In this week's column, and next week, I address some of the most common mistakes made by homeowners' association boards of directors.
1. Failing to enforce covenants, rules and regulations consistently and uniformly, or engaging in "selective enforcement."
The HOA board really has only two functions: to maintain the common areas and elements in the community, and to enforce the covenants and rules of the HOA.
Many times I have seen HOA boards that have turned a blind eye to obvious violations of the covenants, such as the installation of noncompliant fences or outbuildings. In these cases, eventually some of the neighbors begin to complain, while other neighbors build their own noncompliant fences or outbuildings. Pretty soon, the HOA has multiple violations to address.
It is much easier for a board to deal with the first violation at its inception, as opposed to dealing with several violations that have been allowed to exist for months or years. The board has a fiduciary duty to all homeowners to enforce the covenants consistently and uniformly.
Board members should not allow personal relationships and hidden agendas to dictate which covenants are enforced and which persons the covenants are or are not enforced against. Doing so could result in a lawsuit by an aggrieved homeowner against the HOA and the board members for breach of fiduciary duty and for the arbitrary and capricious enforcement of the covenants and rules.
2. Failing to consult with professional advisors before making big decisions.
HOA boards typically consist of volunteer homeowners who by law cannot be paid for serving on the board. The board has the responsibility of making decisions on issues that can have significant financial and legal implications for the HOA and the homeowners.
Many HOA boards do not have directors with the training, skill and experience to properly evaluate these issues. If your HOA is faced with a difficult or perplexing issue, seek the advice of a professional.
Some examples include accredited community-association managers, accountants, lawyers, engineers, insurance consultants, real-estate appraisers and agents, reserve planning specialists and architects.
Some single-family communities, for instance, retain licensed architects to sit on their architectural review committees to help evaluate homeowner requests for architectural and structural additions and modifications. Obtaining and following the advice of professionals can also help to insulate the board from claims of negligence when a particular decision leads to a bad result.
Next week: Boards that are unfamiliar with governing documents and the importance of keeping minutes.