FREQUENTLY ASKED QUESTIONS

Upon signing of the Management Contract, AMS sends a timeline request for documents to the current management company. AMS staff will then begin working through the documents. They will also meet with the Board or a designee of the Board to get a better understanding of operations. This includes basic day-to-day processing information, review current resolutions, contracts, etc.

The Manager works with the Board and the Reserve Study Analyst to identify and ensure all components are included. The Manager provides all the financial information and past maintenance costs to the Analyst as needed. It is also the Manager’s responsibility to initialize the service for Board review for any upcoming budget seasons.

Each homeowner’s association decision must adhere to the following standards:

• It must be within the scope of the association’s authority under the governing documents and the law;
• It must be based upon a reasonable investigation;
• It must be intended to serve the best interests of the association and the owners as a group;
• It must be made in good faith; and
• It must be reasonable considering the information available at the time the decision is made.

Additional standards may apply for specific types of decisions such as owner discipline or alteration approvals. Where the association has formally established policies or procedures, they must be uniformly applied and followed. But the fact that the association has permitted or approved a certain activity or alteration by a particular owner at one time does not mean that the association must permit or approve that same activity by the same or a different owner at a later time. In evaluating an association decision for compliance with these standards, the courts will defer to the board’s authority and presumed expertise.

The owner should begin by attempting to discuss the matter with the president, a director, committee chair or property manager. If this attempt does not yield satisfactory results, the owner should attend a board meeting or call an owner meeting to discuss the problem with the other owners. If the owner wishes to pursue the matter further, he/she should consult an attorney.

There is no governmental agency with authority to oversee homeowner associations. Association duties and standards must be enforced by owners and lenders through the court system or through some alternative dispute resolution process such as mediation or arbitration.

A homeowner association is typically not entitled to recover its attorney’s fees from an owner unless it prevails in a court proceeding or arbitration involving the enforcement of the governing documents. However, some association’s governing documents do allow for this so a review of your specific governing documents is needed.

In general, the distribution of power and authority within the HOA is determined by the governing documents. Where the governing documents simply give the association power to do or approve something without specifically requiring owner approval, the power can be exercised by the board of directors without owner approval. In practice, most governing documents require owner approval for a variety of major decisions including changing the items which the association is responsible to maintain, changing the owners’ assessment percentages, changing the unit or lot boundaries, and imposing leasing or resale restrictions.

The board of directors has complete control over all committees, officers, and managers. This means that the board decides who will serve in these capacities, and what authority they will have, subject only to restrictions in the governing documents. The board retains the power to override the decision of any committee, officer, and manager.

The first step in homeowner association decision making is determining whether the course of action under consideration would be reasonable and in the best interests of all owners. If this question can be answered affirmatively, the next step is to review the governing documents with the following questions in mind:

• Is a particular action or decision required under the governing documents and/or the law?
• Is a particular procedure for making the decision required under the governing documents and/or the law?
• Does the decision under consideration require an owner vote?

Questionable action should be reviewed by an attorney. If the action could have a significant impact on one or more owners, it is wise to get a written opinion of counsel before acting upon which the board can rely in the event of a legal challenge. A legal opinion may protect the board from liability for an erroneous decision by allowing it to assert reasonable reliance on the advice of counsel as a defense. But remember that the failure of an association to follow the advice of counsel or its own internal decision-making procedures will make inappropriate action vulnerable to a legal challenge.

The law states in Washington and Oregon that the signatures of at least two directors is required for withdrawals from the association reserve account(s). Withdrawal requirements for other association accounts are usually set in the governing documents, but if they are not, the requirements can be established by the board.

The decision of whether the association should enter into a particular contract is made by the board unless the governing documents require owner approval, or unless the board has delegated the decision to an officer, committee, or manager.

Rental restrictions in governing documents are generally legal and enforceable provided they are uniformly applied to all owners, do not discriminate against particular group of potential renters, and can be shown to serve some legitimate purpose.

Most CC&Rs state that the homeowners’ association has the right to enter any unit or lot whenever necessary to fulfill the association’s duties. Among the duties that would justify entry are common area maintenance, verification of an owner’s compliance with owner maintenance requirements or alteration restrictions, and pet rules. Often, the CC&Rs will require that the association provide advance notice of the entry except in an emergency. When the CC&Rs are silent on these issues, both the right of entry, and the requirement for advance notice, would be implied.