Governance of POAs

Discussion Concerning Meeting Minutes

2009 July 28
Last edit:  2008 Aug 08.  See History for brief descriptions of changes and updates. 

    The question concerning the content and detail to be included in meeting minutes has been the subject of numerous posts on HOA Talk.  It is an important question.  There are many considerations. 

     The continuation of this post is a discussion of that question with references to papers by other  writers.  My recommendation is for sufficient detail so that the reasons for each action are described for all potential users of the minutes.  Members have a right to know how they are being represented in board decisions, and that includes how each member voted on each motion. 

Don Nordeen
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Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain.
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• Key Words:  • Attorney Issues;  • Fiduciary Duty;  • Governing Documents;  • Nonprofit Corporation Acts;  • POA Board of Directors Issues;  • POA Governance;  • POA Members' Rights;  access to records;  access;  accountable;  arbitrary and capricious;  arbitrary;  board of directors;  breach of fiduciary duty;  business judgment rule;  capricious;  closed meeting;  closed session;  duties;  duty of care;  duty of loyalty;  duty of obedience;  duty to act;  duty;  election;  executive session;  fiduciary;  fiduciaries;  fiduciary duties;  fiduciary duty;  Governance of Not-for-Profit Organizations;  governance;  governing documents;  governing;  grievance;  handbook;  harass;  harassment;  HOA abuse;  HOA ombudsman;  HOA;  home owners association;  home owners associations;  homeowners association;  meeting;  members' rights;  Michigan;  Non-profit Corporation Act;  non-profit corporation;  Nonprofit Corporation Act;  nonprofit corporation;  open meeting;  POA members' rights;  property owners association;  property owners associations;  prudent person;  public policy;  trustee; 

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Posts on HOA Talk

2009 May 05
See History for brief descriptions of changes and updates. 

    This writer has made a number of posts on HOA Discussions on HOA Talk which provide additional information on Governance or Property Owners Associations.  Click on HOA Discussions to access the discussions as a non-registered reader.  More privileges are provided if you sign up as a registered user. 

    The continuation of this post provides search information for the HOA Discussion Topics on which I have posted. 

Don Nordeen
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• History:  Changes are usually identified in the text with the date which facilitates searching by date.  Edits are usually noted by add and delete changes. 
  • 2009 May 05 — Initial Post
• Links:  Posts on HOA Talk at [http://swagman.typepad.com/poa_governance/2009/05/posts-on-hoa-talk.html]
• Key Words:  • Accounting Principles;  • Attorney Issues;  • Case Law, Michigan & Other;  • Common Interest Development;  • Community Associations Institute;  • Fiduciary Duty;  • Governing Documents;  • Legislation, CID & POA;  • Legislation, CID & POA Model & Content;  • Legislative Issues & Proposals;  • Nonprofit Corporation Acts;  • POA Board of Directors Issues;  • POA Governance;  • POA Members' Rights;  • POA Problems;  • POA Resources;  • POAs, General;  • Private Government;  • Reference Materials & Papers;  abuse; access; access to records; accountable; accounting; accounting principles; accounting standard; ADR; advocacy; AICPA; AICPA Audit & Accounting Guide; AICPA Audit & Accounting Guide for Common Interest Reality Associations; alternate dispute resolution; alternative dispute resolution; amendment; annual meeting; architectural committee; architectural control committee; architectural review committee; attorney; attorney client privilege; attorney general; attorney obligation; audit; bill of rights; board of directors; breach of fiduciary duty; business judgment rule; bylaws; CAI; case law; CC&R; CC&Rs; CID; CID/POA; CIDs/POAs; CIRA; client; client attorney privilege; client attorney privilege; client lawyer privilege; closed meeting; closed session; collection; common interest community; common interest development; common interest homeowners coalition; Common Interest Realty Association; community association; condo; condo ombudsman; condominium; Condominium Act; condominium association; condominium ombudsman; conflict; conflict resolution; consolidated financial statement; constitution; corrective action; Covenant; Covenants Conditions and Restrictions; CPA; declarant; democracy; democratic; depreciation; developer; developer control; development; director; directors’ obligation; disclosure; dispute; dispute resolution; due process; dues; duties; duty; duty of care; duty of loyalty; duty of obedience; duty to act; easement; election; enforcement; enforcing; engagement; engagement letter; excessive; executive; FASB; fiduciaries; fiduciary; fiduciary duties; fiduciary duty; financial statement; fine; foreclosure; freedom of information; GAAP; generic CC&Rs; glossary; governance; Governance of Not-for-Profit Organizations; governing; governing documents; grievance; harass; harassment; HOA; HOA abuse; HOA ombudsman; home owners associations; Homeowner Bill of Rights; homeowners associations; improvement; land development; law; laws; lawsuit; lawyer; lawyer client privilege; legislation; Legislation, CID & POA; Legislation, CID & POA Model & Content; legislative; legislative issues & proposals; legislature; limitations; lodging; meeting; members' meeting; members' rights; model act; model bylaws; model CC&Rs; model covenants conditions and restrictions; negligence; nonprofit; nonprofit corporation; non-profit corporation; Nonprofit Corporation Act; Non-profit Corporation Act; nonprofit GAAP; notice; obligation; oligarchy; ombudsman; open meetings; organization as client; owners' rights; planned communities; planned communityplanned unit development; POA; POA Act; POA Board of Directors issues; POA governance; POA members' rights; POA problems; POAs, general; preservation; preservation fund; Private Government; private government; problem solving; problems; property owners association; property rights; proxies; proxy; proxy vote; proxy voting; public policy; PUD; quorum; reference materials & papers; regulation; rental; reserve; reserve fund; restrictive covenantcommunity association; home owners association; homeowners association; property owners association; resources; restriction; restrictive covenant; roles and responsibilities; rule; rules and regulations; special meeting; statement of rights; subdivision; transparency; trustee; unreasonable; vacation rental; vote; voting

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Should a Legal Opinion be Believed?

2009 April 18
Last edit:  2009 Dec 21.  See History for brief descriptions of changes and updates. 

    The title asks a very important and difficult question for members and board members of owners associations.  Contrary to a common perception, legal opinions are not unique.  A wide range of legal opinions can typically be written on a legal question depending upon the facts and documents provided, the direction from the agent of the client, and the philosophy of the attorney.

    The title is not a criticism of attorneys.  Rather, the post is an analysis of what attorneys do for clients and what that means for board members and individual members of owners associations.  A principal conclusion is that members should be very skeptical of advocacy legal opinions by attorneys for owners associations. 

     The continuation of this post discusses the issues involved and provides recommendations. 

Don Nordeen
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Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain.
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• Key Words:  Attorney Issues;  Fiduciary Duty;  Governing Documents;  POA Members' Rights; abuse; access; access to records; advocacy; agent; case law; client; engagement letter; model act

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Outline of Dispute Resolution Recommendations

2006 August 13
Last edit:  2008 Dec 27.  See History for brief descriptions of changes and updates. 

    This post provides an outline of dispute resolution recommendations for common interest developments (CIDs) and property owners associations (POAs).  The recommendations provide practical, effective, certain, timely and low-cost means of enforcement and dispute resolution for individual POA members. 

    This is work in progress.  It is being posted at this time for comment and suggestions.  Most of the background is well developed and shows the need for reform.  The concepts of Enforcement Considerations and Dispute Resolution Considerations are closely linked.  Various alternatives for reform for listed with a few notes regarding each.  Previously, the outline in this post was included in the post on Dispute Resolution Considerations. 

Don Nordeen
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• History: 
  • 2006 Aug 13 —Initial Post
    
  • 2006 Aug 17 —added alternative of ordinance to use the municipal court for dispute resolution concerning alleged violations of CC&Rs
  • 2006 Aug 26 —added information concerning pattern of litigation involving POAs
  • 2008 Sep 29 — internet links checked and updated
  • 2008 Dec 27 — addition recommendation for ombudsman office in Office of Attorney General and recommendation on allocation of total legal costs
    
• Links:  Outline of Dispute Resolution Recommendations at <http://swagman.typepad.com/poa_governance/2006/08/outline_of_disp.html>
  
• Key Words:  • Attorney Issues; • Common Interest Development; • Fiduciary Duty; • Governing Documents; • Legislation, CID & POA Model & Content; • Legislative Issues & Proposals; • Michigan; • POA Board of Directors Issues; • POA Governance; • POA Members' Rights; • Private Government; abuse; ADR; alternate dispute resolution; alternative dispute resolution; attorney; common interest community; common interest development; community association; complaint; democracy; democratic; dispute; dispute resolution; enforcement; governance; home owners association; homeowners association; Legislation, CID & POA Model & Content; legislative issues & proposals; ombudsman; planned communities; planned development; planned unit development; private government; problem solving; property owners association; public policy; statement of rights

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Fiduciary Duty

2005 November 30
Last update: 2006 Mar 01. See History for brief descriptions of changes and updates. 

     This post is work in progress, and may be nearly completed.  The continuation now contains excerpts from the Michigan Nonprofit Corporation Act, excerpts from the ABA Model Nonprofit Corporation Act of 1987, excerpts from case law, one paper on the subject, and numerous references available on the internet.  At this time, I believe that most of the concepts are in the continuation. 

    Your questions and comments are welcome. 

Don Nordeen
   
P. S.  Please be advised that I am not an attorney.  This post is concerned with governance and management issues arising out of attorney-POA relationships.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• History: 
  • 2005 Nov 31 — Initial Post/li>
  • 2006 Jan 10 — added discussion and reference that courts tend to apply fiduciary duty for business corporations to nonprofit corporations
    
  • 2006 Mar 01 — Added excerpts concerning fiduciary duty from Michigan Nonprofit Corporation Act and the Revised ABA Model Nonprofit Corporation Act of 1987, and revised other discussion. Use your browser's search on the date to identify the added/revised text.
• Links:  Fiduciary Duty at <http://swagman.typepad.com/poa_governance/2005/11/fiduciary_duty.html>
  
• Key Words:  fiduciary duty KeyWords

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Update of Model POA Act (UCIOA)

2005 September 10
Last update:  2008 Sep 26.  See History for brief descriptions of changes and updates. 

    In an internet search on other subjects, I discovered that the Uniform Law Commissioners have a project to update the Uniform Common Interest Ownership Act.  The formal title for the Uniform Law Commissioners is The National Conference of Commissioners on Uniform State Laws (NCCUSL). 

    The Uniform Law Commissioners have developed at least two model acts concerning POAs (they use the term "common interest owners"). 

• Uniform Planned Community Act, issued in 1980
• Uniform Common Interest Ownership Act (UCIOA) issued in 1994

Both of these appear to be based on real estate development aspects and the transition from developer controlled to POA control including the transfer of common property.  Neither significantly addresses the governance of the POA after control has been transferred to the POA. 

    The Uniform Law Commissioners now have a "Drafting Committee to Prepare Amendments to Uniform Common Interest Ownership Act."  The committee now has draft documents on relevant reference materials and proposed amendments, all dated 2005 Feb 24.  My cursory review suggests that the proposed amendments extend what I call the "Developer's Model for POAs" (board controls almost everything with few members' rights).  Some groups have provided documents concerning the members' rights issues, but they don't appear to be integrated into the proposed amendments. 

    The continuation of this post provides additional information and comments on the model laws developed by the Uniform Law Commissioners.  Your emails to the Commissioners are needed to bring the members' rights issues into consideration.   You can contact this committee at:  nccusl@nccusl.org.  Please include the name of the committee in the Subject line of your email.

    (added 2008 Sep 26)  Further monitoring of the activities indicates that the Drafting Committee appears to be responsive only to organizations within the Common Interest Development Industry.  This is indicated by the reference materials they have posted at the UCIOA website.  I have written to both the chair of the committee and its reporter and have not received any response, nor were the communications included in the committee's reference materials. 

Don Nordeen
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• History: 
  • 2005 Sep 10 — Initial Post
  • 2005 Dec 04 — added information on the Uniform Common Interest Ownership Act (1994)
  • 2006 Jan 06 — added Selected Transcript of 2005 July 27 Meeting of the Drafting Committee on Amendments
  • 2006 Mar 04 — added more information on the Uniform Common Interest Ownership Act (1994), and the role of the drafting committee
  • 2006 Apr 28 — reference CLRC memo on common interest model laws and related discussion added
  • 2006 Jun 19 — Information added on Maryland's Common Ownership Community Task Force established by the legislature.
  • 2006 Nov 01 — reference to Florida Report on CID/POA law added
  • 2008 Sep 26 — added paragraph to introduction concerning the limited receptivity of the writing committee
• Links:  Update of Model POA Act (UCIOA) at [http://swagman.typepad.com/poa_governance/2005/09/update_of_model.html]
• Key Words:  KeyWords

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Attorney Obligations to Third Parties

2005 September 10
See History for brief descriptions of changes and updates. 

Derivative Liabilities a Danger
Eye on Ethics
Arizona Attorney
2005 June

Introduction

    The above title is from the Arizona Attorney, a publication of the Arizona Bar Association.  The article follows this introduction. 

    Have you ever thought that your POA’s attorney should be responsive to your interests since you are affected by the attorney’s advice and recommendations?  Are you a client since you, as a member of your POA, are paying your part of the attorney’s fees through your dues?  Since you are paying for the advice and recommendations, shouldn’t you be able to read the advice and recommendations?  Shouldn’t the advice and recommendations include a description of the facts and circumstances on which the advice was developed? 

    A partial answer to the above questions is that the board could act immediately to make all board/attorney communications available for inspection/copying to the members, with one important temporary exception.  Is it in the interest of the Association to do so?  Yes.  The temporary exception is for communications on any matter concerning negotiation or litigation while that matter is in progress.  Once the matter has been completed, then there is no reason for the information to be privileged. 

    Is the attorney obligated obligated to so advise the board?

Don Nordeen
   
P. S.  Please be advised that I am not an attorney.  This post is concerned with governance and management issues arising out of attorney-POA relationships.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• History: 
  • 2005 Sep 10 — Initial Post
• Links:  Attorney Obligations to Third Parties at [http://swagman.typepad.com/poa_governance/2005/09/attorney_obliga.html]
• Key Words:  KeyWords

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Letter of Engagement by Attorney

2005 September 10
Last edit:  2008 Nov 15.  See History for brief descriptions of changes and updates. 

    Do you understand the role of a POA's attorney(s)?  Who is the client?  What information between the attorney and the POA should be privileged?  To whom?  Who should decide?

    What should you do if there is a disagreement with an interpretation of the governing documents?  You believe the plain language in the governing document is clear?  The board has a different interpretation and claims that their interpretation is made by the POA's attorney.  (added 2008 Sep 28)  But the board as agent provided the instructions to the attorney and provided the documents and other information to be used in the attorney's opinion.  How should this be resolved?  Should you have access to the attorney's letter containing the interpretation and the analysis on which the opinion is based?  Should you have access to the instructions from the POA to the attorney that resulted in the opinion?

    Suppose a proposed amendment to the bylaws is represented as having the approval of the POA's attorney.  Should you be able to question the expertise of the attorney to recommend such an amendment?  Many of the same questions as in the above paragraph are also applicable. 

    The continuation of this post discusses these considerations and proposes that a letter of engagement be written by the attorney (added 2008 Sep 28)  But the board as agent provided the instructions to the attorney and provided the documents and other based on the above and other considerations defined by the POA and approved by members to address these and other issues in the attorney-client relationship and that the letter be available to members. 

    Your comments and questions on this important matter are encouraged.  Members should not assume that attorney-client relationship will serve their interests. 

Don Nordeen
   
P. S.  Please be advised that I am not an attorney.  This post is concerned with governance and management issues arising out of attorney-POA relationships.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• History:  Changes are usually identified in the text with the date which facilitates searching by date.
  • 2008 Nov 15 — added/edited discussion that legal opinions are not singular or unique, and that some uncertainty is inherent but can be reduced by good procedures
  • 2008 Sep 28 — added discussion to better ensure that legal opinions are in the interests of the POA
  • 2008 Apr 20 — added discussion of standards for legal advice
  • 2007 Oct 18 — added introduction for the standard for legal advice from POA's attorney to represent all the interests inherently involved
  • 2007 Oct 13 — added further discussion of the standard for legal advice from POA's attorney to represent all the interests inherently involved
  • 2006 Sep 24 — added discussion of the standard for legal advice from POA's attorney to represent all the interests inherently involved
  • 2006 Sep 10 — Initial Post
• Links:  Letter of Engagement by Attorney at [http://swagman.typepad.com/poa_governance/2005/09/letter_of_engag.html]
• Key Words:  KeyWords

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Attorney as Expert

Date:  2005 September 10
See History for brief descriptions of changes and updates. 

    This is "Work in Progress."  Your comments and questions are invited for consideration in drafting this post.  If there are any errors, please advise. 

    Is the attorney an expert?  If so, on what?  If the attorney has a bridge design company as a client, does that make the attorney an expert in bridge design?  Does an attorney have to be an expert in bridge design to be an attorney for a bridge design company?

    The answers to these questions are obvious.  The attorney should be an expert in the law.  The attorney does not have to be an expert in bridge design because the attorney is not asked for advice on bridge design.  Further, the attorney does not have to be an expert in organization, governance and management of the bridge design company. 

    How does this reasoning apply to attorneys and property owners associations?

    My tentative conclusion is that the retainer for an attorney for a POA should include a "letter of engagement" that defines how all of the attorney-client issues will be handled for the POA, the POA board, and the POA members, including the subjects on which the attorney is an expert. 

Don Nordeen
   
P. S.  Please be advised that I am not an attorney.  This post is concerned with governance and management issues arising out of attorney-POA relationships.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• History: 
  • 2005 Sep 10 — Initial Post
• Links:  Attorney as Expert at [http://swagman.typepad.com/poa_governance/2005/09/attorney_as_exp.html]
• Key Words:  KeyWords

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Organization is the Client

2005 July 02
Last update:  2009 Jan 12.  See History for brief descriptions of changes and updates. 

• Search with updated date as shown to identify added/revised text. 

    This is "Work in Progress."  Your comments and questions are invited for consideration in drafting this post.  If there are any errors, please advise.

    Who is the client?  the board?  the property owners association (POA)?  each and every member?  members collectively?  Important questions.  

    (Added 2005 Sep 09)  My tentative conclusion is that the retainer for an attorney for a POA should include a "letter of engagement" that defines how all of the attorney-client issues will be handled for the POA, the POA board, and the POA members.  This requirement should be a provision in the appropriate governing document, since the POA should speak through its governing documents on such policy matters.

Don Nordeen
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Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain.
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• History: 
  • 2009 Jan 12 — added discussion concerning difficulties for ensuring that attorney represents the Association as client
  • 2008 Oct 04 — revised discussion of applicable Michigan case law
  • 2008 Jan 24 — added paragraph citing a Michigan Court of Appeals case
  • 2006 Sep 24  — added discussion of standard for legal advice from POA's attorney  to represent all the interests inherently involved
  • 2005 Nov 12 — added reference to paper, "Attorneys should represent entire  association, not just the board"
  • 2005 Oct 23 — added discussion re attorney relationships for POAs
  • 2005 Sep 21 — added discussion that Florida and Virginia laws in effect require  attorney-client privilege to be waived
  • 2005 Sep 09 — Post date changed with addition of paragraphs concerning highest authority, attorney-client  privilege and other subjects
  • 2005 Jul 02 — Initial Post
• Links:  Organization is the Client at [http://swagman.typepad.com/poa_governance/2005/09/organization_is.html]
• Key Words:  KeyWords

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