SECRETIVE BOARDS, P.2

Penny Pinching. There are directors who ran on a campaign promise to hold down costs. This is difficult when the economy is failing, and lawmakers keep adding requirements like policies and disclosures or registrations. In these economic times, budgets can be greatly affected by hefty losses of income caused by owners "walking away" and bank foreclosures. As a result of all of this, some directors are loathe to share the negative financial records.
 
When a board makes decisions in secret meetings or via email and avoids notifying owners of any problems until they have escalated, the result is often that the board's problems also escalate. It is hard enough for a board to deal with big problems such as the need for a large special assessment because of the discovery of serious problems caused by deferred maintenance, or a lawsuit that has been kept a secret, or some other tough issue.
 
Add to that the burdens that pile up as owners get more and more angry or distrustful, and you may face:

•  Threats of lawsuits by current owners or recent purchasers for mismanagement or failure to disclose

•  Attorney-demand letters or threats written on behalf of angry owners

• Collections efforts complicated by withholding of assessments and frustrated "walkaways"

• Recall petitions

•  Escalated and comprehensive demands for records inspections

•  Small-claims actions for meeting or records inspection violations

•  Increasing frequency of disruptive and angry owners at annual and open meetings

Failure to cushion the blow of bad news by initiating discussions with members of the problems early on to let them know that the board is properly handling the difficult issues can exacerbate problems exponentially.

While excuses like those set forth above for being secretive may seem justifiable in the worst circumstances, boards can avoid many problems by having periodic open  meetings or open portions of meetings, making building records readily available and most importantly, communicating well and regularly with residents and keeping them informed.

It is important to keep in mind that it only takes a few horror stories for a legislator to trigger a proposal for new and more onerous accountability requirements.

 
Attorney Loura K. Sanchez, a managing partner at HindmanSanchez and a specialist in homeowner associations, is a member of the Community Associations Institute and on its national faculty. This is adapted from an article on her firm's website.

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