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Brad Watson: Understanding HOA decisions

Posted: August 1, 2012 2:00 a.m.
Updated: August 1, 2012 2:00 a.m.
 

Dr. HOA,

After nearly 20 years with the same management company, and the same manager at our clubhouse, our association’s board of directors decided to change management companies.

We did not even learn of the management change until after they were already hired. Can the board of directors hire and fire our manager and management company without a vote of the homeowners?

Wouldn’t this decision need to be made during a board meeting with homeowner input? These board members need to remember whom they work for!

– Ron M.



Hello Ron,

Making association vendor changes can be one of the most difficult and time consuming endeavors an association board of directors can take on. Whether it be the association’s landscaper, pool maintenance company or management firm, the decision to make a vendor change is usually not done hastily or without good reason.

The association’s directors have been elected by the membership or appointed to their positions on the board to make community decisions on behalf of the membership.

The board has not only the right, but the responsibility to make important community decisions including, but not limited to, association financial matters, rules enforcement, member discipline and association contracts.

The majority of these decisions do not legally require a vote of the membership and often homeowner feedback prior to the board’s decision is not realistic or appropriate.

As it relates specifically to association vendor contract decisions, including vetting and hiring a new management company, the board is legally permitted to determine when and if it is necessary for the association to bid out a vendor contract. Homeowner feedback prior to making this decision is not typical and not required.

The association’s board will usually prepare a formal Request for Proposal, which defines the contractual scope of work and community expectations, and invite at least three vendors to participate in the bid process.

Once the bids are received, the directors will typically meet in an executive session, which is closed to the membership, to review the proposal packages, vet the bidding vendors and take action in the form of a vote.

A majority affirmative vote of the board is all that is necessary to approve a vendor change. The board is then required to disclose the decision at the next general session board meeting, which is open to the membership.

Board members have access to a considerable amount of information regarding vendor contracts and performance that homeowners may not have knowledge of.

The board is responsible for reviewing monthly invoices, fielding homeowner concerns and complaints, conducting regular vendor performance evaluations and reviewing monthly financial statements.

When a board determines it is necessary for the association to consider a vendor change the reasons are not always apparent to the membership.  The board could be making the decision to lower expenses in the interest of avoiding assessment increases, they may be taking action in response to homeowner complaints and poor vendor performance reviews or they may simply be striving to get a better value for the association by increasing the scope of services, lowering association expenses or a combination of the two.

It is important to keep in mind that the association’s board members are your fellow neighbors and community volunteers. They do not get compensated for their time or service.

Most members join the board of directors with the best intentions to serve their fellow homeowners and protect the value and integrity of the community. Although there may be times homeowners disagree with a decision, the board has considerable authority to make association’s decisions without member input.

That being said, an association is a democracy with annual board member elections. If you are not happy with your community’s leadership, you have the right and responsibility to vote them out and elect a new board.

Readers can submit questions to:
drhoa@pmprollc.com.

Brad Watson is managing director of Property Management Professionals which is located at 27413 Tourney Road, Suite 100, Valencia. He can be reached at 661-295-4900 or www.
pmprofessionalsllc.com. The column contains general information about HOA practices and does not represent the specific CC&Rs of each HOA or replace the advice of an attorney. Watson’s column reflects his own views and not necessarily those of The Signal.

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