Board Replacement
Q. Our condominium association has been in turmoil over the last year, trying to resolve a number of issues, including pool expenses and new roofs. Now there is a group of owners who want to remove the board of directors. Are there some ways to tell if the Board is out of control?
A. There are 10 basic questions to ask when assessing a board’s performance.
1- Does the board announce the time and place of the meetings?
Under the Virginia Condominium Act, an association must provide notice to the owners of the meetings of the board of directors in a manner “reasonably calculated to be available to a majority of the unit owners”. The notice must include the date, time and place of the meeting, but is not required to state the agenda.
2- Are homeowners invited to attend?
The Condominium Act also requires that owners must be allowed to attend the board meetings. Although, except during a brief “owner’s forum” before the board meeting begins, they may only listen to the discussion. Committee chairs who are not board members, may be called upon to give reports.
3- Do the directors attend the board meeting and do they come prepared?
One of the most frustrating problems is when meetings are set and yet there is not a quorum of the board present or the directors have not bothered to prepare for the meeting.
4- Is there time set aside for the homeowners to comment and raise issues with the board?
The Condominium Act states “… The [board] shall provide a designated period of time during a meeting to allow unit owners an opportunity to comment on any matter relating to the unit owners’ association.”
5- Does the Association have an annual financial review by a qualified outside party?
Regardless of the document requirements, every association should have an outside financial review done annually. This may not have to be a full-blown audit (unless the documents require it) but an outside CPA should do it. Occasionally mortgage lenders are asking for a copy of the audit and due to the size of the budget and number and variety of transactions it may be prudent for large associations do a full audit annually.
6- Has the association had a reserve study performed?
The Condominium Act requires that every association have a reserve study done at least every five (5) years. Many lenders are now asking to see both the reserve study and the CPA’s certification that it is fully and properly funded. Further, under the statute, the reserves must be reviewed annually by the board to insure that they are being funded in accordance with the study.
7- Is the Association’s property being properly maintained?
This is as simple as looking around and taking stock of the appearance of your community. Are there weeds in the floor beds? Do the buildings need to be painted or the roof replaced? Nothing affects sales and the sales process more that what is known in the industry as “Curb appeal”. If your community is not attractive, sales will suffer, as will prices.
8- Is the board doing business with any of its own members or their relatives?
This is probably one of the biggest no-nos for any Board. While not illegal, it can and often does create problems. In fact, we recommend that the board never do business with relatives or friends of members of the board. We would also recommend a policy of not doing business with owners or residents of the community because in the event there are performance issues which arise it makes for a very uncomfortable situation for both parties.
9- Are the rules of the Association enforced regularly and uniformly?
Rules have to be enforced consistently and they have to be enforced uniformly - no favors and no exceptions. If you have rules which are not being enforced, then you need to repeal them as soon as possible
10- Are a majority of the owners pleased with the overall operation and condition of the property?
If the majority of the owners are not happy, then it is probably time for a change of leadership. It is important to remember that the new directors will be facing the same issues and need to generate some good ideas on how they are going to resolve the issues or it won’t be long before they find that they are a board that is not performing.
Answering these questions will provide a good “management audit” of the board and should tell you what needs to be done at your next election.