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The Community Counsel - Our Blog for Your Association

timingCommunity associations must be careful to preserve construction defect claims.  All too often, our firm is approached by associations to handle construction defect litigation at the eleventh hour, or worse, when the time has already passed to bring an action.  Because of the significant costs typically associated with repairing construction defects, community associations must be proactive in their pursuit of construction defect claims.

Georgia has a relatively short window of time to assert construction defect claims, including negligent construction claims.  Thus, it is important for associations to investigate potential defects and then take immediate action based on the findings.  For example, if an owner reports significant cracks in a common element wall, the association should arrange for an engineer to inspect the property and then discuss the results with legal counsel.

willworkforfreeTraditionally, service on the Board of Directors for a community association has been carried out on a completely volunteer basis, with the Board members’ only reward being the sense of fulfillment they receive from knowing that they are providing a valuable service to their community.  But increasingly, some community associations are finding that this altruistic reward is not enough to keep the open spots on their Boards filled.  For such associations, the question of whether it is permissible to offer compensation to Board members for their service may understandably arise.

There is no law in Georgia that prohibits a member of a Board of Directors of a non-profit corporation to be compensated for his or her service.  That said, the By-laws of most community associations do prohibit the Directors from receiving any form of compensation for their service or only permit it if it is approved by a majority of all of the members.  Notably, for the purposes of By-laws provisions governing Board member compensation, the term “compensation” means not only a cash payment for service, but any form of compensation at all, including a waiver of assessments.

contractterminationIn some ways, good termination provisions in community association vendor contracts resemble pre-nuptial agreements in marriages.   When in the first flush of infatuation with a new vendor’s promises of excellent landscaping or pool services, the Board, like a new bride or groom, understandably does not want to think about what will happen if the vendor’s services don’t live up to expectations.   Unfortunately, though, however rosy a relationship with a particular vendor may start out, there’s a good chance that at some point, there will come a time when one party wants out of the contract.  And when that time comes, a good termination provision, like a pre-nuptial agreement, can alleviate much of the strife that might otherwise result from the split.  

meetingHomeowners often assume that state “Sunshine Laws” require that all meetings of the Board of Directors of a community association be open to the membership.  This assumption is incorrect.  The Sunshine Law, also known as Open Meeting law, does not apply to community associations.  The law only applies to state and county governments, boards and agencies.   It does not apply to non-profit corporations except in certain cases in which the non-profit corporation receives public tax funds.  Further, neither the Georgia Condominium Act nor the Georgia Property Owners Association Act (the “POAA”), require that Board of Directors’ meetings be open to the membership.  As a consequence, unless a particular community association’s By-laws specifically require that Board meetings be open to the members (which some do), meetings of the Board of Directors can be closed to the members. 

board_of_directorsIn the community association context, members commonly confuse the roles of members of the Board of Directors and those of officers of the Association.   This is understandable since in many community associations, the Association officers also serve as members of the Board.   However, as in any non-profit corporation, the roles of members of the Board of Directors and officers of a community association are distinct, and a clear understanding of this distinction is essential to proper community association governance.

The membership of the community association elects members of the Board of Directors pursuant to the association’s Bylaws.   This election commonly occurs at the Association’s annual meeting.  Once elected, the Board of Directors serves as the governing body of the community association, and members of the Board are the only parties entitled to vote on actions taken by the association as a corporation.  For example, the Board determines by majority vote how monies are spent, when to hire and fire employees and contractors, and how to handle a broad range of other responsibilities for the community.  

hoaloanAs the economy continues to slowly improve, many community associations are starting to think about starting the common area repair and renovation projects that they put off during the economic downturn. For those associations considering large-scale, expensive repair and renovation projects, the most practical source of funding for the project is often a community association loan.  However, despite their frequent use among community associations, a few common misconceptions persist about community association loans that may make some Boards hesitant to explore the option of obtaining a loan.

Who Gets to Vote?

votinghandsWith school back in session and the summer winding down, many of us are looking forward to the advent of the fall season and its accompanying benefits, including cooler temperatures and fall sports.   If you are property manager or serve on the Board of a community association, the fall season also likely means association annual meeting season.   In fact, many community associations are already gearing up to prepare for their upcoming fall annual meetings.  And, as preparations begin, a number of questions on proper notice and handling of the meeting inevitability arise.  Perhaps the most primary of these questions is “who gets to vote?”   

crop_ffr-neighborhood-floodGiven the delu
ge of rain Georgians experienced this summer, recent news reports of flooding and related images of swollen creeks and submerged houses may not come as much of a surprise.  What may come as a surprise, however, is that much of the severe flooding in Georgia this year occurred in mountainous North Georgia, an area that does not meet the typical description of a flat, flood-prone region.

This underscores an important point- that flooding can happen anywhere, to any of us, at any time.  In fact, flooding is the most common, and costly, natural disaster in the U.S.  Yet, as many homeowners learn too late, homeowner’s insurance policies DO NOT cover damages caused by a flood.  Instead, such coverage is available only by purchasing special “Flood Insurance”.   Flood insurance is widely available through the National Flood Insurance Program (NFIP), a program administered by the Federal Insurance and Mitigation Administration, which is part of FEMA.

homesIt’s not often that you see a homeowners association compared with an indestructible fictional character.   However, you may be surprised to learn terminating a homeowners association may be just about as difficult as terminating the Terminator.   One of the reasons for this is that abolishment of a homeowners association involves two steps, each of which is fairly complex on its own: 1) termination of the Declaration of Covenants; and 2) dissolution of the corporation. 

As you may know, the Declaration of Covenants (“Declaration”) contains the restrictions and obligations, or “covenants”, binding both the community association and the individual owners.  These covenants provide for the obligation to pay assessments and for architectural controls that restrict changes to the lots.  

treedamageFor many community associations, the wet and stormy summer we’ve been experiencing here in Georgia means an uptick in damages from falling water-logged trees and branches.  Given that association-owned common area and individually-owned units and lots often lie in close proximity to one another, these falling branches and trees give rise to the inevitable question:  who pays for the damage? 

Under basic Georgia common law, ownership of a tree is determined by the property upon which the tree’s trunk is located.  If the tree’s trunk is located entirely on one piece of property, then that tree belongs to the owner of the property on which it sits.  If the tree trunk stands on two or more pieces of property, then each property owner owns that portion of the  tree that is located on his or her property and has an easement of support from the other landowners who share the tree.  That means that each landowner has the right to require that the other landowner not use his part of the tree in such a way as to unreasonably damage or destroy the whole tree.