HOW BOARDS SHOULD WORK Kathleen Profitt, Profitt Law PC Troy Rudd, Superior Community Management Karen Moore, Belmont Place Condominium

Overview Levels of Authority Duties of the Board Powers of the Board Board Conducting Association Business Meetings Q & A

Board Authority – Levels of Authority State Statutes (But don’t forget about Federal law!) Governing Documents Rules are trumped by Statutes, Declarations and Bylaws Statutes, Declaration and Bylaws may create intermediate steps before court enforcement

State Statutes HOA/Planned CommunityCondominium -Oregon Planned Community -Oregon Condominium Act Act (ORS 94) (ORS 100) -Washington Homeowner’s -Washington “Old” Horizontal Association Act (RCW 64.38) Property Regimes Act (RCW 64.32) (1963) - Washington “New” Condo Act (RCW 64.34) (7/01/90)

State Statutes continued… Oregon Nonprofit Corporations Act (ORS 65) Washington Nonprofit Corporations Act (RCW 24.03)

Duties of the Board Administration of the Association and its assets Maintenance of common property Levying assessments to pay for the Association’s common expenses Enforcing the Declaration, Bylaws and Rules

Standard of Conduct Fiduciary Duty (legal term of art) Nonprofit Corporation Act defines standard – A director shall discharge the duties of a director, including the directors duties as a member of a committee: (a) In good faith; (b) With the care an ordinarily prudent person in a like position would exercise under similar circumstances; (c) In a manner the director reasonably believes to be in the best interests of the corporation.

Powers of the Board Adopt and enforce rules Impose late fees Levy reasonable fines (after notice and opportunity to be heard) Review Financial Statements Exercise powers necessary and proper Duty of Officers and differences from Director duties

Key Components for Conducting Efficient Board Business Reserve Study Maintenance Plan Rules and Regulations Resolutions and Policies Manager or Management Company Business Judgment Rule – Indemnity

Conducting Association Business Board Meetings – Properly Noticed and Open to Owners Executive Session Exception (legal advice, personnel matters, collection, negotiating contracts ) – Decisions Made in Meetings – (not s) – Emergency Meetings – (Telephone ok) Annual Homeowner Meeting – Elect the Board – WA ratify budget

Conducting Association Business Committee Work – ARC may have authority separate from the Board, other committees are at discretion of Board Manager Tasks – Variable on scope of contract – Full service liaison for the Board – Facilitate day in day out business of association

Association and Board Meetings Notice to Owners Agenda Establishing Quorum Robert’s Rules of Order Meeting Minutes

Methods of Communication Meetings Written Notices per Documents Newsletters- general community info Electronic Communication – Dissemination of information – Meeting notices as allowed by governing documents – No decisions. Do not say “I vote...” – Can be effective for urgent matters – Beneficial for communication with management team outside of meeting schedule

Due Process Notice and opportunity to be heard – In writing – Notice should describe the alleged violation, the rule and the authority in detail, set forth the fine or action to be taken and offer an opportunity to request a hearing (Tip: require the owner to request a hearing in writing) – Notice should be drafted to diffuse emotions and offer an explanation – Levels of Written Notice: Warning with opportunity to correct, Notice of Fine, Subsequent Notice Declaration or Bylaws often provide the process details

Due Process continued Hearings – At a meeting with a quorum of Board members or before a designated committee if allowed within governing documents – Adopt hearing procedures by Board Resolution and disseminate them to owners along with a fine and fee schedule – Give an owner a reasonable time to explain their side. Avoid debate and keep minutes – Provide concise written decision to the owner in a reasonable time frame

Fines Must adopt and mail any fine schedule to each owner Fines must be reasonable and simple to apply Must not conflict with state statutes or governing documents Keep an accurate and current ledger Fines are assessments and included in the lien Generally, must offer mediation prior to filing suit on fines

Closing the Loop Assembling and using the HOA’s team Tools to increase accountability and forward momentum Building community with homeowners Addressing community issues with transparency and invitations for involvement

Questions?

THANK YOU ! Kathleen Profitt, Profitt Law PC Troy Rudd, Superior Community Management Karen Moore, Belmont Place Condominium