014 session. Currently Utah nonprofit companies are operated and mandated by currently existing Utah law, association declarations (CC&Rs), and bylaws. In my opinion, this is adequate and sufficient for legal oversight of Utah nonprofit companies and homeowners associations. An operating Board of Trustees does not need additional LAW to operate properly. It is currently difficult enough to maintain volunteer, mostly inexperienced, Board Members to serve on a homeowners association’s board where open dialog of issues is essential. I am very concerned that by the current version of the open meetings bill, we are creating legal creep into the operating parameters absolutely necessary for a Board to operate in the best interest of all association members. This is evident with current version having eight (8) paragraphs of DEFINITION OF "OPEN MEETINGS". This is not required law. What we currently have is sufficient for our needs in order to protect and manage our business properly. The homeowners association board that I currently serve on has an open meeting policy by its "Declarations" and has worked just fine since 1973. Thank you for the opportunity to comment on this important issue. FOR: AN OPEN MEETINGS LAW IS UNNECESSARY Noell Marble, Homeowner and Board Member The Management Committee is elected to represent the members of the HOA. Every member of the Community, in good standing, has the right to run for a seat on the Management Committee and vote for those nominated. Too often the Management Committee becomes a God unto itself and forgets the members they represent. Thus, Management Committee members are representatives of the HOA membership, are accountable to the membership, and have an obligation to carry out the wishes of the HOA community as stated within the HOA’s By-Laws, CC&Rs and State Law. The financial condition of the HOA must be considered as well. In order for the Management Committee to represent their HOA community (i.e.: the owners), the owners must have the opportunity to be heard. All owners must be advised of when the Management Committee meetings are held, where the meetings are held, and provided copies of the agenda. Since some members are absentee owners, agendas sent by regular mail or electronically, must be sent in adequate time for their action and attendance. Furthermore, all owners should have copies of minutes of previous meetings available prior to the upcoming meeting. The Utah Chapter of Community Association Institute’s (UCCAI) Open Meeting Proposal strongly endorses published agendas, adequate notice and availability of all actions of the Management Committee (i.e.: minutes). My name is Noell Marble, and I support UCCAI’s Open Meeting Proposal. I have owned condominiums since 1991, as few as 19 and as many as 64 at one time. I currently own twelve, nine in Murray, Utah and three in Reno Nevada. I have served as a member of a management committee (called Board of Directors in other states), president of two management committees and as a property manager of two HOAs. I have served on four management committees and am currently serving on one. In Nevada, an Open Meeting Law was implemented in about 1999. The law is closely monitored by the state. In order to serve as a property manager in Nevada, one is required to have both a Real Estate License and a Property Manager License. Violation of any of the open meeting 10 Utah Community Living laws can result in loss of both licenses. Utah law has NO Licensing requirements (i.e.: a warm body could manage an HOA). The Open Meeting Law under which I worked served everyone’s best interest, especially those HOA members. I am a strong supporter of this law from both an HOA member and Property Manager standpoint. I am fired up over this issue as a result of what I’ve observed recently in two local associations as a management committee member of one association and a member of another HOA. Neither the Property Manager nor the President of the HOA where I am a member of the Management Committee, have notified me of the last two meetings. Also, the HOA membership has not been notified of the last meeting. One HOA Management Committee increased dues by 15% in executive session and without prior notice to the owners, and entered into negotiations for a loan in another executive session. It was more than a month later that the community learned of a $140,000 loan for work already contracted for – 50% plus complete and halted. I have yet to see the specifics of the work under contract. The HOA fee increase was noticed to the members after the fact and 20 days before it took affect. These are events that have all taken place within the last half of 2013. I have seen Management Committee meetings held as the committee members walked the grounds. Several decisions have been made by two or three Management Committee members in private discussions. No agenda was issued and no minutes exist. The open meeting portion of the monthly meeting is mostly a gripe session; actual business takes place in “Executive Sessions” where only the Management Committee and the property manager are included and everyone else is excluded. All subjects to be addressed by the Management Committee must be on the agenda except in “defined” emergencies and sensitive topics limited to legal issues, contract negotiations and personnel hiring and firing. These topics considered in Executive Session must have final action in a published open meeting. In conclusion, based upon my experiences as a homeowner and Management Committee member in a state with an open meeting law, I support the UCCAI’s Open Meeting Proposal. TOOL TIME PAYING DIRECTORS LEGAL RAMIFICATIONS OF HOA BOARD MEMBER COMPENSATION BY PETER HARRISON, ESQ PRESIDENT UTAH CHAPTER OF CAI We are often asked the question, “Due to lack of participation on the board, we’d like to amend our documents so that future board members receive compensation. What are potential problems with this scenario? Is it advisable to do this? Does this affect our D&O insurance?” While these might seem like complex questions whose answers could contain numerous variations, the answer is actually very simplistic; paying board members is not an acceptable or advisable practice. The only statutory guidance provided under Utah law that addresses this issue is contained in the Utah Revised Nonprofit Corporation Act, found in UCA 16-6a-811 which states “[u]nless otherwise provided in the bylaws, the board of directors may authorize and fix the compensation of directors.” So technically speaking, board directors may receive compensation. However, paying board members should not happen. Numerous HOA covenants, conditions, and restrictions (CC&R’s), actually prohibit a board member from being compensated. Such a prohibition creates a clear line of demarcation, but does not explain the policy reasons behind not compensating board members. There are many reasons that HOAs typically do not allow for compensation of board members, but typically it is due to the chilling effect that such a practice can have on the community, the individual board members, and the HOA itself. First, HOA’s should not compensate board members because of the impact it will have on homeowners within the HOA. Homeowners typically view board member positions as opportunities to volunteer and work for the betterment of the community. As such, the typical homeowner expects their board members to be volunteers that are primarily interested in taking a bigger role improving their community. When board members are paid, home owners begin to distrust the board members and their priorities and are skeptical of how they are spending HOA funds. Compensation for board members can also lead to speculation regarding self dealing and the role that vendors play in the HOA. Second, paying HOA board members is not advisable because of the possible harms it can cause to individual Board Members. In 1997, Congress passed the Federal Volunteer Protection Act (42 U.S.C. 14501), a law intended to encourage volunteerism in communities throughout the United States. Through this law, volunteers in non-profit organizations, such as Board Members of an HOA are protected from liability for any harm caused by any actions or omissions made in the course of volunteering for the organization. See 42 USCS § 14503. In order to receive protection under this law, a person must be performing services for a non-profit organization or a governmental entity and cannot “receive compensation (other than reasonable reimbursement or allowance for expenses actually incurred; or any other thing of value in lieu of compensation.” See 42 USCS § 14505. As such, if Board Members receive any compensation or even a reduction in HOA fees, they would not be eligible to receive protection under the Federal Volunteer Protection Act. Third, don’t pay HOA board members because it could possibly result in stiff penalties for the HOA. Under sections 501(c)(3) and 501(c)(6) of the Internal Revenue Code, Non-profit organizations are prohibited from using net earnings to benefit individuals and from allowing board of directors and members from profiting due to their positions within a non-profit organization. See 26 USCS § 501. Any non-profit organization, including HOAs, that violate these provisions may be in danger of being punished by the IRS, even to the point of losing their non-profit status. See, e.g., John Marshall Law School and John Marshall University v. United States, 81-2 USTC 9514 (Ct. Cl. 1981)(revoking tax exemption of law school and university for benefitting private individuals from net earnings of the organizations; Spokane Motorcycle Club v. U.S., 222 F. Supp. 151 (E.D. Wash. 1963) (revoking tax exemption of club for benefitting private individuals from net earnings). With the possibility of such punishment, it is better to avoid compensating HOA Board Members. Finally, the compensation of board members should be avoided due to the insurance and employment risks that such payments could create. Before accepting any sort of compensation a board member should have a frank conversation with their insurance professional or attorney regarding the possible implications to their insurance policy or employment practices. Board member best practices should be to avoid actions that could potentially create liability to the HOA and to safeguard the assets and property of the community. Based on these reasons, we recommend that HOAs refrain from paying its Board Members even though it is legal to do so in Utah. Utah Community Living 11 TOOL TIME RE: WINTER INSPECTIONS PROACTIVE STEPS CAN SAVE MONEY IN THE LONG RUN TANNER BLACKBURN COMMUNITY MANAGER PROPERTY MANAGMENT SYSTEMS It is obvious why inspections are so important during the Spring, Summer and Fall months with projects, landscaping, pools and encouraging owners to perform a “spring cleaning” after four to five months of hibernation. With less of these types of projects happening during the colder season, you may wonder why winter inspections are important. Boards and community managers are encouraged to perform inspections at least once a month. These inspections are just as important, if not more, during the winter months as they are during the other three seasons during a year. The winter of 2012-13 is a prime example of why board’s and manager need to visit properties to ensure that the safety and value of properties are maintained. During the month of January, Utah experienced one of the longest cold spells on record as well as an ice storm. As a result of moisture and cold temperatures thick sheets of ice were left on roofs, sidewalks and roadways. This resulted in very dangerous conditions for walkers and drivers but also severe damage to roofs in many cases. Because of the cold temperatures salt and ice melt were ineffective. Many HOA’s had to have ice removed from these areas with gardening shovels rather than the typical snow shovels. While most HOA’s did what they could to prevent damage and/or injury, boards and managers should make a concerted effort to keep walkways as clear as possible at all times. Yearly reviews of heat tape on roofs should also be part of the best practices for a community. Gutters should be kept clean to prevent damming and possible ice and water damage to siding and interior walls. Should we experience another winter with heavy wet snow accumulation on roofs without melting, boards should consider having snow removed from roofs. If boards feel more frequent inspections are necessary, they may consider adjusting their management contract to conform to those needs. During the cold winter months, it is very easy to walk out your door and go directly to your car and then the opposite when returning. Board members should also plan on keeping an eye on the property and conducting their own inspections. This will greatly assist the manager and show owners you are taking your position in the community seriously, which will result in more support. By taking simple and proactive steps like regular inspections, many costly repairs, injuries and claims can be avoided for boards and HOAs. Keep in mind, this is something that will ultimately help to achieve a board’s fiduciary duty of protecting the community and upholding and improving home values. 12 Utah Community Living ON THE HILL CONDOMINIUM ACT ACTION OPEN MEETING LEGISLATION Our Legislative Action Committee (LAC) has been working hard this past year considering several proposals that impact the community association industry. One matter that has been the center of much debate is the proposal for requiring open meetings in community associations. The Open Meeting legislation that the LAC is supporting is set forth below. If you feel strongly in favor or against this legislation, I encourage you to contact a member of the LAC or representative. In addition, as the legislative session gets underway, please visit the UCCAI website (http://uccai.net/) for blog posts discussing the legislative developments. TO BE PROPOSED WITH A DELAYED START DATE – JULY 1, 2015. THIS IS THE CONDOMINIUM ACT VERSION (57-8-___), BUT A SIMILAR VERSION WOULD ALSO BE DRAFTED FOR THE COMMUNITY ASSOCIATION ACT (57-8a-__) USING THE DEFINED TERMS IN THAT ACT. BY LAMOND WOODS 57-8-56. Meetings of the Management Committee – Open Meetings. (1) As used in this section "meeting” means: (a) any gathering of Management Committee members, (b) whether in person or by telephonic or other means by which members may hear one another, and (c) at which a binding action can be taken. (2) (a) the association of unit owners shall give notice of a meeting to each unit owner who requests notice in writing and provides an email address for notice, unless the meeting (i) is included in a schedule previously given to the unit owner, or (ii) has been called to address an emergency; (b) The notice to unit owners described in Subsection (2)(a) shall: (i) be given: (A)by email to the email address provided by the unit owner; and (B) at least 48 hours before the meeting; (ii) state the time and date of the meeting; and (iii) state the location of the meeting and, if there is an alternative method of participating in the meeting such as by telephone or other electronic means, provide necessary information to allow unit owners to participate through the alternative method. (3) (a) Except as provided in Subsection (3)(b), a meeting shall be open to unit owners and representative of the unit owner as designated in writing. (b) The management committee may hold a closed session during a meeting if the purpose of the session is to: (i) consult with an attorney to obtain legal advice; (ii) discuss existing or potential litigation, mediation, arbitration, or administrative proceedings; (iii) discuss a labor or personnel matter; (iv) discuss a matter relating to initial contract negotiations, including the review of a bid or proposal; (v) discuss a matter involving a person, if the management committee determines that public knowledge of the matter discussed could cause undue embarrassment or violate the person's reasonable expectation of privacy; or (vi) discuss a delinquent assessment. (4) A reasonable opportunity for unit owners to offer comments shall be provided at meetings, which may be limited to one specific time period during the meeting. (5) Members of a management committee may not avoid or obstruct the requirements of this section. (6) An action at a meeting is not invalidated if this Section is not complied with. (7) Unless otherwise provided in the governing documents, this section shall not apply during the period of control provided for in Subsection 57-8-16.5(1). (8) This section applies to each association of unit owners, regardless of when the association of unit owners was created. Utah Community Living 13 TOOL TIME WHAT NOT TO SAY HANDLING A COMMUNITY INCIDENT APPROPRIATELY BYJERRY JENSEN COMMUNITY ASSOCIATION MANAGER, AMS, CMCA I have recently been involved in a few incidents with a couple of our managed Homeowner Associations that could have easily been handled except for the fact that a Board Member, after a quick solo analysis of a situation, accepted or inferred liability on the part of the Association. Incidents that we may find ourselves involved in can range from a "slip & fall" injury to a "water damage" claim to a "structural defect" claim and so on. In most cases, you as a Board Member or myself as your Manager do not have the expertise to know who is responsible and in any case, a single Board Member nor your Manager can speak for the entire Board unless such authority has been granted by the entire Board of Directors. If someone in your Association is a victim of a crime, an accident, or property damage from any source and you are at the scene, be courteous and be helpful. However, unless you have authorization from your entire Board, do not comment about the incident to anyone. In particular, be careful that you do not provide opinions or conclusions about any aspect of the incident, either at the scene or if approached later by the homeowner, an investigator or an attorney of the victim. I have learned by sad experience that certain remarks and phrases - even if well-intended - may open your Association to liability if it is ever sued over the incident. We do not want courts to find Associations liable for incidents based on casual statements made by Association Board Members and/or Association Sub-Contractors about the circumstances of an incident. I encourage you to follow these guidelines when reacting to specific situations that you may encounter: TIP DO NOT volunteer information or opinions about the incident. In particular, be careful that you do not provide opinions or conclusions about any aspect of the incident, either at the scene or if approached later by the homeowner, an investigator or an attorney of the victim. DO NOT offer information or your opinions about the incident to anyone - including the victim. Your opinion about the cause of the incident is not an appropriate subject for conversation. DO NOT respond to statements about the incident from the victim. If a victim makes a statement about the cause of the incident, do not respond. For instance, an accident victim may say "I can't believe that railing was so shaky." Simply refrain from making any comment or response. DO NOT answer victim's questions about the incident. The victim may not know what caused the incident and ask a question like: "Did you see what I fell on?" OR "How did that man get into the clubhouse?" It is not appropriate for you to engage in such conversations. DO NOT answer any questions, even if the victim persists and repeats a question. If you're interviewing a victim for an incident report, simply ask your questions without responding to the victim's. If the victim continues to press you for an answer, you can say, "I'm sorry, but Association Policy does not permit me to comment on that." You can also refer all questions to the entire Board of Directors. DO NOT talk to attorneys, investigators, or insurance representatives. After the incident, someone representing the victim may come to the Association to find out more about the incident and help the victim prepare a lawsuit against the Association. These representatives may not identify themselves. Therefore, do not talk to either identified representatives of the victim or anyone else that you do not know unless you have authorization from your entire Board. Instead, simply say, "I'm sorry, but you will have to direct all questions on that subject to the entire Board of Directors. 14 Utah Community Living CASE STUDY CEO OF THE HOA UNDERSTANDING THE RESPONSIBILITIES OF AN HOA PRESIDENT Similar to the CEO of a company, the president of a homeowners association (HOA) plays the primary role in decision-making and overseeing the day-to-day administration of the association. Some HOA presidents receive compensation, but most are unpaid volunteers, filling a role that can be rewarding, but often unappreciated. Whether you’re compensated or not, your role as president should not be taken lightly. Accepting an HOA board position is serious, as you are charged with safeguarding the personal investments of all HOA members. Care must be taken to ensure homeowners’ concerns and matters are resolved to the satisfaction of all parties involved. Understanding the responsibilities of an HOA president—and the risks related to the role—is important for anyone serving in the position. THE PRESIDENT’S RESPONSIBILITIES Being an HOA president requires a great deal of interacting with homeowners, the property manager, other board members and the outside community. Patience and flexibility are key qualities for the position. You must make every decision in a fair and just manner, avoiding favoritism or decisions of self-interest. The HOA’s bylaws usually dictate how often a new president should be elected. If not, it’s a best practice to re-elect a new president every few years to get a fresh perspective and also to avoid the potential for embezzlement of the association’s funds. The bylaws also outline the president’s responsibilities, which can vary from one association to the next. As HOA president, some major responsibilities include: Presiding over board meetings. Develop the agenda before the meeting and keep the meetings on track. Maintaining accurate records. This is mainly the responsibility of the board secretary, but the president is ultimately responsible. Reviewing local laws before passing rules. HOAs are dictated by state laws; the president is responsible for understanding the laws that apply to the association. Communicating frequently and consistently with the association. This includes distributing copies of board meeting minutes and keeping all homeowners informed of changes. Monitoring the association’s activities on a daily basis. Carry out day-to-day administration of association policies set by the board, and ensure that projects are completed. Working with the board to develop a budget and a plan for reserve funds. This is mainly the responsibility of the board treasurer, but the president is ultimately responsible. Executing contracts, bank documents and other legal documents on behalf of the association as its agent. As a best practice, obtain three bids for every contract to ensure that you receive a fair price. OUTSIDE THE SCOPE OF A PRESIDENT’S ROLE While HOA presidents have many responsibilities, there are some matters that fall outside of their scope. Presidents are not property managers. An HOA usually hires a property management company or a property manager to monitor the day-to-day activities of the association. In fact, it’s unwise to have the president also serve as the property manager, as it increases the chance of fraud BY BÉAT KOSZINOWSKI CERTIFIED INSURANCE COUNSELOR AND COMMUNITY INSURANCE RISK MANAGEMENT SPECIALIST accurate bookkeeping. An HOA president interacts with property managers, acting as a liaison between the property management company and the HOA’s board. Presidents are also not “property police,” and should not be responsible 24/7 for enforcing swimming pool hours, removing children from the fitness center, etc. RISKS OF THE HOA PRESIDENT’S ROLE As president of your HOA, you must identify and address the risks of your position. You will be the person that homeowners go to when they have a problem; and with owning property, problems are inevitable. Since homeowners have a high personal stake in their investments, it’s natural to assume they will be frustrated if their concerns and issues are not resolved in a timely manner or in their favor. Your role may come with more liability than you expected. Lawsuits can result from homeowners who aren’t satisfied or think their concerns haven’t been properly addressed by the board. Similar to the director or officer of a corporation, an HOA president also has fiduciary responsibilities. This means that a good faith effort must be made to make decisions in the best interest of the association. Presidents breach their fiduciary duties when they act negligently, commit a crime or benefit personally at the expense of the HOA. Poor and infrequent communication can lead to additional problems when homeowners are uninformed of decisions or changes. You must ensure that communication between the homeowners, the property manager and the other board members keeps all parties up to date of the happenings in the association. HOW TO MITIGATE THE RISKS One of the primary ways to mitigate the risks of your position is to build a solid knowledge base of the HOA’s governing documents and applicable local laws. Even if you are fairly new to the position, you will still be expected to make informed decisions in the best interest of the association. Also, familiarize yourself with the history of the HOA, including past planning by the board and how issues were previously handled. Make sure you are consistent with handling issues as they’ve been handled in the past and don’t spring drastic, despotic changes on members. Know your fiduciary duties and make sure every decision the board makes is made in good faith and in the members’ best interest. When working with the board, focus on creating and setting policies; but leave the implementation and enforcement of those policies to the property management company. As president, you oversee the administration of the association, but you should not be monitoring day-to-day activities. You can also mitigate risks in the following ways: • Foster a team spirit in the association and encourage team building • Communicate consistently between the property manager and the board • Consult an attorney before getting involved in legal disputes • Avoid letting personality differences with other board members prevent the board from getting work done • Spend money prudently and build a sound financial future for the community. Obtain advice from a financial advisor, if necessary. • Preserve and enhance all common areas, which is one of the reasons people want to join HOAs. 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