Readers weigh in on HOA management

Q: I just read your response to the question about the 20-unit homeowners association (HOA) that can’t get people to run for the board. I used to manage HOAs and have a few thoughts for your readers.

First, before they do anything, they need to carefully read their HOA documents and see if they can reduce their number of board members on the board to three people. For a small HOA, that’s a much more manageable number! And they might be able to do it with a vote at an annual meeting.

Second, I once read every line in a promissory note from Fannie Mae or Freddie Mac. It was not fun. But one of the clauses forbade the borrower from voting to dissolve the HOA. From the lender's point of view, that’s part of the security for their loan.

Lastly, I fully agree they should hire an HOA management company and then let them do their job! Don’t butt in and interfere. Amateurs often skip stuff that’s required by law such as managing reserves, doing reserve studies, etc. You can see the problems in Florida happening now because work was put off.

A: Thank you for some great suggestions. And, you’re right. We should have mentioned in our prior column that homeowners can’t dissolve an association without getting their lender’s consent. Dissolving an HOA is considered a major change to their arrangements with the association. Loan documents typically contain a provision that requires the borrowers (that would be each owner of an HOA who needs a loan to purchase their property) to get their lender’s approval to make changes to association documents.

Simply put, the current association documents provide an arrangement that allows lenders to foreclose on a condo, townhome, or other units in homeowners associations. That arrangement gives lenders certainty as to the rights they have and their ability to enforce their rights under their loan documents with borrowers. While a lender might not object to having a homeowner dissolve their homeowners association, they need to consent to the change so they know how the change affects them. If you dissolve the HOA without getting every lenders’ approval, it could violate the terms of a mortgage, and keep future buyers from getting their loans approved.

We do agree with you that a smaller HOA can benefit from a smaller board. However, you still need homeowners willing to serve and work for the HOA. You can have five members share the responsibilities and have it work well. Three board members can also work. But in each instance, you still need people willing to help and do some of the heavy lifting that may be needed to live in an HOA.

Thanks for writing in.

Q: I’m a board member of a condominium owners association. We have nine board members. We open our office to residents three hours a week and the residents can come in at that time to interact with us. They can ask questions, buy utility keys, phone books, parking passes, or make requests. We sometimes have five board members helping out during these office hours. Are we in violation of our building rules if we don’t call an official meeting of the board? Having five board members together makes it a quorum and some residents are raising a red flag.

A: Our typical email is an owner complaining that their building can’t get enough people to serve on the HOA board. You have the opposite situation. Good for you!

We don’t think you should have any legal issues with what you are doing as long as you don’t discuss or make building policy at those office hours. There are legitimate ways to hold events without having it declared an official meeting. For example, parties. Everybody could attend, including board members, without having to call an official meeting of the board and notifying the unit owners of that meeting.

Just be careful. Don’t discuss matters that should be discussed at a board meeting. Stick to the matters that relate to the open hours of operation. If someone asks you for a clarification of a policy or makes a request better suited for a board meeting, tell them when the next meeting will occur and suggest they attend.

Note: We have been receiving a large number of questions about HOAs and the problems owners are having. You’ll find our most recent columns on HOAs at https://www.thinkglink.com/tag/homeowners-association.

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(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, a financial wellness technology company. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)