Officers Managers and Committees
The law does not explicitly state that the reserve study must be performed by a qualified expert but does require that it be reasonably competent and diligent. In practice, the competency requirement probably cannot be satisfied without one or more outside experts, and the board will be exposing its members, and the HOA itself, to a risk of liability to owners and/or mortgage lenders if it does not use an outside expert to perform the reserve study.
Officers are chosen by the board unless the governing documents specifically provide for election by the owners. Officers chosen by the board may be replaced by the board at any time.
Most governing documents authorize the formation of one or more specific committees, but the board has the authority to create committees even if that power is not specifically mentioned in the governing documents. Unless the documents specify the size of the committee, the qualifications required of the members, and the method of selecting and removing the members, these matters can be determined by the board. Committee recommendations are not binding on the board, and committee decisions may be overridden by the board.
The board has the authority to select the manager and determine the content of the management contract, but it may appoint a committee to make recommendations. Managers of homeowner associations are not required to be licensed in Washington or Oregon.
Some governing documents require professional management or state that an owner vote (or even the approval of mortgage lenders) is required to discontinue professional management. Absent these provisions, professional management is not required, but it is generally advisable, particularly for larger associations.
Homeowner associations are not required to provide or disclose any information directly to prospective purchasers of units or lots but are required to provide a variety of documents to selling owners so that these owners can meet seller disclosure and resale certificate requirements. These include: (i) a copy of all governing documents and, if the association is not incorporated, a statement in writing that the association is not incorporated; (ii) a copy of the most recent annual budget report and annual policy statement, along with a statement of any change in the association’s current regular and special assessments and fees which have been approved by the board, but have not become due and payable; (iii) a true statement as to the amount of the association’s current regular and special assessments and fees, and any unpaid assessments or monetary fines/penalties owed by the selling owner; (iv) a copy or a summary of any notice previously sent to the selling owner alleging a violation of the governing documents; (v) a statement describing any restriction of rentals; and (vi) if requested by the prospective purchaser, a copy of the minutes of board meetings, excluding meetings held in executive session, conducted over the previous 12 months.
The Association is required to make all association records available to owners upon reasonable request. The Board may adopt processes for handling owner document requests and may impose reasonable charges for providing copies of documents. Association records include membership lists, governing documents, meeting minutes (association meetings and board meetings), proxies and ballots, budgets, year-end financial statements, tax returns, executed contracts, and insurance policies and documents relating to insurance claims. There are also some association records that should not be produced to protect owner confidentiality; those include documents such as individual owner delinquency reports and confidential owner contact information.
A reserve study is a careful analysis of the future repair and replacement needs of a homeowner association based on the condition of the elements of the property it maintains, a projection of the remaining useful life of these elements and future cost to repair or replace them, and the amount of money the association has in its reserve fund. A reserve funding plan is a plan for collecting funds from the owners through regular and/or special assessments to fund the reserve needs of the association. Both Washington and Oregon require each HOA to undertake a new reserve study at least once every three years, subject to some specific exceptions.
The Legislature is still developing laws to prevent commingling and fraud in the handling of HOA funds. You should look for a management company that has implemented its own internal controls to protect your association’s assets.
Professional managers offer a wide variety of services to homeowner associations including accounting, budgeting, record keeping, assessment collection, bill payment, meeting coordination, and common area maintenance. Associations choose from among the services available and enter into a contract with the manager describing the scope of work. The management contract should also include the fee, the duration of arrangement, and the circumstances under which the arrangement can be terminated early. Some governing documents limit the duration of management agreements or require specific early termination provisions. Most governing documents list certain association functions that cannot be delegated. Non-delegable functions typically include borrowing money, levying assessments, making capital expenditures more than budgeted amounts, and imposing discipline for violation of the governing documents. Regardless of what functions are delegated and regardless of the content of the management agreement, the board retains the duty to supervise the manager and the authority to override any decision.
The power and authority of each officer is determined by the governing documents. If the documents are silent, then it is determined by the board. Regardless of how power and authority is delegated among the officers, the board can override the decision of any officer on any matter.