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Unless Barred, Board Can Use Collection Service

SPECIAL TO THE TIMES

QUESTION: The board of directors of my condominium association recently voted to hire a collection service to collect unpaid assessments from the owners who are not paying their share.

Does the board have the authority to hire this service without a vote of the owners?

ANSWER: In the association’s declaration, the board is usually given broad powers and duties to operate and maintain the association, including the duty to collect assessments from all the owners. These assessments pay for the common expenses of the association and therefore, if owners fail to pay, the association’s fiscal stability is jeopardized.

Selecting a collection service or lien service company to perform the task of collecting delinquent assessments is a very effective way of fairly and consistently enforcing the association’s collection policy.

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In most cases, the association does not have to pay for this service because the association is entitled to pass along to the delinquent owner any reasonable costs of the collection procedures, including attorney’s fees, lien filing fees and other reasonable costs.

In my opinion, unless your association’s legal documents require a vote of the owners for approval of contracted services, your board does have the right to obtain the assistance of a collection agency or lien service.

Board Should Advise Members of Projects

Q: Our association’s board of directors makes important decisions without notifying the owners. For instance, a portion of the complex was scheduled for painting. However, notification to the owners was not sent and there was no discussion of color or other considerations. Two people on the board approved the color and the homeowners were amazed that they were not notified before the work was done.

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Then, another phase of the project was scheduled for painting and again, the owners were not notified. Three board members approved an entirely different color from that used in the previous phase.

What recourse do we have?

A: Most of the authority for making the association’s business decisions is given to the board of directors. The association members should elect board members who will be responsive to the owners’ desire to be informed about the board’s decisions.

In my opinion, even though the board may have the authority to make a decision of this type, they should be communicating these decisions to the owners so that the owners’ surprise and resentment does not create a problem.

Communication is extremely important. Boards need the support of the owners and good communication builds consensus for changes that the board is contemplating.

On the other hand, if the board allowed all of the owners to actively participate in every decision of this type, the association’s work would be less than efficient.

Selection of paint color is always one of those decisions that generate complaints because owners’ color preferences will vary greatly and it is impossible to please everyone. I believe that the board may have taken this into consideration when they failed to notify people ahead of time.

Now that the work is completed, repainting would add unnecessary expense. I suggest that you, and other owners who feel strongly about the color, should volunteer to give your input to the board of directors before any additional painting work is done. Perhaps the board will appoint you to a committee that would make recommendations for future projects of this type.

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Appointee Should Fill Full Term of Director

Q: The board of directors of my 54-unit association asked me to serve on the board. I was appointed to fill out the remaining term of a board member who resigned after just three months of his two-year term had elapsed.

Our annual meeting and election of directors is coming up soon. Some people have suggested that I should resign and submit my name in nomination to be duly elected.

What is your opinion?

A: Unless the association’s legal documents require that you run for election, don’t allow others to discourage you from serving out the full term of your appointment. The association’s bylaws usually state the procedure for filling board vacancies. In my opinion, you should comply with the bylaws and if the bylaws say that you may do so, then continue to serve for the full term of the person that you were appointed to replace.

Election Notice Should List Nominees’ Names

Q: I live in a homeowners association in Orange County. Our association’s attorney has advised us to put the names of nominees for the annual election on the official notices that are mailed to all of the owners. This advice is contrary to information in your column that appeared on Sept. 29.

Would you please comment on announcing the names of nominees in the annual meeting notice that is sent to all owners?

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A: Janet L. S. Powers, an attorney with the law firm of Fiore, Nordberg, Walker & Woolf-Willis, wrote to me about this subject. She advises that the nominees’ names should appear on both the meeting notice and the proxy.

Powers writes, “Actually, in California the Corporations Code (Section 7511(a)) requires that the notice of any meeting at which directors are to be elected shall include the names of all those who are nominees at the time the notice is given to members. . . .’ Therefore, when the Association sends out its Notice and Proxy, if anyone has announced his/her candidacy, then his/her name should be on both the Notice and Proxy sent to the members. Additional candidates may also be nominated from the floor at the Annual Meeting as a part of reasonable election procedures.

“However, failure to put nominees’ names on the Notice and Proxy not only makes obtaining votes more difficult, but may be challenged by a member in court. A court may find that any notice not given in conformity with the Corporations Code is still valid, if it was given in a fair and reasonable manner. But the court could also conclude that, if the Association intentionally had not placed nominees’ names on the Notice, the election was invalid and might order a new election held.”

Hickenbottom is past president of the Greater Los Angeles chapter of the Community Associations Institute (CAI), a national nonprofit research and educational organization. She welcomes readers’ questions, but cannot answer them individually. Readers with questions or comments can write to her in care of “Condo Q&A;,” Box 5068, Thousand Oaks, Calif. 91360.


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