What Happens When Too Many Complain and No One Wants to Serve on the Board?

What Happens When Too Many Complain and No One Wants to Serve on the Board?

It happens. For some associations, no one wants to serve in the first place.  Board service can be a thankless task. In others, some stepped up to do their time motivated by a sense of responsibility, and eventually found that they had signed on for a perpetual job. And the more that owners complain, the less appealing it is to serve on the board of an HOA. Hope this never happens to you – that everyone loses interest or moves to the complainer side of the table.

Volunteer service for an HOA that has problems is not desirable; it’s a dirty job, but someone has to do it! A board can delegate a lot of tasks to a manager, but once the manager is making all or most of the decisions, it commonly starts the downhill slide, into HOA h*!l.

So what is the solution? Someone has to take up the reins or gather up a group to lead the charge. Someone has to step up, make the difficult decisions, come up with a plan, and follow through.  That might involve getting professional help  and raising assessments to do it.  There is no Plan B that involves a white knight. Neither the cities nor states are in  a position to renovate failed homeowners associations. The bankruptcy courts turn most away simply because of the “ability” to raise funds – the so called “bottomless pit” asset.

Here is what can happen if no one steps up. Then the infrastructure starts to crumble.  The reserves dry up. Owners start to complain, values plummet (in addition to the nose diving economy). The common area becomes dangerous. Professional help and vendors shy away, and owners lose faith, and walk away or sue.  There will always be a lawyer to take the case of course. Then the insuror will step in and provide a defense, which may be the last hurrah, because once an association on this kind of downhill slide gets through one serious claim – it is likely that it will get harder to get insurance, and even if it is available, it might come at a very high price (as HOAs with a negative risk history have found).

Receivership works in some cases; however, not all HOAs are  acceptable candidates. Why? Receivers have to get paid and the money for it  does not come from the courts or the government; it comes from the owners. It  costs more to manage when the courts are involved, and legal fees come into play, and an  association commonly gets less bang for the buck. However, if a board is ready to throw in the towel and puts the association into receivership – at least the  court has unfettered power to raise assessments. Boards are limited by the  Civil Code and sometimes owners will just not approve the assessments needed to  maintain the infrastructure. Boards can pass emergency assessments in some cases if all the elements are present (proper recordkeeping and findings  regarding the need and inability to budget, or that safety and risk elements  are present).

Yes, someone has to take the reins and kick butt.

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2 Responses to What Happens When Too Many Complain and No One Wants to Serve on the Board?
  1. Charly Todd
    December 29, 2011 | 8:35 pm

    We have the opposite problem. We can’t get on the board. We have plenty of people, but, the normal 30% “Don’t Vote” killed us from keeping control of our board from the builder. And this is a 34 year old development.

    The original builder owns 42% or the units and is trying to pack the board with his friends who have no association with the property other than friendship with the original builder. The person voted on the board by the builder went to high school with the builder and has no expertise is building or running condominiums. Right now they constitute only two out of five board members. At the next annual election, with the number of builder votes, the number could go to 4 out of 5 in the builder’s favor. I am recommending that everyone on the board sign a Conflict of Interest Policy, which includes three types of conflict: Pecuniary Interest, Indirect Pecuniary Interest and Non-pecuniary Bias. If the conflict applies, they must recuse themselves from voting on a particular matter.

    • Beth Grimm
      December 31, 2011 | 2:45 am

      A “Conflict of Interest” Policy seems like a reasonable idea – as long as approval and enforcement of it is legal and accomplished by proper means. A draft policy should be reviewed by knowlegeable legal counsel and the process for approving it and using it should also be reviewed by legal. I have seen some directors and boards using Codes of Ethics and similar policies more like a sword to attack other directors, rather than a shield encouraging reasonable behavior, thereby wielding it inappropriately.