Just One Big, Happy Family...? Remedies for Dysfunctional Boards

Just One Big, Happy Family...?

Finding the right balance of involvement between homeowner associations, co-op boards, condo boards and residents can be like maintaining a healthy relationship with a significant other: you want to be compassionate, responsive and attentive, but not too needy, nosy or aggressive. Fresh flowers are always a nice touch too.

With our busy and hectic schedules, associations and boards might typically be more likely to be apathetic and disinterested in the status and well-being of the building, leading to unbalanced reserve budgets or broken lights in common areas.

While this lethargy can be an annoyance to those who would like a more dynamic and proactive voice regarding the comfort of their home, the opposite side of the spectrum can also be cause for serious concern. An association or board that oversteps its bounds, intrudes on the privacy of individual residents and pushes the legal envelope can lead to tension, arguments and perhaps, the end of what should be a long-term relationship.

Power to the People?

The powers of an association or board don’t have to be a mystery. As Attorney Matthew L. Moodhe of the law firm of Kovitz Shifrin Nesbit in Buffalo Grove explains, “Board powers are outlined in various statutes and the association’s governing documents. Depending upon the type of association or organization, the board powers will be spelled out in either the Illinois Condominium Property Act (ICPA), the Illinois Common Interest Community Act or the General Not for Profit Corporation Act. Additionally, the organization’s governing documents including the declaration, bylaws and rules and regulations will delineate the specific powers of the board of directors. It is imperative that board members make themselves familiar with their responsibilities and authority.”

That being said, board powers can differ between homeowner associations, co-ops or condos.

“In a general way, board powers are similar in co-ops and condominium/homeowner associations in that board members are subject to a fiduciary duty to act in the best interests of their organization,“ explains Moodhe. “Wiith respect to specific board powers for their particular organization whether it’s a co-op or a condominium/homeowners association, again the various statutes will apply and their governing documents may contain different powers for each entity.”

Some of the most common kinds of dysfunction residential boards are prone to are usually based around the interpersonal relationships between members and the varying (and sometimes clashing) personalities of individual residents.

“For a manager (or board member), worse than apathetic boards is micro-managing,“ says Angela Falzone, a consultant at Association Advocates, Inc. in Chicago. “These are board members who have a lot of time on their hands, detail every minute issue that is supposedly wrong (one sprinkler head didn't go off at 3 a.m.) and becomes angry at the manager for not getting it fixed immediately. The range of intrusions to a manager’s job by a micro-managing board member can vary, from simple to very detrimental. Apathetic boards may slow a process by not getting back to a board for approvals, but it's easier to work with them because they generally trust management to do the job right.”

“The types of problems experienced by residential boards,“ adds Moodhe, “run the entire scope of human interactions. Of course, there is apathy and often disorganization. Additionally, one of the most common problems that I see with residential boards is an unwillingness or inability to properly deal with disagreements amongst the board. I often counsel board members that it is okay to agree to disagree. Not every decision has to be made unanimously. Individual board members are entitled to their opinion and their vote. Boards have to remember that they are dealing with a wide variety of association topics and unanimity will be virtually impossible on every issue. More importantly, board members cannot take it personally if fellow board members do not agree with them.”

That is sometimes easier said than done. John, a Chicago resident and member of his self-managed condo board says that at meetings, sometimes it is the tension between members that holds back making important decisions, not a lack of funding or resources. “I feel people vote too much with their hearts and not with their common sense, just because they want to be contrary to a board member who has been too pushy or too aggressive with their opinion. Maybe that is just their personality, or maybe it is a passive-aggressive form of revenge, but regardless, it leads to uncomfortable dynamics and a lack of action. Ultimately, it hurts the building.”

Upsetting the Apple Cart

Situations like John’s can mean that quarterly meetings get a little awkward, or it could be more damaging. Dysfunctional boards can genuinely impact the community they are supposed to be governing. “A dysfunctional board,“ says Moodhe, “can have a negative impact on the community they govern by not paying sufficient amount of attention to important association business and instead focusing on personal issues or personality conflicts on the board of directors.

Additionally, the mood and/behavior of unit owners at open board meetings often reflects the level of professionalism and/or organization of the board of directors. The more professional, considerate, polite and organized the board of directors, the more constructive, polite and considerate unit owners will be at board meetings.”

Further, as Falzone points out, depending on the level of dysfunction, these issues can “cost the association more money, can delay projects, or can cause a management company to quit.”

John’s experience backs this up. “We used to be managed by an outside company, who eventually got tired of our resident’s bickering and distrust with them. Right now we are self-managed, but I often wonder if that is a sustainable condition.”

Beyond interpersonal drama, there can be legal ramifications and financial loss associated with a board in peril. Overzealous boards can, according to Moodhe, lead to an increased number of potential claims of breach of fiduciary duty and/or possibly violation of various state and federal laws concerning the unit owners’ rights to use and enjoy their property.

Falzone does point out that issues that demand legal attention can be difficult to identify. “Unless an owner gets a legal interpretation of board's actions, or the manager identifies illegal activity, it's difficult to address. Illinois now has managers' licensing, so we are obligated to ensure the board is acting within the law at all times, and that has been a game changer for good managers. If self-managed, a bad board can get away with a lot until someone, somehow catches them,“ she says.

Ownership really does fall on the board members and residents to understand the duties and scope of the association or board. Just as you would familiarize yourself with a politician’s platform, so should you get to know the ins and outs of your board and building’s guidelines, which will help you recognize red flags of dysfunction. Moodhe suggests, “One of the early warning signs that a board is having a difficult time functioning is frustration with non-unanimous votes. This often leads to creation of factions on the board, improper email communication and/or debate amongst board members and the overuse of workshops to discuss association matters outside of the purview of the owners.”

That sluggish response to issues is a concern across the board, says Falzone. Boards that are “Slow to respond to manager's request; long board meetings going over every minute detail; and personal agendas (demanding one vendor get the job)” are all signs to be cautious of.

If these warning signs have been spotted, Moodhe says there are still ways boards can get themselves back on-track and improve their overall function and effectiveness, including “participating in the numerous available seminars for board members offered by various industry organizations. Additionally, a board may ask for assistance and rely on their property management company to provide advice and assistance in overcoming board issues.”

Similarly, Falzone suggests boards should, “Listen to your manager if they have one, trust the advice of the professionals around them, not make it up as they go along, understand they are not supposed to know everything, they are obligated to follow the laws, be unbiased, fair in judgment, use the business judgment rule, and leave personal agendas out of their decision making.”

Property managers can also do their best to stage an intervention and help a floundering or hostile board get its act together, but as Moodhe explains, this is a very difficult situation for property managers. “Most property managers enter the profession because they want to improve a community for the residents. However, legally they are the agent of the association and of the board of directors. Having an overzealous board micromanage the association definitely hinders the property manager from performing the tasks for which they were hired. Often, the association’s legal counsel may intervene and impress upon the board to utilize the property manager’s skills and resources and let the property manager do their job to make the board members’ lives easier and the community run more efficiently.”

Learning Tools

Regardless of if you are a board member, a property manager or a resident watching it all go down, there are plenty of resources to help you. Falzone points out that “there are classes through the Association of Condominium, Townhouse and Homeowners Associations (ACTHA) and the Illinois chapter of the Community Associations Institute (CAI-IL), seminars at all trade shows, books written, articles (such as this one) that a good board member should be in tuned to.” She suggests owners “utilize all resources available, no one was born a board member, like anything else in life, it is taught and learned.”

Board members can also gain a wealth of experience by attending the Chicagoland Condo, HOA & Co-op Expo on Tuesday, October 22, at the Navy Pier Convention Center in Chicago from 10 a.m. to 4:30 p.m. More than just another trade show, the Chicagoland Expo will help connect vendors and service providers with the decision-makers from HOAs, condominiums, and residential co-ops throughout Chicagoland, and will offer educational seminars custom-built for board/association members and property managers.

Moodhe concurs, “In addition to the industry seminars, some of our clients at Kovitz Shifrin Nesbit ask us to meet with the board and analyze where they’re having difficulty and offer some specific suggestions with respect to implementing measures to make their administration of their association operate smoothly and effectively in the future.”

As for John and the rocky relationship between the members of his board, he says he’ll be doing his best as a unit owner to provide support and a voice of reason. “I do feel like I’m a kind of couple’s counselor at meetings,” he says. “I’m always trying to see both sides of arguments when they come up, and looking for compromise.” For the next meeting, maybe he should also bring a box of chocolates.

Rebecca Fons is a Chicago-based freelance writer and a frequent contributor to The Chicagoland Cooperator.

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