What Homeowners Can Do When Board Won’t File Insurance Claims
QUESTION: Our homeowner association has fewer than 50 units, so our board seems to think that it does not have to operate in an organized manner. It does not meet on a regular basis. It allows a brief period for homeowners’ comments before meetings but does not allow participation in its discussions or decisions.
The board has declined to file insurance claims even though we all share in the cost of the insurance policies. Can it block the submission of insurance claims?
ANSWER: Most insurance companies will process a claim from an individual unit owner. The board may want to protect the association’s claims history, but the insurance company must process the claim if it is informed about an insurance loss. The board should discuss with the insurance agent an owner’s right to file a claim. In my opinion, the board should not interfere unless it knows that a claim is inaccurate or fraudulent.
It is good that your board allows time for owner comments before board meetings. However, the members should not expect to join in the board’s discussions or decision-making.
Use of Management Firm Has Benefits
Q: The board of directors of my community association has delegated to the management company all hiring and firing and contracting with vendors. The board does not keep any records or copies of contracts.
The owners are not allowed to know how much the management company is being paid or how much the company is making off of our maintenance personnel.
What can happen if the board continues to ignore its duties? Is it possible that the individual owners could all be vulnerable if some disgruntled owner decides to sue the board? How can we improve the current situation if most of the owners are apathetic?
A: Though you feel that your board of directors needs to improve, it may already be handling the association’s business properly. Perhaps with more disclosure and communication from the board, you would see that your association is in good hands.
The board/management relationship varies from one association to the next. In most associations, the board has the authority to delegate to a management company many of the duties of operating the business affairs of the association. The management company may be responsible for hiring, firing, contracting and record-keeping for the association based upon the contract that you have not seen. In fact, some associations’ governing documents require the board to hire professional management. However, the board usually retains the obligation to approve the action that management takes on behalf of the association.
For instance, boards usually vote on the acceptance of contracts after reviewing competitive bids for large projects. The board might delegate to management the tasks of screening and qualifying the bidders, obtaining bids, checking the references of the competing companies, verifying the insurance coverage and preparing a bid comparison report and a final recommendation to the board.
Some large associations give management full authority to contract for services within the constraints of the board-approved budget. This can be an effective way of operating if you have a professional, ethical manager. It discourages the board’s tendency to micro-manage but leaves the door open to the possibility of problems if management is unethical or inept.
You have a right to review records of the association, although many attorneys advise associations that they do not have to disclose contracts if the board believes that the questioning owner simply wants to find something to challenge. The board will be slow to disclose information to you if it believes that you are on a witch hunt.
If the board members are ignoring their fiduciary responsibilities, it is possible that the association or its board will be sued. The threat of a lawsuit is usually ineffective in changing the board’s procedures. The board will probably try to discredit the critics, and the divisiveness will be very detrimental and long-lasting.
The constructive way to bring about change is to elect new board members at the next election who will be more diligent about their duties and more open in their communication with the owners.
Check the Law Before Towing Away Cars
Q: I live in a gated 100-unit association. Parking decals are issued to cars belonging to owners and residents so that the owners and residents can gain access through the entrance gates.
Each unit has specific carport spaces assigned to it. In the past, the association would tow cars from the assigned carport spaces if the cars did not have a proper parking decal.
The board of directors has decided that it will no longer tow cars from the assigned carports. I have read our condominium plan and map, which states that the carports are part of the common area with “easements appurtenant to and for the use of the tenant.”
From this information, what can you tell us about the association’s right to tow vehicles from the carports?
A: Your association may have run into some legal problems resulting from a car that was towed in the past. That is probably the reason it has decided not to tow cars.
Because the carports are assigned to the individual units, it appears that the unit owners would be responsible for authorizing the towing of vehicles from their spaces when the need arises.
The California Vehicle Code contains many restrictions on towing. Vehicle Code 22658.2 addresses towing from a common interest development (CID) or community association. Any condominium association, homeowner association, stock cooperative or community apartment association (“own-your-own” apartment project) that authorizes the towing of cars should be relying on the advice of an attorney who has researched the association’s legal documents, the applicable state vehicle codes and the local ordinances. The attorney can assist the association’s board in adapting written towing procedures. These towing procedures should then be distributed to all owners and residents and to each new owner or resident when they move into the complex.
If your association has determined that it will not tow cars in the future, the owners should be informed about their rights to tow cars from the spaces that have been assigned to them.
If you would like to do further research, your local public library’s legal reference section will probably have the state vehicle codes and local ordinances.
A reprint of the “Condo Q & A” column about alternative dispute resolution that originally appeared in The Times in June, 1994, is available. The information includes a summary of Civil Code 1354 that can be distributed to the owners and an explanation of the distinct differences between mediation and arbitration. Send a check for $4 made out to Condo Consulting Services, c/o CONDO Q&A;, P.O. Box 5068, Thousand Oaks, CA 91360. Allow four weeks for delivery.
