Board Empowered to Act in Litigation
QUESTION: Our homeowner association filed a lawsuit against the developer. The association’s attorney settled the suit on less than acceptable terms. What authority does the board of directors have in this matter? Can the board authorize the settlement? Since the legal expenses are being paid by all the owners, shouldn’t all owners participate in the decision-making on this important matter?
ANSWER: Several attorneys have advised me that in most instances the board does have the authority to settle a suit filed on behalf of the association. The board is elected annually by the general membership of the association. The duly elected board has the responsibility of managing the affairs of the association, often making decisions that affect millions of dollars of association assets. Their authority is usually very broad with certain specific limitations found in the association’s legal documents.
Read your declaration of covenants, conditions and restrictions to find out about the board’s specific powers and duties. I have often seen CC&Rs; that specifically authorized the board to take legal action on behalf of the association members. On the other hand, I have also read legal documents that require a vote of the membership before legal action is taken.
Concerning your opinion that the settlement was less than favorable for the association, it may be that the board considered the strength of their case or the legal costs and made a prudent decision to settle. I would expect that they weighed many factors and then made their decision based on their attorney’s advice. If you feel that the board’s action is not in the best interests of the association, contact an attorney who specializes in community association law.
Election Notice Need Not Name Nominees
Q: Our condominium association’s annual membership meeting and election will be taking place soon. Can the board of directors just send out a notice two weeks in advance of the meeting stating that three positions are open? Don’t they have to give the names of nominees and state what board positions are open?
A: Your association bylaws usually state the procedures for elections, including the number of days in advance for distribution or mailing of the notice to the membership.
Generally, it is not required that the nominees be announced before the meeting. Persons wanting to submit nominations should be allowed to do so at the meeting.
After the general membership meeting, the directors convene a board meeting to elect or appoint their officers. In other words, the person who receives the highest number of votes in the general membership meeting does not automatically become the president.
Some associations’ bylaws allow the directors to appoint other individuals as officers. For instance, the board might appoint someone other than an elected board member to serve as the association’s secretary or treasurer.
Board Service Prompts Management Ambition
Q: I have served on my association board for about three years. It has been a learning experience that has prompted me to consider a career change. I an interested in finding out about a career in property management. Where can I obtain training or education that will prepare me for a condominium management position?
A: Many local colleges and universities have courses pertaining to property management. I also recommend that you contact the local office of the Institute of Real Estate Management (IREM) and the Community Associations Institute (CAI). Both organizations provide courses and publications to assist you in your education. The IREM courses cover a wide range of property management principles for commercial and residential properties.
CAI’s Professional Management Development Program is specifically geared to community association management, including condominiums, homeowner associations, cooperatives and community apartment projects.
