In 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.
Homeowners 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.
In 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.
As 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.
With 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?”
Given the deluge 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.
It’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.
For 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.
Board members often ask me about potential liability to the Association stemming from maintaining or adding a playground on Common Property. Frequently, they assume that the Association will automatically be held liable if anyone gets hurt on the playground equipment. Fortunately, that is not the case. Georgia Code Section 51-3-23 protects the owners of property used for recreational purposes from liability. That Section provides that the owner of land who permits the use of the property for recreational purposes does not guarantee the premises are safe for any purpose or create any duty of care for the landowner. In other words, a person uses recreational facilities at their own risk.
There are two types of homeowners associations (generally subdivisions) in Georgia—- those that are subject to the Property Owners Association Act (POAA) and those that are not. Associations not subject to the POAA are known as common law homeowners associations. The members of a common law association can vote to amend their declaration to submit to the terms of the POAA.
Common law associations who do not adopt the POAA are subject to O.C.G.A. 44-5-60 (d) (4). That statute provides that covenants imposing greater restrictions on the use of land cannot be enforced against a property owner without that owner’s consent. That means that if an amendment is adopted by the vote of the number of members required by a declaration, the amendment can be enforced only against the owners who consented to the adoption of the use restriction. That is not the situation with the POAA. Amendments approved by the required number of members apply to all owners, not just those that voted in favor of the use restriction.