Archive for July, 2010

How To Run a Successful Condo, Co-Op or HOA Board Meeting

Thursday, July 22nd, 2010

Hello again, and welcome to our new “How To” feature!  In the next few blogs, we’re going to cover a number of practical areas that will help board members and homeowners manage common issues in Shared Ownership Communities (SOCs).  In our book, New Neighborhoods, The Consumer’s Guide to Condominium, Co-Op and HOA Living, we devote an entire chapter to running meetings, but I’m going to try to distill that advice into a smaller package.  If you’re still interested in more information, of course I recommend the book as a great resource.

As explained in New Neighborhoods, Condo, Co-Op and HOA boards are democratically elected groups of owners who are tasked with overseeing the corporation that operates the community.  Elections are periodically held to elect new directors (or retain old ones) and generally it is those directors who serve as the officers of the corporation as well (although in most states it’s not strictly necessary that officers be either directors, or even owners, except perhaps the president and treasurer).

So once officers are elected, they must find a way to conduct the business of the association, and that is usually done in the context of a MEETING.  Now, a corporate board meeting is not the same as going to a book club luncheon.  There are certain corporate fomalities that need to be used if you want to ensure a smooth and conflict-free environment.

1) Know your Rules (Of Order)

Over 100 years ago a very smart American named Henry Robert published a procedural rulebook called, simply, Robert’s Rules of Order.  Robert’s Rules is today the gold standard for all meeting organization.  What Robert’s does is explain, in exacting detail, how a meeting is run–who the chairperson is, when each person may speak, how to make motions, how they are seconded and voted upon, etc.  The documents of your SOC very likely specifies that some form of procedural rules should be used at all board meetings, and it’s likely that Robert’s is mentioned by name (although there are other very good options).  Now, if you’re in a tiny condominium with four owners, and all four sit on the board, it’s reasonable to hold your board meetings at a coffee shop somewhere and be quite happy and efficient.  But once associations involve dozens, even hundreds of unit owners, it really does benefit the board if a rule system like Robert’s is strictly followed.  Otherwise, the chairperson of the meeting (usually the president) is going to find herself trying to maintain order in a large meeting as if it were a classroom, and that generally doesn’t work very well with adults.  When I was elected president of my own condominium, the very first thing I did was to buy a copy of Robert’s Rules for all of my board members.  And by the way, Robert’s works great in any formal meeting–charity boards, fraternal organizations, and of course all corporations (like condos and HOAs).

2) Stick to the Plan (Your Agenda)

Another legal requirement of most SOC board meetings is that they must be noticed in advance (48 hours is common) by posting an AGENDA in a public place on the property.  An agenda is simply an outline of what issues will be discussed at the meeting.  Any items not on the agenda cannot be discussed.  Now, obviously this can be an inconvenience to board members, who often want to chat at the last minute about items that aren’t on the agenda, or that were forgotten.  But the idea of posting an agenda is to allow owners to accurately know what issues will be discussed at a meeting so that they can attend if an issue is important to them.  So I’m not particularly fond of agenda items that state “discussion of any and all business that may be important to the association.”  That may be legal, but it certainly goes against the intent of notice requirements and makes it impossible for owners to adequately participate in meetings (more on that a bit later).  Instead, I strongly recommend that agendas be explicit and specific, outlining all items that might be discussed (it’s always OK to table a matter if needed) and whether those items are old or new business.

3) Embrace your Inner Exhibitionist (Do it in the Open)

The current trend among laws around the country is to mandate that the vast majority of SOC meetings must be held in a public place, open to all members.  Under many laws, members must be allowed to speak on all issues on the agenda for some minimum amount of time.  Generally, the only exceptions to these rules involve legal meetings, which are required to be closed to maintain attorney-client confidentiality (the attorney represents the association itself, not the owners, and so the only ones who may be privy to the attorney’s advice are the officers and certain employees of the association.  Otherwise privilege is broken, and any advice may be requested by third parties, such as the opposition in a lawsuit).  But assuming that we’re talking about a typical board meeting, whether or not your documents, or the laws of your state require open meetings I would STRONGLY suggest that all of your meetings be open to members.  Look at it this way–directors are democratically elected by the owners to represent the owners in a mirror of our own American governmental system.  Nothing looks more corrupt than an elected government operating in secret 100% of the time.  That’s why our own federal government is largely open to the press–look at TV channels like C-Span.  This is just a very basic element that is core to our democracy, and ultimately SOCs are supposed to be mini representative democracies, themselves.  The owner’s don’t have final say on decisions, but they are supposed to be able to contribute.

The main reason that boards fail to follow open meeting rules is because it’s inconvenient for volunteers, who ordinarily have their own lives to manage, to have to meet in a big formal meeting every time they want to make a decision about the community.  In the modern age it’s tempting to simply send around an email to discuss issues among the board at their convenience.  But remember that the main reason owners may attend meetings is so that they can comment and add their thoughts on issues that affect their community.  Often, you will find that an owner has an unusual expertise in an area being discussed by the board, one where his or her advice is welcome and even essential.  Or, you may find that a contrary position as presented by an owner is convincing enough to change the board’s mind about its course of action.  Either way, it’s never a bad idea to allow owners to participate and comment as much as possible.  Ultimately, it serves as a CYA for the board–actions taken at open board meetings, where owners are allowed to participate and comment, always carry a greater impression of propriety than a decision made in secret by a quiet cabal.

4) Let the Man Speak! (Dissent is Your Friend)

It’s a normal human reaction–when we are criticized or disagreed with we tend to get defensive, and even feel like we are being attacked.  So it’s not surprising that board members often find themselves shouting down contrarians in the audience at a meeting, and those disagreements can even turn violent.  But honestly, there’s no reason for that to happen.  Part of serving as an elected official is becoming tolerant of criticism and dissent–in fact, that’s probably the hardest part about serving as a board member in an SOC.  It’s hard to listen to your neighbors tell you you’re making a mistake!  But disagreements become far more virulent if opponents aren’t allowed to vent a bit.  Sometimes, just the act of speaking ones mind is enough to allay concerns about procedure, even when the ultimate decision goes against the owner’s wishes.  If you are a board member, and especially if you are a board president, try to allow yourself to take criticisms, disagreements and even nasty comments for what they are–the thoughts of a fellow neighbor or owner who simply wants to be heard on an issue and, you’ll sometimes find, makes perfectly reasonable points that you simply may or may not agree with.

But what I can assure you is that if you DON’T allow a dissenter to speak at an open meeting, if you dismiss him, or cut him off, you’ve now permanently turned that dissenter, who may only have an issue with one particular topic being discussed by the board, into a full out ENEMY of the board of directors.  This person will now attend every board meeting, making sure to criticize the board for every decision they make (whether or not that owner agrees with the decision or not).  And really, why not?  It’s only fair that an owner, with an equal stake in the decision to each and every board member, has the right to speak his or her mind when that decision is being made.  Listening to dissenting opinions is good management for any corporation.

Now, that doesn’t mean that every meeting must become a free-for-all of shouted diatribes and screaming matches.  Instead, the chairperson of the meeting can use the Rules of Order (remember number 1 above?) to control when people can speak on an issue and for how long.  Be strict about the requirements–every owner may speak, but for no more than 3 minutes, and the chair retains the right to cut off discussion if it becomes off topic, or something of that nature.  But cutting off dissent entirely is a bad decision for any board, and the moderate amount of discomfort it saves at meeting time will ultimately translate into a huge cauldron of dissent later on.  So let them speak, bit your tongue, thank them for their comments and move onward with the agenda.

5) Confidence is Key (Trust in your Judgment)

Edmund Burke, a famous Irish politician, once said that “Your representative owes you not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.”  SOC boards, just like most democratic governments, are representative democracies, not pure democracies.  By and large owners don’t vote en masse on individual issues.  The reasons for this are basic and practical–the vast majority of people, engaged in their own complex lives, cannot reasonably be expected to educate themselves about every issue facing a corporation, at least not enough to make a well-judged decision about the subject.  And further, unlike board members, individual owners have no legal duty to the association, and can make decisions that are personally preferable, but globally inadvisable.  So once an issue has been discussed, and every owner has had an opportunity to weigh in on the subject, it’s up to each board member to use their best personal judgement to decide how to proceed, given their duty to the association as a fiduciary (a person in a unique position of trust).  You can’t be an effective director if you make decisions based on the rumblings of one or two of your friends, or in an attempt to keep other owners from disliking you, or simply because you’re intolerant of conflict.  Serving as a board member requires some internal fortitude.  It’s your responsibility as a director to make your best, well informed decision, consistent with the requirements of the association, even if a majority of owners would disagree with that decision.  A very common example of this is when a special assessment is needed to perform some form of advisable but non-emergency maintenance on the property.  Especially in difficult economic times you’ll find that a large percentage of owners oppose the expenditure, but deferred maintenance is almost always more expensive down the road.  It’s well within the rights of a group of board members to decide that a decision is in the best interests of the association as a whole, even if it goes against the stated will of the majority.  Remember, if a true majority of owners rejects a board, they can always recall the members and elect a new board that they believe is more representative.  Still, this rarely happens in practice because a true majority of people rarely disagrees with the decisions made by a board that follows the rules I’ve discussed above.  And, even in that rare case where your neighbors recall you from the board, it’s better to be rejected for sticking to your own ideas than retained for caving to those that you don’t agree with.

Well there you go, some practical tips for SOC directors and homeowners for how to manage board meetings!  Until next time, good luck and always remember to be neighborly!

Emergency Mode! Tips on Dealing With Disasters in Condos, Co-Ops and HOAs

Wednesday, July 7th, 2010

Hi again!  The last couple of weeks have been pretty rough at my building–a string of bad luck minor disasters, one after another, have severely tested management’s ability to respond.  But so far they’ve come through with flying colors–and I thought I’d share our experiences and give my thoughts on some of the factors that go into dealing with emergencies effectively and efficiently.

“Disaster” number 1–About two weeks ago, one of our compressor pumps, which pushes water into the cooling tower to operate the building’s air conditioning, broke down.  Because two others were also being repaired at the time, we were down to a single pump providing water for the entire building’s cooling needs.  Of course, the night this happened (a Sunday, when else), the AC in the building went out entirely, on a balmy 90 degree Florida evening.  By the next morning staff had gotten it running again, but only by working creatively to adjust the valves so that enough water was going into the tower to do the work of 4 pumps.  In the meantime, our air conditioning contractor is completely rebuilding the pump (there was a bent shaft, among other issues).

“Disaster” number 2–Within a day or 2, a second emergency struck–the water main that delivers potable water into the building developed a serious crack, leaking tremendous amounts of water underneath the driveway and threatening to rupture entirely.  If that were to happen, the building would lose water completely.  It’s one thing not to have air conditioning–it’s quite another to go without a shower for weeks.  Fixing the water main was therefore a true emergency repair.

I don’t want to go into too much detail about the specifics of these repairs, but I’ll give some background regarding the water main just so that readers can appreciate the scope of the problem.  The water main had cracked once before, and had therefore been repaired just a week earlier.  That repair required tearing up a six foot section of the driveway, cutting through 2 feet of concrete, excavating dirt and repairing a broken joint that connected the water main pipe to the building.  During that process, one of our two garages needed to be shut down for two days, the building was without water entirely for a day, a parking garage across the street was rented at a significant sum–it was a serious inconvenience for residents.  We thought, however, that the problem was corrected.

To our horror, just a few days later the water began again pouring out into the garage, this time with significantly greater force.  We assumed that the contractor had somehow botched the repair–but now it appears that we are dealing with several different construction defects that contributed to the repeated failure of the pipe.  It’s impossible to tell at this point the exact cause of the water main break, but our engineers are investigating.

For the moment, the important issue is not who caused the leak, or how it occurred, it’s HOW to fix it, and fix it properly.  And that’s where a good management team, good board, and good planning all come into play.  Let’s look at the individual elements.

1)  Good Management–The absolute most important factor in any shared ownership community (SOC) in dealing with disasters is having a management team that you can trust, that is competent to deal with the issue and that is either properly informed or knows how to inform themselves.  We’re lucky to have a great manager and a very knowledgeable chief engineer at the property, and both are dedicated enough that they put themselves on 24/7 call to help deal with the problem.  Of course, when it first began, we assumed that the driveway could be dug up and repaired again in a day or so, but the damage has turned out to be far more extensive–now we’re running on over a week of excavation.  You know that big red dog, Clifford?  Well it looks as if Clifford is having a field day on the side of our building.  There’s a giant hole dug into the driveway that actually runs underneath the driveway for several yards.  When the project started, the digging was all done by hand (occasionally one would see dirt being flung out of the hole, just like a dog digging under a fence), but the excavation ended up being extensive enough that a vacuum truck was brought in to suck the dirt out of the hole.  And that vacuum truck has now been here for days, just sucking dirt and emptying it away from the property–I can hear it buzzing downstairs as I write this blog.

So the manager and chief engineer, both appropriately dressed-down for digging, have been putting themselves in the thick of the repair, jumping into giant holes in the ground, peering into dark mining-shaft tunnels and coordinating with the pipe contractor.  Without their dedication, and without the board’s trust in their abilities to coordinate the repair effectively, this emergency would have become a full-on nightmare for the board.  It is absolutely critical, long before disaster strikes, that SOCs ensure that they have the absolute best management team in place that they can find and afford.  If you as an owner have any concerns about your property manager’s ability to direct an emergency situation, now is the time to speak up to the board, BEFORE there is an issue that turns into a true catastrophe.  I feel strongly that our management team has effectively prevented an emergency situation, admittedly unpleasant and stressful, from becoming a building-clearing nightmare scenario for owners.

Now, I certainly understand that there are smaller properties around the country that cannot afford an independent manager, and where the board members run the show.  While this is sometimes necessary, it is simply never ideal.  Directors and officers are rarely trained in SOC management, and are even less likely to be able to effectively deal with emergency engineering issues.  They will be at the whim of the contractors who are advising them, and will be under tremendous pressure from the other owners to fix any problems quickly (and quickly is not always the best policy–sometimes doing repairs deliberately and taking your time is the way to prevent future problems).

2)  A Good Board–The second, very important factor in dealing with emergencies is having a good board of directors, one that is not afraid to make decisions, that is willing to meet on short notice to deal with important issues and that has good communication practices.  When an emergency arises, it will often be up to the board to rapidly consider repair proposals, analyze engineering reports and authorize the expenditure of large sums of money.  To do that properly, it takes dedication, and it takes bravery, because there are always some owners who will balk at the idea of spending any money on a property, even to repair a life-safety issue.  Serious issues may take tens of thousands of dollars to repair, and in most properties that money must be recovered either through insurance or a special assessment of the owners.  This is exactly the time when a board needs to act professionally and not be swayed by neighbors who might be shouting in their ear to do one thing or another.  Instead, board members should remember their duties to the association (maintain the property, maintain the property, maintain the property) and do what’s needed to satisfy residents’ basic needs.

3) Good Contractors–Emergencies like this are why it’s critical to cultivate strong relationships with contractors that you can trust.  Sure, it’s all well and good to save money on a major project by going with the lowest bidder, but picking the lowest bidder is not always the best choice.  Sometimes, the lowest bidder is actually the lowest for a reason, and may be using cheaper, less well-trained labor or cheaper materials.  And while picking the lowest bidder on a small project that is less important to a property is attractive, consider the long term value of working with a contractor who, for a bit more money, you trust to do the really difficult work at the property.  At our building, we attempt to use the same contractors for certain issues (air conditioning, elevators, plumbing, landscaping, etc.) and accept that the cost may not always be, to the dollar, the cheapest option available.  The decision more than makes up for itself in consistency, efficiency (though superior long-term knowledge of the property) and a desire, on the part of the contractor, to deal with emergency repairs quickly and appropriately.  Consider this–who is going to do a better job repairing an issue, and spend more time and effort on the repair–a contractor for whom the repair is a one-shot deal, or the contractor who expects to get future work out of the property?  Long term contractors will almost always be the best choice in dealing with emergency repairs, and it pays to have contractors that you trust available at a moment’s notice.

So because we have a great management team, a dedicated board and trustworthy contractors at a moment’s call, an emergency that might have been catastrophic has instead been livable, if annoying, for our residents.  Despite the pipe repairs, a smart bypass with a fire hose has ensured that we have plenty of water (although not really hot water, as there’s not quite enough pressure to run the boilers at a super-hot temperature), and the A/C hasn’t gone down since that first Sunday evening.  A life-safety problem that could have been a total nightmare (a totally dry building for weeks) has instead been just another bump in the complex pathway of SOC maintenance and management.

Until next time, good luck with your own properties, and if disaster strikes, don’t panic!  Just make good choices and trust in your team.