It happens in business, government, and industry every day: employees learn the rules of a new job, and before long they start going around them or taking shortcuts. Rarely is this done with malicious intent. More often, it is simply a matter of knowing the rules so well that they fade into the background, and solving the problem at hand becomes the priority -- not necessarily following protocol or best practices. 

The same can happen with HOA and community association boards who may find themselves straying from the letter and spirit of the rules that govern the entity over which they have been given authority.  

In other instances, the lapse in governing “by the book” could come from the fact that new members may or may not have fully familiarized themselves with those all-important governing documents. In these cases, ignorance rarely if ever leads to long-term bliss. Sooner or later, boards that fail to lead according to their condo or homeowner’s association governing documents will find themselves in a bind—the kind that may end up involving litigation. 

Letter of the Law

For HOAs and condo associations, there are guidelines available to help a board efficiently, effectively, and legally lead their communities. For condo associations, those documents include first and foremost, the master deed, says Dennis Estis, a partner with the law firm of Greenbaum, Rowe, Smith & Davis LLP in Woodbridge. “Second, there are the bylaws. Third, any rules or regulations adopted over the years and fourth, the certificate of incorporation.”  

For an HOA, these governing documents would be the declaration and bylaws. “The parts that the board really control are small, like the roadway, swimming pool or retention pond,” Estis continues. “Other than that, every homeowner has their own home.” It helps for board members to have a firm grasp of those elemental documents. “I have found over the years that many board members have no idea what documents they should be following,” he says.  

Where the Wheels Fall Off

Lapses can be intentional or unintentional—some people break the rules by choice, others by omission, and others simply by accident. Steven Troup, a partner with the law firm of Tarter Krinsky & Drogin  in Manhattan, says, “It's not unusual for a board to forget what their governing documents actually provide and create a precedent that I’ve seen followed incorrectly for many years.”  Troup says boards can also find existing rules simply burdensome. “Sometimes a board simply chooses not to follow the governing documents on issues that the board deems to be inconvenient or disfavored.”

The temptation to cut corners may be so gradual that some boards may not even notice when they're doing so. Michael Cervelli, founder and CEO of Cervelli Management based in North Bergen, New Jersey, adds, “Oftentimes -- especially when things are going well -- no one ever shows up to the meetings, and as human beings, people become complacent. They take shortcuts and before they know it, the ship is steering off course.”

In other instances, problems can arise due to more formidable reasons. “People can get into a position of authority and start to just do whatever they want,” Cervelli says. Estis agrees. “Sometimes board members have been in office so long that no one has challenged them,” he says. “They get used to following their own rules, and develop a sense of entitlement to the position they hold.” 

While it seems that others involved in the management of a community association or HOA should step in to put the board back on track, there are times when that safeguard fails. For example, some communities may be represented by counsel who have served them for so long that they don't want to rock the boat, says Estis. “They may not want to risk being replaced by someone who is more amenable to following the board’s interpretations of the situation.” 

The End Result of Laxness

As the saying goes, all good things must—or at least usually—come to an end. The avoidance or simple ignorance of the rules and how a system of leadership should function can not continue indefinitely. There comes a time when trouble begins to arise, either from external sources or from residents who may disagree with the way things are being run.  “What I have found is there will eventually come a point in time where the board may find themselves in a situation because they have been interpreting documents one way, but then when they find it’s to their advantage to rule another way, they find that they can’t without throwing out the ways they’ve done things in the past,” says Estis. The lax interpretation of the rules that served them well in the past may come back to bite them when a new, and perhaps more accurate reading of a certain rule better solves a newly-arisen problem or issue. 

It can be a difficult rut to emerge from, primarily because that precedent they have established in doing things the “wrong” way can eventually evolve to represent the “right” thing. “Courts...have ruled that notwithstanding what the documents say, if an association or condo board has done something consistently for many years, where owners come to rely on the incorrect policy, the court will not overturn the particular policy,” says Troup. That can be especially problematic when an attempt is made to get back on track, only to find the administrative hole that has been dug is far deeper than first imagined. 

In many instances, problems arise because board members were simply trying to go easy on their shareholders or unit owners. Estis cites the example of boards that try to keep monthly costs down for residents -- a practice that often means they are not putting enough aside for the capital fund, or for unplanned expenses. When it comes time for a new roof or the replacement of a boiler that has gone bad, there's not enough money at hand to cover the cost. The board may have been charging residents $300 a month for the last six years, but that sudden, out-of-nowhere expense is going to require a five-figure assessment. “This is very damaging to people who don’t have tens of thousands of dollars on hand,” says Estis. It’s not that different from municipalities, he adds, where a mayor running for re-election may not want to raise taxes -- only to find later that those taxes must be doubled the next year to get a new sewer line built. 

The fast 'n' loose approach can even lead to damage of the building systems themselves. Troup cites an example of a small association with very informal governance. Residents in the building had made significant alterations to their respective apartments without building plans or municipal permits, or even board approval. No one -- including the board -- raised any concerns about the practice. This went on for years until the building systems became so severely compromised that serious safety issues arose. Soon after this occurred, the building “cleaned house” in order to create uniform policies and standards, and the board received counseling and guidance from their attorney on the necessity of maintaining and enforcing these policies.

Pets can be another sore spot when it comes to loose management, says Cervelli. It is a problem that can seem small—after all, what’s one dog in a supposedly pet-free building? But with more people than ever treating their pets as four-legged members of the family, these issues can quickly escalate. “They may have had a rule in place where there’s a no-pet policy,” he says. “Someone decided that now that they’re on the board, they want to allow pets, so they just start allowing them. Someone else decides they don’t want them, or someone else in the building may have allergies, and it becomes a quality-of-life issue, and one of potential illness. In the meantime, people have gotten attached to their pets.” Disagreements like these can end up in court, with all parties involved no doubt wishing the rules had never been bent.

Finding the Solution

What can be done to mitigate these problems? The best approach is, of course, to not veer off track in the first place and ensure that each and every board member is familiar with and committed to upholding the rules and regulations of the association. “Read the bylaws, read the rules,” says Cervelli. “Do it. It saves time, every time. Don’t take shortcuts. Familiarize yourself with what you can or can’t do. If you don’t know, then follow up with your attorney the next day.”

If people begin to stray, managers can step in and try to gently coax them back to the center. “If the manager has a good relationship with their board, they’re far better off saying, in a diplomatic way, this is what the bylaws say and this is how we have to do it,” says Estis. 

If things do not get better or board members are unresponsive, it may be necessary for unit owners or shareholders to get involved. “If things don’t seem kosher or don’t feel right, have discussions,” says Cervelli. “Read the bylaws. Consult an attorney. You can fire your board but you have to be ready to step in. I’ve seen it happen.” 

That process can be an involved one. “If the board is non-responsive to resident complaints and simply won’t do what the governing documents require, through inattention, self-interest or otherwise, the shareholders or unit owners may petition the board for a special meeting to remove the board and vote to bring in a new board which hopefully will take steps to right the ship,” says Troup. He adds, “As a last resort, shareholders concerned about material violations of governing documents and/or the law—such as building and fire codes—may commence a lawsuit to obtain judicial relief.”

Finding a solution through litigation can be expensive. Individuals who wish to pursue a case more often than not need to find others willing to support that approach as well, simply to ease the cost. “If there are 250 people in your building and you are the only one willing to put the board to the test, everyone in the building will benefit if you win, but you won’t be able to get your $10,000 back. You can’t fund this yourself. You need neighbors willing to put up funds themselves,” says Estis.

 Ultimately, perhaps the best way to bring about the desired results is to do it from the inside—by joining the board. “The best way to make change happen is to get on the board,” says Cervelli. “Get on a committee. I don’t know anybody who wouldn’t welcome someone saying that they want to help and shoulder some of the burden.” 

That is an important point to remember: being a board member can be a lot of responsibility, a commitment that could feel overwhelming at times. When rules are bent or broken, it may be a sign that these volunteers just need a helping hand, one that can help guide the ship and shoulder some of that responsibility. There's no doubt that when that happens, everyone benefits.  

Elizabeth Lent is a freelance writer and a frequent contributor to The New Jersey Cooperator.