United States: Three Steps For Condominiums And Community Associations To Minimize Disputes

Last Updated: May 2 2018
Article by Na Lan

As general counsel to common interest communities, we advise condominium and community associations regarding day-to-day operations, including interpretation and enforcement of governing documents, fiduciary duties of directors, statutory compliance, amending and restating governing documents, preparing and enforcing vendor contracts, delinquency collection and foreclosure, covenant enforcement, and dispute resolution with unit owners, vendors, and other third parties.

We recommend and can assist you in taking the following three steps to minimize future disputes:

First, update your project documents package and adopt effective policies to address your project's specific concerns.

Effective January 1, 2019, Chapter 514A of the Hawaii Revised Statutes will be repealed. If your condominium project was developed prior to July 1, 2006 and has not opted into Chapter 514B, you should update the Declaration and Bylaws. Is your collection policy effective and appropriately tailored to the size and delinquency status of your project? Has your project adopted a priority of payment, rent collection, and termination of utilities and other common privileges policies? Do you have procedural guidelines for your staff on when and how to correctly enforce such policies? Do you have a confidentiality agreement for your directors and officers? Do you have a high risk component policy in place and are your members familiar with the requirements? Is your fining policy and appeal procedure effective, efficient, and enforceable? Are your house rules in compliance with FHA and ADA? Are they up-to-date to address assistance animals and medical marijuana issues? Have you adopted policies on installation of solar energy devices and electric vehicle charging systems? Have you considered how to address issues relevant to aging in place?

For each new association client, we offer a free one-hour initial on-site meeting with your directors and property manager to identify your project's specific concerns and challenging issues.

Second, train your new directors, committee volunteers, resident manager, general manager, property manager and project accountant so that they can deliver quality services to meet the satisfaction of association members.

HB832 passed in 2017 provides that any condominium board of director's violation of the mandatory mediation or arbitration statutory provisions may constitute a violation of the fiduciary duty. Do your directors know how to correctly respond to a mediation or arbitration request? Does your manager or accountant know what they can do and cannot do after a delinquent owner files for bankruptcy? Are you aware of the deadline and statutory requirements for the association to respond to an owner's request for access to certain documents? Do you have a convenient checklist for your staff on the deadline and procedural steps to process an owner's application to the design review committee or appeal of any committee or board decision? Does your resident manager or security staff know how to write an effective incident report on house rule violations? For each new association client, we provide a free 30- minute training session and materials at our office to suit your needs upon your request.

Third, improve your communication with members, plan in advance and help them make an informed decision when ownership approval is needed.

Use your association website, newsletter, or email list to keep owners posted on your project operation, remind owners and tenants of your project rules on pets, smoking, and transient accommodation rentals, provide them with a simple checklist on items that they need to seek board approval before making modifications, and clarify your association's policy on HO6 insurance and allocation of the responsibility to pay the deductible amount for a property damage claim made under the Association's master policy.

Our mission is to help your organization solve problems expeditiously within your legal budget, prevent and reduce future disputes, and provide legal support for your directors and managers to guard all members' investments in your building or community.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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