Association Management: Associations Have Options

Association Management: Associations Have Options

Choosing management assistance is one of a board’s most important decisions. Even the smallest associations will benefit from some form of professional management. What is a “Manager”? Managers carry out the association’s day to day operations, advising and providing information to the board and carrying out its policies and instructions regarding association property and funds. A manager may be an unpaid volunteer or may be paid. The paid manager may be an association employee, a consultant, or an employee of an outside company. In California, no license is needed to manage HOAs. Volunteer management Many associations use volunteers for their management functions. The motivation for volunteer management is primarily to save cost. In volunteer management, volunteers place themselves in the role of an unpaid manager – with all of its risks and no reward. Volunteer managed associations often find it difficult to find candidates for the board, since directors work so much harder when they are also managers.  Financial management This involves collecting assessments, paying bills, and preparing monthly and annual financial reports, disclosures, and budgets. A financial manager typically does not visit the property. Management companies often prefer financial management because it is more predictable and less prone to the extra work of managing the property. Some accountants also offer financial management services. Associations struggling with the cost of full association management may wish to consider at least financial management. Property management Property management involves responsibility for keeping up the condition of the buildings and grounds and may include routine inspections for architectural violations, maintenance items and repair needs. The plumbing leak on a Sunday afternoon and the...
What Makes a Director Outstanding [Part 4] – Participation in Board Meetings

What Makes a Director Outstanding [Part 4] – Participation in Board Meetings

Productive and efficient meetings are not happenstance but are the result of committed and prepared volunteers, normally assisted by a great professional manager. To help bring about the best board meetings: Read the agenda packet Come to the meeting prepared, having already read the agenda and the supporting materials. The packet is provided in advance to prepare you to make the decisions presented. Reading it for the first time at the meeting disrespects the other directors, indicates lack of commitment, and delays meetings as one “gets up to speed.” Stay on topic A single director can derail discussions by moving on to a different topic before the current one is concluded. Politely remind colleagues when deliberations stray from the matter at hand. Talk to the board, not the audience Directors attend board meeting to deliberate with board colleagues, not the audience. Grandstanding by speaking to the audience disrespects other directors and encourages raucous meetings. Ask the manager for input on most motions The board’s most frequent protector under the Business Judgment Rule is the manager, so seek the manager’s input. The manager often has years of experience and training; take advantage of that background. If a manager’s input isn’t being sought, why have them in the meeting? Treat open forum as an important event and pay attention California law requires open forum at all membership meetings and open board meetings. That is the time for the board to listen to the community. Take notes and don’t interject or argue. Open forum reminds directors that they are there to serve their community, and often helps the board learn things they...
Tighter Protection of HOA Funds in 2019

Tighter Protection of HOA Funds in 2019

Assembly Bill 2912 The most important new legislation changing how HOAs will operate is Assembly Bill 2912. AB 2912 began with the statement that its purpose is to “take important steps to protect [HOA members] from fraudulent activity by those entrusted with the management of the association’s finances.” Sponsored by the Community Associations Institute and the California Association of Community Managers, the bill received no credible opposition and passed both houses of the Legislature on unanimous votes. Civil Code 5380(b)(6) and 5502 One very significant change is the new Civil Code 5380(b)(6) and 5502. These new statutes are identical in substance and so appear to be redundant. They require that before any transfer of $10,000 or 5% of total association combined reserve and operating deposits (whichever is smaller), there must be prior written approval from the association board. This slows down the overly active board officer or lazy manager who would pay bills or transfer funds without bothering to obtain explicit board approval. One question is whether a manager could obtain permission in advance to pay certain larger recurring bills, but the intent of the statute seems to argue against this and require express permission for each individual transfer. Association boards should already be preparing for this additional step and talking to their managers about how compliance will occur. This statute does not only reference payments, but controls any “transfer” of association funds. So, advance written authorization is required not only for payments and withdrawals but also deposits and transfers between association accounts. Civil Code 5500 Civil Code 5500 has for years required boards to at least quarterly review...
Bills That Made It in Sacramento and Some Which Didn’t

Bills That Made It in Sacramento and Some Which Didn’t

September 30 was the last day for the Governor to sign or veto bills passed by the Legislature in 2018. Many bills affecting HOAs were signed, and two were vetoed. SB 261 This bill, signed by the Governor on September 27, amends Civil Code 4040 to allow homeowners to use email to request the HOA send communications via email to the homeowner, and amends Civil 4360 to require 28 days (instead of the current 30) notice to homeowners for proposed rule changes. SB 721 HOAs exempted. SB 721 requires multilevel residential properties to conduct inspections of balconies and other elevated elements every six years. Signed into law by the Governor on September 17, the final version of the bill exempts HOAs from its requirements. SB 1016 Time of Usage (“TOU”) Meters. SB 1016, signed by the Governor on September 13, adds a new Section 4745.1 to the Civil Code, protecting the installation of TOU meters for electric vehicle charging stations. HOAs may impose reasonable requirements on the requesting owner. AB 2912 New Association Financial Requirements. AB 2912 requires boards to review the HOA financials monthly instead of the current quarterly requirement. The new law, approved by the Governor on September 14, requires all HOAs to have fidelity (dishonesty) insurance in place. It also requires documentation of board authority for expenditures over $10,000 or 5% of the HOA’s budget, whichever is lower. SB 1128 and 1265 Vetoed. Two of the most troubling bills for California HOAs this year were Senate Bills 1128 and 1265. SB 1265 would have made it much harder for common interest development associations to preserve elections...