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Minnesota Community Living November/December 2010

Self-Managed Association Boards: The Top Six Challenges That Face a Board Today

By Joel Starks, Sharper Management

In this series we will focus on you the board member and the challenges you face each day when running your homeowners association. We will explore six challenges and ways to work through them. If you see something that seems common or you identify further challenges, do share. I will add your comments and feedback as the year goes on. You can email your comments to joel@sharpermanagement.com.

A Board President Speaks
A small-association board president reported the following struggles—not to mention the earful she gets from frustrated homeowners who don’t know how hard it can be to manage an association and work full time.

  1. Enforcing rules: it is difficult to confront friends and neighbors.
  2. Knowledge of pertinent statutes: trying to understand the ‘legalese.’
  3. Developing meaningful specs for services/vendors, etc.: not my area of expertise and requires time.
  4. Frequent phone calls from members with matters that need attention: Time.
  5. Keeping track of paperwork: Time.
  6. Foreclosures: How can we protect the investment? What if they vacate?

In this article we will focus on the first of the six issues: Enforcing the rules.

A Reason for Rules
No one likes confronting his or her neighbor. For many boards it becomes a struggle to protect the investment while enforcing rules that are as simple as the color of the landscape rock—or more complex, as in shared common elements, which lead to privacy and liability issues.

Each day board members find rules and regulations that are either relaxed or not enforced. When rules are not enforced to the word, it can lead to frustration for new members or even liability and litigation. 
"Association directors have a fiduciary duty of care to the membership as a whole,” says Joel Hilgendorf, a certified real property specialist with Hellmuth & Johnson. "Directors sometimes struggle with taking their ‘member hat’ off, especially when it comes to enforcing covenants and rules against their neighbors and fellow members. Where a board carries out its duties and policies objectively and uniformly, it lessens the chance that members will raise claims against the association of disparate treatment, favoritism, Fair Housing violations, and breach of duty. Correspondingly, the association should have less collection issues and covenant violations. On the other hand, if the Board is unable to act objectively, and treats certain members differently from others, the chances are that such claims will increase.”

Becoming the Rules Police
There is a lot that a board can do to enforce rules, but in the long run, it is difficult to be a part of a community when you feel like you are the local "rules police” instead of great neighbors and sometimes close friends.

Boards are put in place to take care of the collective investment, both in the short-term care of day-to-day operations and long-term financial solutions that allow reinvestment in the property and property integrity. Eventually we all look to turn over or increase the value of our assets. It is that attitude that drives good stewardship and objectivity when dealing with vendors, homeowners and each other on a daily basis.

Next issue, we will further explore the legal side of association management: statutes, changes, and updates as they relate to associations and their liability to stay informed, educated and up to date.

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