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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Proxies and Proxy Voting

2007 December 22
See History for brief descriptions of changes and updates. 

    This post discusses proxies and proxy voting.  Previously, the continuation is based on the reply I made on HOA Talk on Proxy Voting.  Your thoughts on what to add would be helpful.  Thanks.

    (Added 2009 Jan 23) The continuation of this post has been added to Meetings, Information, Proxies and Voting 

Don Nordeen
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• History:  Changes are usually identified in the text with the date which facilitates searching by date.
  • 2009 Jan 23 — Continuation text moved to Meetings, Information, Proxies and Voting 
  • 2007 Dec 22 — Initial Post
• Links:  Proxies and Proxy Voting at [http://swagman.typepad.com/poa_governance/2007/12/proxies-and-pro.html]
• Key Words:  proxy;  proxy voting; annual meeting;  special meeting;  absentee ballot

Draft Revision, Michigan Nonprofit Corporation Act

2007 January 24
See History for brief descriptions of changes and updates. 

    The Nonprofit Corporations Committee of the Business Law Section has been working on a revision of the Michigan Nonprofit Corporations.  The committee's reports are available at Nonprofit Corporations Committee Reports with the latest report dated 2005 March 03. 

    I have briefly reviewed a preliminary draft of the proposed amendments to the Nonprofit Corporation Act which appears to have been released in 2006 April.  I have many concerns about the fairness in the voting and related provisions that affect fundamental fairness and information provided so that members can make informed votes. 

    The continuation of this post is an email I sent to Ms. Jane Forbes, co-chair of the committee, expressing those concerns. 

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• History:  Changes are usually identified in the text with the date which facilitates searching by date.
  • Initial Post:  2007 Jan 24
• Links:  Draft Revision, Michigan Nonprofit Corporation Act at <http://swagman.typepad.com/poa_governance/2007/01/draft_revision_.html>
  
• Key Words:  • Legislation, CID & POA; • Michigan; • Nonprofit Corporation Act; democratic; Michigan; Nonprofit Corporation Act; Non-profit Corporation Act; POA governance; proxies; proxy; proxy vote; proxy voting; vote; voting

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Meetings, Information, Proxies and Voting

2007 January 10
Last edit:  2009 Jan 23.  See History for brief descriptions of changes and updates. 

    Election laws in most states are comprehensive, and are undergoing change as problems and abuses are discovered.  No part of democratic principles is more fundamental than guaranteeing the right the vote. 

    The voting and election laws for property owners associations are minimal.  In most states, they probably have evolved from corporation law to nonprofit corporation law to laws specific to property owners associations (POAs) in some states.  In Michigan, the voting and election provisions are in the Michigan Nonprofit Corporation Act, and are minimal.

    The continuation of this post discusses the various considerations, the potentials for abuse, the need for a fair method for informed absentee voting, and a recommendation for a "two-meeting" process (similar to the concept of three readings) to ensure fair and informed voting. 

Don Nordeen
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• History: 
  • 2009 Jan 23 — Text from Proxies and Proxy Voting added as new section
  • 2007 Jan 10 — Initial Post
• Links:  Meetings, Information, Proxies and Voting at [http://swagman.typepad.com/poa_governance/2007/01/meetings_inform.html]
• Key Words:  • Fiduciary Duty; • Governing Documents; • Legislative Issues & Proposals; • Michigan; • Nonprofit Corporation Act; • POA Governance; • POA Members' Rights; • Private Government; democracy; democratic; meeting; members' meeting; members' rights; Michigan; proxies; proxy; proxy vote; proxy voting; vote; voting

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Voting Requirements in the Michigan Nonprofit Corporation Act

2006 May 01
Last update:  2006 May 11.  See History for brief descriptions of changes and updates. 

    This post provides an analysis of the voting requirements in the Michigan Nonprofit Corporation Act (MNCA).  Voting requirements are specified in the Act for different situations.  However, the voting requirements for members are essentially the same for all of those situations.  Moreover, the Act specifies only very limited and specified deviations to be specified in the Articles of Incorporation or Bylaws, but the Act is silent with regard to mail ballots.  Mail ballots may be a surrogate for consents required for taking action without a meeting.  However, consents must be written and signed. 

    As a practical matter for a property owners association (homeowners association, community association, association of co-owners) in which participation at meetings and in votes is relatively small, only voting at a meeting in person or by proxy has a practical quorum or affirmative voting requirement.  The most practical of the alternate "voting provisions" effectively requires approval by the same number of members as would be required for a quorum of 100%. 

    The Michigan Nonprofit Corporation Act is part of the corporate world which allows voting only in person or by proxy at annual and special members' meetings. 

    The continuation of this post provides the supporting analysis. 

Don Nordeen
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P. S.  Please be advised that I am not an attorney.  This post is concerned only with organizing information available on the internet on this subject.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• Key Words:  • Governing Documents;  • Legislation, CID & POA;  • Nonprofit Corporation Acts;  • POA Governance;  • POA Members' Rights;  association of co-owners;  association of owners;  common interest community;  common interest development;  community association;  Governance of Not-for-Profit Organizations;  governance;  governing documents;  home owners association;  home owners associations;  homeowners association;  Michigan;  Non-profit Corporation Act;  non-profit corporation;  Nonprofit Corporation Act;  nonprofit corporation;  property owners association;  property owners associations;  proxies;  proxy vote;  proxy voting;  proxy;  vote;  voting

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Developer's Model for Governance of CIDs/POAs

2006 April 02
Last update:  2006 Aug 23.  See History for brief descriptions of changes and updates. 

    Many commentators have observed that governance of common interest developments (CIDs) and property owners associations (POAs) has a similarity from development to development and state to state.  Logically, there are valid reasons for these similarities.  Developers tend to copy what has worked well for others.  Developers don't want to invest the time and effort into development of unique governance for a new development.  The standardization has also occurred as a result of recommended practices from trade associations and agencies of government as described by Dr. Evan McKenzie in Privatopia. 

    It may be important to understand the history and reasons for the development and use of the Developer's Model for Governance to effectively address the issues and problems that are integrally related to the Model.  A Democratic Model for Governance addresses the issues and problems and is the focus of the information in this weblog. 

    This post is work in progress, but is needed at this time to provide necessary references in other posts. Please post your comments at the end of this post.  Thanks. 

Don Nordeen
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• History: 
  • 2006 Apr 02 — Initial Post
    
  • 2006 May 6 — added links to CAI's documents that support the developer's model
  • 2006 May 20 — added more information on legislators being advocates for individual POA members
  • 2006 Aug 23 — added reference to the Homes Association Handbook and brief discussion of its effect on CID/POA governance
  • 2006 Dec 11 — added and revised discussion about the influence of the Homes Handbook on the developer's model
    
• Links:  Developer's Model for Governance of CIDs/POAs at <http://swagman.typepad.com/poa_governance/2006/04/developers_mode.html>
  
• Key Words:  KeyWords

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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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Legislation on CIDs and POAs

2005 November 19
See History for brief descriptions of changes and updates. 

    There is much evidence that improvements in legislation concerning common interest developments (CIDs) and property owners associations (POAs) can and should be improved in all states and in the Uniform Common Interest Ownership Act (UCIOA).  Generic or common problems have been identified that can be traced to the existing governance model for POAs — which I call the "Developer's Model for Governance".  This obviously occurs since the initial governing documents are written by the developers or jointly with their attorneys.  Accordingly, those governing documents reflect the developer's interests. 

    Many have advocated more democracy in POAs, but a clear description of how to accomplish this in CIDs with their associated POAs has not evolved.  It is likely not possible to amend the "Developer's Model" to address the generic issues.  Thinking "outside the box" with a "Democratic Model" for governance is required — a "clean sheet of paper."

    The continuation of this post describes some of the principal references based on an extensive internet literature search of the governance issues.  Some of the elements of a "Democratic Model" are clearly indicated in that literature search. 

    I would appreciate your comments, additions and suggestions.  Thanks. 

Don Nordeen
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• History: 
  • 2005 Nov 19 — Initial Post
• Links:  Legislation on CIDs and POAs at <http://swagman.typepad.com/poa_governance/2005/11/legislation_on_.html>
• Key Words:  KeyWords

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Proposed Amendments to UCIOA

2005 September 30

    The Uniform Law Commissioners, formally the National Conference of Commissioners on Uniform State Laws (NCCUSL), drafted an existing model law for POAs called Uniform Common Interest Ownership Act (UCIOA) in the mid 1990s.  They have recently undertaken a project to draft amendments to the UCIOA.  Incorporation of governance provisions for POAs is one of the areas under consideration. 

    The continuation of this post is an email to the Uniform Law Commissioners on their work to draft amendments to the Uniform Common Interest Ownership Act (UCIOA).

Don Nordeen
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POA Legislation at Crossroads

2005 September 14
Last update:  2006 May 29.  See History for brief descriptions of changes and updates.  

Work in Progress (posted for interest and comments)

    This post attempts to define some of the history of POAs and why that history has led to a number of problems with many similarities across the states.  Many of these problems are inherent in the way in which property owners associations have been authorized under the various state laws, and further defined in governing documents that have been drafted by real estate developer.  (added 2006 May 29)  Still others are related to the economic interests of the developers and the assumptions in drafting the initial governing documents and in the various state laws. 

    This history is very pervasive, and has resulted in many people thinking that what has existed in history is the only way for the laws to be.  Moreover, trying to address problems and improve the law is very difficult if one believe that the way of the history is the only way.  Thinking "outside the box" is required. 

    Developers, attorneys, accountants, banks, insurance companies, and others involved in community associations all have their lobbies.  The rank-and-file property owners must depend upon the elected legislators to be their advocates.   

Don Nordeen
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• History: 
  • 2005 Sep 14 — Initial Post
  • 2006 May 20 — added more information on legislators being advocates for individual POA members
  • 2006 May 29 — major revision
• Links:  POA Legislation at Crossroads at [http://swagman.typepad.com/poa_governance/2005/09/poa_legislation.html]
• Key Words:  KeyWords

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POA Legislation by State

2005 August 18
Last update:  2006 May 07.  See History for brief descriptions of changes and updates. 

    The continuation of this post provides internet links to various websites, which in turn provide internet links to existing POA law.  If you are aware of any other resources, please add a comment providing the internet link.  Also, if you are aware of any paper that analyzes the content of the various POA laws for common and different provisions, please add a comment providing the internet link.

    Specific references are being added for states with the most comprehensive and best POA laws, in my view.  Supporting references for these POA laws are included.  More will be added.  Work in progress.  Your comments and suggestions are welcome. 

    This post will be updated periodically as new information becomes available.  The date of the update(s) will be noted in this introduction, and the updated information will be added in italics. 

Don Nordeen
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• History: 
  • 2005 Aug 18— Initial Post
  • 2005 Sep 28 — update
  • 2005 Dec 06 — added information on the Uniform Common Interest Ownership Act (UCIOA) approved in 1994
  • 2005 Dec 11 — added information on omissions concerning members rights and enforcement and dispute resolution
  • 2006 May 07 — added reference to specific information for several states
• Links:  POA Legislation by State at [http://swagman.typepad.com/poa_governance/2005/08/poa_legislation.html]
• Key Words:  KeyWords

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