New Condo President Facing Uphill Battle

T.S. from San Diego County, California writes:

Dear Mister Condo,

I recently was elected President of our Board. Since living here, I have had concerns: projects approved never seem to get completed, the previous board was non-existent, the management company did and ran everything. There were probably only two or three meetings in the two years I’ve lived here. I look to change that. The management company on many occasions doesn’t return emails or calls, and at the meeting I was elected President, she informed us that our reserve was low because there were two leaks one a slab and another along with some plumbing issues. She turned one unit into insurance and chose to use reserve funds for the other. Her reason was to save us from getting canceled or having our rates go up. Now we are faced with a shortage and already pay high HOA dues for a property that has no amenities except for a grill and some landscaping. Also, I’ve noticed there is over 5k in dues outstanding. What power do I have to review all records? Can we have a board meeting without the management company present? Can you send me anything that might be helpful? Also, can I request an outside audit? I realize I’m probably all over the place but I am wanting to represent my community well and truly am concerned with how we have been managed. 

Mister Condo replies:

T.S., you are right to be concerned. Clearly, your community association has not been governed properly by a Board of Directors from within the community. The management company seems to be running the show, which isn’t the way it should work. That being said, they may have had no choice seeing as they weren’t getting any direction from an active Board of Directors. As the new sheriff in town, you will help get your association back on track. But you won’t do it alone. You need to have an equally interested and active Board of Directors to assist you and to validate the votes and actions necessary to get the community upright. If you haven’t already done so, I strongly recommend your download the Board Member Toolkit from the Community Association Institute (CAI). You can find it here: https://www.caionline.org/HomeownerLeaders/ResourcesforHomeownerLeaders/CAI.BoardMemberToolkit_2014.pdfThis document was prepared by some of the best minds in the industry and will be invaluable to you as you navigate your association to become a great community. Once you understand the pillars of how the Board functions, many of your other questions will answer themselves. You mentioned two items of immediate concern. The Reserve Fund should not be used for “rainy day” items. The Reserve Fund assures the long-term financial stability of your association and the ability to replace common elements that are sure to wear out. Those funds will very likely need to be replaced, either by a special assessment or an increase to common fees. Unpaid dues cannot be tolerated. Timely collection of common fees and assessments is the only way a community association can survive. (Full disclosure, I work for a company that collects unpaid fees, Axela Technologies. I am happy to talk to you offline about how we can collect those funds for your association). Yes, the Board can hold a meeting without the management company present but I’d hold off on doing that until the Board is fully functioning. I haven’t heard anything to suggest the management company has done anything wrong. They may still be an excellent choice for your association since they have all of your records and an intimate knowledge of your common areas, vendors, collections, and more. The Board can hire an outside auditor, which sounds like a good idea at this point. Better safe than sorry. All the best!