Governance of POAs

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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Comments on Dispute Resolution in Owners Associations

2008 December 29
See History for brief descriptions of changes and updates. 

     The continuation of this post was written by Shu Bartholomew, host and producer of On The Commons, a weekly radio show dedicated to discussing the many issues surrounding mandatory membership common ownership developments.

Don Nordeen
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• History:  Changes are usually identified in the text with the date which facilitates searching by date.
  • 2008 Dec 29 — Initial Post
• Links:  Comments on Dispute Resolution in Owners Associations at [http://swagman.typepad.com/poa_governance/2008/12/comments-on-dispute-resolution-in-owners-associations.html]
• Key Words:  Legislative Issues & Proposals;  POA Governance;  POA Members' Rights;  POA Problems;  Private Government;  dispute resolution

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Michael Reardon's 2007 May 29 Letter to MA Legislator

2007 May 29
See History for brief descriptions of changes and updates.

    The continuation of this post is a letter from Mr. Michael Reardon to Representative Kevin Honan of the Massachusetts Legislature discussing a number of problems concerning property owners associations — particularly the lack of democratic principles. 

    His letter describes how elections are not enough to produce democratic governance.  Many writers have concluded the same.  Conduct a Google search with the phrase with quotation marks in [  ] — ["elections are not enough"].  You will get over 50,000 hits. 

Don Nordeen
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• History: 
  • 2007 May 29 — Initial Post
    
• Links:  Michael Reardon's 2007 May 29 Letter to MA Legislator at <http://swagman.typepad.com/poa_governance/2007/05/michael_reardon.html>
  
• Key Words:  • Legislative Issues & Proposals; • POA Members' Rights; • POA Problems; abuse; common interest development; community association; democratic; directors obligation; excessive; governance; legislative issues & proposals; obligation; oligarchy; POA governance; POA members' rights; POA problems; property owners association; public policy

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Dispute Resolution for CIDs/POAs in Maryland

2006 March 15
Last edit:  2008 Jun 03.  See History for brief descriptions of changes and updates. 

    Complaint and dispute resolution in common interest development (CIDs) and property owners associations (POAs) are an important part of governance.  In the middle 1980s, Montgomery County, Maryland, enacted legislation that established a Commission of Common Interest Communities to provide alternate dispute resolution that has the force of law. 

    The continuation of this post provides some information on this legislation and subsequent activity.  Analysis and other discussion may be added if time permits. 

Don Nordeen
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• History: 
  • 2006 Mar 15 — Initial Post
  • 2006 Mar 18 — added statistics concerning results
    
  • 2006 Mar 19 — added information on CCOC and the mediation process
    
  • 2006 Jun 16 — added short discussion and link to Maryland Task Force  concerned with CID and POA issues
  • 2008 Jun 03 — added link to Washington Post article on a major dispute resolution case
• Links:  Dispute Resolution for CIDs/POAs in Maryland at <http://swagman.typepad.com/poa_governance/2006/03/dispute_resolut.html>
  
• Key Words:  KeyWords

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Nevada CIC Law and Ombudsman

2006 March 09
Last Update:  2009 May 02.  See History for brief descriptions of changes and updates. 

    Nevada is one of the states with many Common Interest Development (CIDs) governed by Property Owners Associations (POAs).  And the number is growing.  There has been substantial legislative activity since 1991, but the POA problems continue to grow. 

    The continuation of this post briefly describes the legislative history (from internet sources), and references a Nevada television report on continuing problems within POAs and the Nevada Law, and my comments on the Office of Ombudsman established in Nevada law. 

Don Nordeen
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• History: 
  • 2009 May 02 — Added another example of ineffectiveness of Nevada's Ombudsman concept. 
    
  • 2006 Jun 21 — added reference to definition of ombudsman
    
  • 2006 Jun 12 — added references to TV report and newspaper article on backlog of complaints from homeonwers
  • 2006 Mar 31 — added comments concerning the March Meeting of the Nevada Commission for Common Interest Communities
  • 2006 Mar 15 — added information on complaint and dispute resolution and CID/POA law
    
  • 2006 Mar 12 — added information on the Nevada CIC Act and the Office of Ombudsman and amended legislation creating the Commission for Common Interest Communities
  • 2006 Mar 09 — Initial Post
    
• Links:  Nevada CIC Law and Ombudsman at <http://swagman.typepad.com/poa_governance/2006/03/nevada_cic_law_.html>
  
• Key Words:  • Common Interest Development;  • Legislation, CID & POA;  • POA Governance;  • POA Members' Rights;  • POA Problems;  • Private Government;  alternate dispute resolution;  alternative dispute resolution;  common interest community;  common interest development;  governance;  Nevada;  ombudsman;  POA governance;  POA members' rights;  POA problems

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Dispute Resolution Considerations

2006 February 16
Last update:  2006 Aug 26.  See History for brief descriptions of changes and updates. 

    This post is a discussion of dispute resolution considerations in common interest developments (CIDs) and property owners associations (POAs).  See Enforcement Considerations for a discussion of the linked concepts of enforcement and dispute resolution. 

    This is work in progress.  Most of the background is well developed and shows the need for reform.  Various alternatives for reform for listed with a few notes regarding each.  It is being posted at this time for comment and suggestions.  The various notes will be converted into appropriate text.  (revised 2006 Aug 13) Previously, this post included an Outline of Dispute Resolution Recommendations which is now a separate post. Included are recommendations to provide practical, effective, certain, timely and low-cost means of enforcement and dispute resolution for individual POA members.   

Don Nordeen
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• History:  Changes are usually identified in the text with the date which facilitates searching by date.
  • 2006 Feb 16 — Initial draft
  • 2006 Mar 19 — Updated and first posted:
  • 2006 Mar 19 — Virginia Supreme Court case added and discussed
  • 2006 Mar 19 — outline and notes for recommended dispute resolution added
  • 2006 Jun 21 — dictionary definition of ombudsman added
  • 2006 Jul 23 — title changed from Enforcement Considerations, various editing
  • 2006 Aug 13 — outline of recommendations moved to a separate post; added references to alternative dispute resolution for POAs within governmental units
  • 2006 Aug 14 — added discussion re current practice in POAs
  • 2006 Aug 26 — added discussion re litigation between POA and owner/member and potential conflict of interest for attorneys involved in such litigation
• Links:  Dispute Resolution Considerations at [http://swagman.typepad.com/poa_governance/2006/02/dispute_resolut.html]
• Key Words:  KeyWords

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Thoughts on Problem Solving for CIDs/POAs

2006 January 01
Last edit:  2006 Apr 25.  See History for brief descriptions of changes and updates. 

    Several inquiries have been directed to this weblog concerning specific complaints, grievance and/or problems members are having within their common interest developments (CIDs) and/or property owners associations (POAs). 

    The continuation of this post contans "Thoughts on Problem Solving for CIDs/POAs" based on my replies and other information.  The "Thoughts" are offered for whatever assistance they might provide.  Your ideas on improvement in the problem solving are needed, and will be considered and added. 

Don Nordeen
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• History:  Changes are usually identified in the text with the date which facilitates searching by date.
  • 2006 Jan 01 — Initial Post
  • 2006 Feb 19 — added discussion about the importance of a "gang of 20"
  • 2006 Mar 11 — added discussion on the Montgomery County, Maryland, Commission on Common Interest Communities
  • 2006 Apr 25 — added discussion about the unique aspects of interpretation of restrictive covenants
• Links:  Thoughts on Problem Solving for CIDs/POAs at <http://swagman.typepad.com/poa_governance/2006/01/thoughts_on_pro.html>
• Key Words:  KeyWords

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Analysis of POA Problems

2005 September 14
See History for brief descriptions of changes and updates. 

    Work in progress (posted for your interest and comments)

Don Nordeen
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• History: 
  • 2005 Sep 14 — Initial Post
• Links:  Analysis of POA Problems at [http://swagman.typepad.com/poa_governance/2005/09/analysis_of_poa.html]
• Key Words:  KeyWords

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Sample of POA Problems

2005 September 13
Last update:  2005 Dec 22 and ongoing.  See History for brief descriptions of changes and updates.  

    The continuation of this post provides a sample of POA problems reported on the internet.

    Based on reviews of these examples and many more problems posted on the internet, there is a pattern to these problems which is described in Analysis of POA Problems.  To avoid those problems, appropriate provisions are needed in POA law and each POA's governing documents. 

Don Nordeen
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• History: 
  • 2005 Sep 13 — Initial Post
  • 2005 Dec 22 — many additions identified by date added to the list
  • Ongoing — dates noted with addition internet links
• Links:  Sample of POA Problems at [http://swagman.typepad.com/poa_governance/2005/09/sample_of_poa_p.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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References on POA Issues

2005 August 18
Last edit:  2007 Mar 03.  See History for brief descriptions of changes and updates. 

     The continuation of this post is a collection of references on common interest developments (CIDs) and property owners associations (POAs) and their issues.  The collection is primarily to internet links with a brief description of each reference.  Also included are links to the CID/POA state laws that appear to be the best in the country.

    Please add your suggestions for additional references by adding a comment.  Thanks.

    This post will be updated periodically as new information is assembled.  The additions/updates in between 2005 Nov 09 and Nov 17 are major updates.  The additions/changes are noted at the beginning of the affected numbered section with the prefix "(added/updated date)."   Use your browser to search for the year and abbreviated month, such as "2006 Jan " (include the space after the three-letter month without quotation marks) to locate all changes for that month, or use a specific date for changes listed above. 

Don Nordeen
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• Links:  References on POA Issues at [http://swagman.typepad.com/poa_governance/2005/08/references_on_p.html]
• Key Words:  KeyWords

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Systemic POA Problems

2005 August 03
See History for brief descriptions of changes and updates. 

    Many problems/complaints within property owners associations (POAs) are posted on the internet.  Some states have had many property owners associations for a long time.  With more POAs, there are naturally more problems.  These problems have patterns common to most states.  POA legislation and POA governing documents should prevent these problems and/or provide easy and quick means of remedy. 

    The continuation of this post summarizes my observations about the systemic problems in POAs that lead to the complaints.  It also contains thoughts on actions to address the problems.  As a network of POA members interested in improving the governance of POA, we need to get beyond the complaint stage — to the improvement stage.  This post is work in progress, and may be updated from time to time. 

    Your interest, comments and questions are welcome. 

Don Nordeen
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• History: 
  • 2005 Aug 03 — Initial Post
• Links:  Systemic POA Problems at [http://swagman.typepad.com/poa_governance/2005/08/systemic_poa_pr.html]
• Key Words:  KeyWords

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Washington HOA Bill

2005 August 01
Last update:  2009 Apr 29.  See History for brief descriptions of changes and updates.
Some additional information on status is contained in the comments. 

New Information — 2009 Apr 29

    Mr. David M Friscia has kindly provided some new information which now precedes the original continuation of this post.  My reading of Mr. Friscia's notes suggests that individual members should look carefully at SB 6054, and write to their legislators if they don't agree. 
 

Original Post

    The continuation of this post is a bill introduced in the Legislature of the State of Washington to amend the state's homeowner association law.  Almost all of the provisions restrict the powers of the board of directors.  Provisions include

• clearer definition of fiduciary duty
• elimination of authority to amend certain governing documents
• requirement for members to ratify the budget
• removal of directors by a majority vote of members with quorum
• specific requirements for boards concerning special members' meetings, and open meetings with restrictions on executive sessions. 

    These provisions are part of including democratic principles in POA legislation. 

Don Nordeen
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• History: 
  • 2009 Apr 29 — updated to include 2009 bill information
  • 2008 Jun 30 — added request for a reader to update the status in a comment.  
  • 2005 Aug 01 — Initial post. 
    
• Links:  Washington HOA Bill.  [http://swagman.typepad.com/poa_governance/2005/08/washington_hoa_.html]
• Key Words:  Legislation, CID & POA;  abuse;  access;  access to records;  accountable;  closed meeting;  closed session;  fiduciary duty;  governing documents;  members' meeting;  open meetings;  POA Act;  POA Board of Directors Issues;  POA Governance  

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CNN Program on Homeowners Associations — aired 2005 April 16

2005 July 05

     Many communities are governed by property owners associations.  Not all is well.  Many of the problems are generic.  The CNN program covered one such problem and includes an interview with Dr. Evan McKenzie, one of the scholars in the field of private government.  The continution is a transcript of that segment on POAs.
   
Don Nordeen
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Quiet Community Erupts over Homeowner's Association Debt

2005 June 27

    This post is a television news report about a Florida homeowners association debt taken on by a prior board for capital repairs, with a subsequent board faced with obtaining the funds to repay the debt through a special assessment.  The amount is about $4,000 per property owner.  The text of the television report is included in this post.  The video link is no longer available.  

Don Nordeen
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