One of the themes I reiterate is that being in a Condo Association is about compromise and knowing when to back down. But I also have mentioned that there are times where you need to lay down on the tracks. Today’s Fighting Apathy will tell you when that’s OK and the right thing to do so that you are protecting Board Powers in a Condo Association.
One of the biggest slides an Association has towards breaking bad is when powers that are to be held by the Board are circumvented. This is illegal, and it is wrong. Unfortunately it happens often. When you read those horror stories about rogue Board Members or corrupt Management, often they are not only carrying out illegal activities but also circumventing the powers of the Board. In many cases, if the Board protected its powers better, you would not have seen the illegal activity occur. But when people are apathetic and Boards break bad – that’s when bad stuff happens.
To stop this, the Board – and Management – must police the powers of the Board strictly. You must ensure there is no “drifting” towards being informal when it comes to these three major issues:
- Awarding contracts fairly. All contracts should be awarded by a majority vote of the Board in an open meeting and documented in the minutes. This ensures transparency of how the Association is spending its money.
- Waiving of fees. Any time fees are waived – such as late fees being waived due to a collection deal, hardship, etc. – it must be done by a majority of the Board. This may be done in executive session to protect the identity of the individual requesting the waiver, but you must ensure the Board votes on this as a group. The request should be documented (typically email) from the requesting Owner, and the decision must be documented in email in the response from the Board. Management should keep these records.
- Hiring, firing, performance reviews and compensation of key staff. You may delegate some of this authority to your Management, particularly in larger buildings, but ultimately you must ensure that the Board is keeping tabs on the personnel issues of your building. This is particularly important when it comes to annual reviews of staff and compensation. Any conflicts of interest – such as familial relationships in Management – should be proactively disclosed and appropriate controls to prevent nepotism instituted.
Although there are certainly exceptions to everything, these major authorities all require a majority vote of a Condo Board quorum in order to be enacted correctly and legally. This means that before any of these decisions are made, you need a majority of the Board to show up (i.e., a quorum), and they must formally vote. It doesn’t matter the situation – from waiving a $10 late fee from an Owner, to awarding a $1,000 bonus to a member of Management. As soon as you start to break these rules, bad things happen – first it’s a small late fee waived without appropriate process, then it’s a large late fee waived for a friend of a Board member.
You must not let there be exceptions other than in the most dire of circumstances. For example, if there is a legitimate emergency and your Management can’t find more than two of your five Board members, and those two Board members approve the spending of money with a trusted vendor the Association has used over and over again, that’s OK. But if it’s not an emergency, and two of five Board members approve non-emergency work for a vendor who’s got a financial relationship with one of the Board members, that’s not acceptable.
If you – as a Board member – find out that a minority of the Board is engaging in any of these activities without a proper quorum of the Board, you must make it an issue. In the event you find your fellow Board members have engaged in this activity, I suggest you do the following:
- If this is a first time offense and may have been innocent, you should raise the issue in executive session with the other Board members who were also excluded present. If they are repentant and acknowledge it was wrong, seek to mitigate the issue if possible (i.e., if it’s a reversible decision, reverse it) – but otherwise, let it go. Make sure it doesn’t happen again.
- If they are not repentant, you need to get as many other Board members together and contact your Association’s lawyer for next steps. You also should ensure the issue is documented in an open session as soon as possible so that Owners can see the possible corruption. You want them to get involved as a movement and back you up.
Do not let these issues fester, and do not let them repeat. Make a scene as soon as possible if you’re facing possible corruption and Board members who won’t acknowledge they are wrong. It may seem extreme, but only by being transparent and actively fighting corruption can you make sure you have a fair and open Condo Association. Make sure you’re stepping up and protecting Board Powers in a Condo Association to fight corruption.