Board Authority
Q. Because of some recent decisions by the Board of Directors of the condominium I live in, some of us are wondering if the Directors should be putting more association matters to a vote of the unit owners. It doesn't seem fair that the Board of Directors can decide to eliminate a service or make other important decisions without the owners' consent. How can we determine what decisions our board is authorized to make without consulting us?
A. As a rule, the Board of Directors of a community association has the authority to make decisions on the use of the common area, to set the assessments and to do all things necessary for the operations of the condominium. The Board oversees and has to approve all of these items unless the governing documents specify that the owners have to approve a particular action, such as the election of Directors, amending the bylaws or declaration and selling part of the common area. Generally, the scope of the board's powers is fairly broad.
Board decisions are measured against a standard known as the "business judgment rule". The Board must ask themselves this question: Is the decision one that a prudent businessperson, having gathered all the pertinent facts, would reasonably make under the circumstances? If the answer to that question is yes, generally the Board's decision will withstand legal scrutiny.
Suppose, in your case, that the Board had taken a poll of the unit owners and observed the use of the playground facilities over time. Suppose, further, that the Board, based on the gathered information, concluded that so few residents use the facilities that the expense of maintaining them was an unwise usage of association funds. If so, the board's decision to remove the equipment is likely to be upheld if legally challenged.
However, suppose your condominium documents specifically require the consent of two-thirds of the unit owners to spend over $25,000 on recreational improvements. In that case, the Board's decision may be improper if they increase the size of the pool without that consent.
In a Florida case, the majority of condominium owners in a community voted to eliminate some tennis courts and replace them with green areas and parking spaces. The Board charged the owners a special assessment to accomplish the change. The condominium documents, however, stated that "no material modifications of the appurtenances to the units" could be made without the consent of all unit owners and all holders of first mortgages. A court decided that eliminating the tennis courts was a material alteration of the appurtenances to the units and required consent to be obtained.
If the Board wants to change a rule regarding the common area (or the common area itself) it should alert owners as early as possible. Not only will this give owners time to comment intelligently on the issue during the owner's forum at a board meeting, but it also may help them be more accepting of the change.
However, if the Board decides to raise the annual assessment or make a change to the Association's rules and regulations, unless there is a requirement to the contrary in the condominium documents, then the board can make the change without the owner's specific approval. To determine the scope of your board's powers, it's important to study your association documents. You may want to make a list of the matters which are subject to unit owner vote to keep handy for ready reference. It would be wise to have your list either prepared by or reviewed by your legal counsel.
The affairs of your Association would most likely come to a grinding halt if the Board had to consult with the unit owners for every decision that they made. Since the Board, like a town council, is charged with maintaining and protecting your community, they must have the authority to carry out their day to day duties and responsibilities without putting every issue to a community wide vote. You and the other unit owners can, in turn, exercise your power by electing a responsible Board of Directors at your next election.
You can learn more about this and other association topics at an all day event sponsored by the Community Associations Institute which will be held on Saturday, March 4, 2006 at the Chesapeake Conference Center. This one day event covers a variety of topics and a chance to meet with both vendors and other homeowners in community associations. More information can be obtained by calling the local chapter at 757-558-8128 or checking the CAI website at www.sevacai.org.