What Makes a Director Outstanding [Part 3] – Understanding How The Role Is DIFFERENT

What Makes a Director Outstanding [Part 3] – Understanding How The Role Is DIFFERENT

All the knowledge and experience from the working world (“day job”) can actually hinder a volunteer’s effectiveness in the world of HOA governance if the differences between the two worlds are not understood. Outstanding directors have learned that much of what worked for them in their day job will likely work poorly in the context of board governance. The chain of command is completely different in a community association. In the workplace, there is usually a person who is the “big boss”, somebody who is your immediate supervisor, and someone who you supervise. In the association, no single person is in charge. Decisions are made by the board, so the chain of command is horizontal and not hierarchical. The president in a common interest development is not the “big boss.” The president has far less power in most nonprofit corporations since all important decisions are made by the board, and so the president’s vote is no more important than any other. In this very different paradigm, the individual director typically has no personal power. Once directors embrace the framework of the board as decision-maker, they understand that they cannot make individual promises. This restraint can be very freeing since no individual is responsible for the association and its actions, as all decisions is made by board vote. So, when confronted at the pool or parking garage by homeowners demanding action, the director can truly say they can’t individually do anything and suggest the homeowner bring their concern to management or to a board meeting. Directors failing to adapt to the group decision-making process will often stray outside of corporate...
California Now Has Fair Housing Regulations: Sexual Harassment is Illegal

California Now Has Fair Housing Regulations: Sexual Harassment is Illegal

The federal Housing and Urban Development Department (“HUD”), adopted regulations in September 2016 which for the first time prohibited sexual harassment within housing accommodations. “Housing accommodations” in this context includes homeowner associations. These regulations have thus far not received widespread attention, but in California this will change soon. In August 2018 the California Fair Employment and Housing Council approved Fair Housing regulations, providing the first written enforcement guidelines to help associations comply and avoid exposure to state or private discrimination claims. The new state regulations will take effect on January 1 or April 1, 2019, after some further rule-making process, and will be found at California Code of Regulations 12000-12271. The inaugural regulations do not address all Fair Housing issues but are informative regarding accommodation of disabilities and assistance animals, and also bring a new requirement by echoing the HUD regulations (as California must) by requiring housing providers to reasonably respond to sexual harassment against residents. Sexual harassment was previously considered only as an employment issue, and its two varieties – unwanted sexual advances and hostile environment- have both long been illegal in the workplace. Under the new regulations, associations must protect residents from unwanted advances not only from vendors or management, but also from other residents. If a resident complains against a neighbor, what should associations do, since they can’t relocate or evict residents? Kevin Kish, Director of the Department of Fair Employment and Housing, said “an HOA can’t be liable for failure to take an action it doesn’t have the power to take.” Under section 12010(c) a violation exists where the person knew or should have known...
“Dangerous Service – Are You Aware Of The Boundaries of Liability or Just Hoping For The Best?”

“Dangerous Service – Are You Aware Of The Boundaries of Liability or Just Hoping For The Best?”

What It’s About: Volunteer board service should not expose the volunteers to risk of lawsuits. California law provides many protections for the careful director. In this presentation, Kelly Richardson will discuss the protections, the boundaries of those protections, and the ways a well-intentioned volunteer can put themselves in the bulls eye of liability. The presentation will discuss statutes and published appellate cases affecting the exposure of volunteer directors to liability. Syllabus and supporting articles will be provided. The presentation will consist of 50 minutes of prepared remarks, followed by 10 minutes of questions from the audience. After registering, you will receive a confirmation email containing information about joining the...
Keep the Lawyers at Bay [Ten Tips]

Keep the Lawyers at Bay [Ten Tips]

Serving as a volunteer director is often thankless, but it shouldn’t be risky. Here are ten ways to reduce if not prevent personal risk from your service. 1. Learn and follow the Business Judgment Rule Found at California Corporations Code 7231 and 7231.5 and contained in most bylaws, the Rule protects volunteers from liability while acting in good faith, for the association’s best interests, and upon reasonable inquiry. 2. Insurance is necessary Only serve if the association has directors and officers (“D&O”) insurance coverage. Civil Code 5800 protects directors from personal liability if the HOA with more than 100 memberships has $1,000,000 of D&O insurance or $500,00 if less members. 3. Refuse compensation Whether called a “stipend” or assessment reduction, reject any form of renumeration for board service. Upon receiving even one dollar of compensation the director is no longer a volunteer and loses all the immunities of volunteers. Reimbursement for a director’s time serving the HOA is not reimbursement – it is compensation. Reimbursements are repayments of out of pocket expenses. 4. Don’t get mad… or even “Good faith” doesn’t just mean a pure heart. However, it certainly does exclude any willful, malicious or retaliatory intent. The nastiest homeowner has the same rights as the saintly ones. Enforce the rules evenly. 5. Don’t take matters into your own hands HOA governance is a team sport, not an individual event. What you think is valid instruction may be viewed by the board (and the HOA’s attorney) as interference. A director (even the president) must use restraint and wait for the board to act. 6. Follow the corporate process Is...