Board Member Responsibilities

We want you to know that at this time we are maintaining regular office hours with some of our attorneys and staff occasionally working from home.  We are committed to be available to our clients in this difficult and uncertain time. Our attorneys and staff are also prepared, if necessary, to work remotely from our homes. We hope and pray that it will not become necessary and that we will soon be over the peak in the number of cases.

 DO YOUR ASSOCIATION’S GOVERNING DOCUMENTS NEED TO RETIRE?  OR MAYBE JUST GO TO REHAB?

If the community association you live in is showing some age, then most likely the association’s governing documents are as well.  When was the last time your Board of Directors reviewed your documents to make sure they are keeping pace with the way we all live in the modern world?  Do your documents comply with current provisions of the Virginia Condominium Act or the Virginia Property Owners Association (POA) Act?  Have you ever tried to find an answer to a problem your association was experiencing and found your documents were inadequate in giving the Board clear guidance?  Do you have difficulty finding certain topics in your documents? 
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What are the challenges facing a board of any association which has recently experienced significant board member turnover or has emerged developer control?  We have found that some of these prior boards have not been attentive to the area of enforcement of certain covenants. There are many challenges but one which requires prompt attention is architectural violations which have not been addressed by the prior board. Some homeowners have likely added fences, sheds, and other exterior improvements without getting approval from the Association.  Many of these addition and exterior improvements may not meet the standards that were part of their documents. The board has a duty to enforce covenants and rules. So, what can the new board do about these apparent violations?
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ASSOCIATION DISCLOSURE NOTICES EFFECTIVE JULY 1, 2019

 

A couple of months ago we told you about changes to the Property Owners Association (POA) Act and the Condominium Act regarding the Disclosure Notices.  We want to remind Association managers and board members that every association should now be using these revised Disclosure Notices.

Effective July 1, 2019 the Property Owners Disclosure Packet Notice prepared by the Virginia Common Interest Community (CIC) Board that is required to be included in every HOA Association Disclosure Packet for the initial sale by the developer and all subsequent resales pursuant to §55-509.5 of the Virginia Residential Disclosure Act was amended.  The Condominium Unit Owners’ Association Resale Certificate Notice that is required to be included in every condominium resale certificate pursuant to §55-79.97 was also amended.  Both Disclosure Notices now inform purchasers, under the section entitled “Assessments,” that mandatory fees collected by condominium associations may include the cost of “construction or maintenance of stormwater management facilities.”  
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Many Association governing documents require an annual audit.  In order for an audit to be meaningful in the Community Association context it must be performed by an independent certified public accountant. The only way to fulfill the requirements is to hire a CPA who is not a member of the Board or even an owner in the community.  While your documents may specifically require an audit, you need to be aware that a CPA can do one of three levels of financial examinations to determine if the accounting work is being done properly: a compilation, a review or an audit depending on the requirements set forth in the governing documents. In a compilation, the accountant simply puts the association’s numbers in a proper financial format. The accounts are not examined for accuracy. A review determines if the financial statements require any material modifications. It consists of inquiries into the association’s bookkeeping practices.  The audit is the most detailed level of review and, if done properly, it will offer reasonable assurance that the records are free of misstatements. The auditor also looks for irregularities or illegal acts. It is significantly more expensive than the other two reviews.

The American Institute of Certified Public Accounts has standards for doing audits on community associations. By adhering to these standards, an auditor can express an opinion on the association’s financial health.
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We have published on this topic in the past, but due to frequent misunderstanding of the process we want to provide more information on this topic. Most community association boards of directors realize the importance of, and requirement for, holding open meetings. There are times however when closed sessions of the board are needed. Fortunately in Virginia the statutes for both homeowners associations and condominium associations are very specific as to when closed meetings can be held. They are generally referred to as executive sessions. The purpose of executive sessions is to allow the board to discuss certain sensitive topics among themselves with no members present.  The following are the topics which qualify for a meeting to be closed pursuant to statute:

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Question: I live in a townhouse style condominium that is comprised primarily of young families and, consequently, we have quite a few dogs in the community. Our recorded Condominium Declaration states: “No more than two (2) pets shall be maintained per UnitThe Board of Directors may promulgate additional rules and regulations regarding pets.” Our Board of Directors has passed a board resolution changing the number of pets allowed per unit from two (2) pets to one (1) pet.  My son is heartbroken that we will have to choose which one of our dogs we have to give away.  Can board members just make up their own rules?
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If you own a single family home and your roof needs to be replaced, you either have to take money from savings or borrow the funds to pay for it.  Either way, it’s your sole responsibility to replace your roof.  But what if you own a condominium unit and the roof of your building needs to be replaced or the streets need to be repaved? What if you live in a homeowners association and the pool deck needs to be replaced?  Don’t you expect all of the owners in the community to contribute to the costs and don’t you expect there to be enough money in “savings” to pay for it. 
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The American Heritage Dictionary defines “fidelity” as “faithfulness to obligations, duties, or observances,” but what does fidelity mean to your association and why do you need fidelity insurance?  Every association collecting assessments has one or more persons handling the financial obligations of the Association (collecting and depositing assessments and paying invoices).  Every board member, management company employee or other individual handling an association’s funds has a fiduciary responsibility to handle those funds in a way that best benefits the association, but what if they don’t? 
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Questions often arise about the duties of the secretary in taking and producing minutes of meetings and providing association records to members. The primary functions of the Secretary are to produce minutes of meetings and maintain the records of the association. The secretary must produce a draft of the minutes for approval, and then finalize them with any changes upon once they are approved at the next meeting. Records to be maintained include all of the minutes, any resolutions adopted by the Board of Directors, correspondence, contracts and notices of meetings.

We suggest that the following files be maintained:
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