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“What Documents?” Boards and Owners Need to Read and Understand Condo Docs

After the excitement of buying a condo, homeowners may stuff the official documents in a shoebox and forget about them. Even the owners who serve on association boards may not be familiar with the documents, which include things like the Master Deed, the Covenants, Conditions and Restrictions (CC&Rs) or the Declaration of Trust, a.k.a, the bylaws. But when answers are needed, these documents become the go-to source for important information. Owners and board members ignore them at their peril.

For those who need a refresher: Typically, a buyer receives a copy of the condo documents from the lawyer hired to represent him or her in the sale. The master deed defines the property, including its boundaries. The deed also stipulates the uses of common areas such as parking garages and limited- or exclusive-use common areas such as patios or balconies. The Declaration of Trust, also known as the bylaws, explains the organization of the condo association board and sets out how it will be run. The bylaws also include the rules and regulations, which affect every unit owner.

“It’s a ‘buyer beware’ situation,” says attorney Diane Rubin of Prince Lobel Glovsky & Tye, LLP, of Boston. “You need to be aware of the rules you’re signing on to.” In her work with homeowners, she has noticed that people tend to forget that they are ceding over decision-making authority to the condo board by signing these documents. They see only the benefits of living in a community, such as snow removal and maintenance. But later, when they want to adopt a second pet, or their toilet leaks and damages the downstairs neighbor’s ceiling, they can bump up against community rules.

Access to Documents

So how does an association or a management company make sure homeowners know the rules, or at least know where to access this information? Make it available online, says Ken Foley, principal of NextGen Property Management in Merrimac, Massachusetts. His company creates websites for client associations, from which homeowners can access PDF files of documents anytime. More associations are making documents available online, which saves money in printing costs and allows homeowners to download only the information they’re interested in. Online versions, as long as they aren’t simply scanned from tattered copies, are also easier to read.

In situations where renters occupy a unit, a copy of the rules and regulations should be provided, because renters don’t see the condo documents.

Understanding is Key to Following Rules

The first line of defense in understanding and carrying out rules is the condo association board itself. In an ideal world, board members, also known as trustees, would be familiar with the documents. That’s where training comes in.

“It’s important for trustees to understand their responsibilities,” says Candice Morse, a condo manager for Thayer & Associates and an executive councilor for the Boston Chapter of the Institute of Real Estate Management (IREM). “We typically condense the documents for the trustees, so they can become familiar with those areas that most impact them.” The areas with highest potential for misunderstandings include plumbing and HVAC issues and insurance claims, she says. Another contentious issue is cigarette smoke drifting from one unit into others. “If we’re at all unclear about the wording in a document, or if there’s a gray area, we ask a lawyer for clarification.”

Condo documents are not exactly light reading. The legal jargon ensures that the documents satisfy state statutes where the complex is incorporated. In Massachusetts, for example, the relevant statutes are under Chapter 183A of the General Laws. But sometimes confusion arises not from legalese but from vague wording. If the language is unclear to a lawyer, he or she must consult case history.

Attorney Rubin is often asked to work with newly elected boards. In new complexes, the developer often recruits the first board. Rubin provides an hour-long training session to explain the job and the scope of the board’s authority based on the bylaws. “New boards should sit down with counsel and understand their fiduciary responsibilities and authority; they should know their role,” she says.

Learning on the Job

Such training is the exception rather than the rule, according to two board members interviewed for this article. Realistically, people learn on the job and newer members rely on the institutional memory of those who’ve served longer, says Steven Ward, who has served as a trustee of his complex in North Quincy, Massachusetts, for six years. For this reason, Rubin says, it’s important that the Declaration of Trust specify staggered terms of office for trustees. “If all three or five trustees come in at the same time for a one-year term, you lose the continuity,” she says.

Homeowners are usually propelled onto the board by a particular issue or concern, says Foley. Money, of course, is a big issue. For Heidi Wilson, in her second year on the board of a 54-unit complex in Brookline, Massachusetts, the issue was condo fees and how they were being spent. “It was self-interest,” she says of her decision to become involved. “I wanted to have my fingers in it.”

Wilson got a taste of the difficulty of making decisions as a board member when it came time to replace carpet and repaint the hallways. “We put out samples of carpet and paint for owners to look over, but hardly anyone got back to us. Since I was the artsy person on the board, the others said, ‘You just choose.’ ” Wilson did, the changes were made, and she received angry e-mails from residents, who disliked the results. The furor eventually died down.

Rubin says a common pitfall for boards is being too solicitous of owners’ wishes. There’s an inclination to seek consensus, which rarely happens, she says. The key is to be clear with owners: “We’ve been elected to the board, we want to hear what you have to say, but we make the final decision.” Otherwise, Rubin says, decision-making comes to a grinding halt.

In North Quincy, Ward describes how the board made a decision on maintaining the architectural integrity of the 7-story, 121-unit complex. All the units are served by heat pumps that were beginning to break down and need replacement. Each heat pump has a vent to the outside that is covered by a grille. The manufacturer doesn’t make the same model of heat pump any longer, and as owners were replacing their pumps, the board noticed a checkerboard pattern of grille covers on the building’s exterior. “They didn’t match,” he says.

So the board, taking its authority from the master deed, set up a procedure for replacing the heat pumps and also determined the specific type of grille cover to be installed. The trustees also developed a system to ensure each grille cover was painted to match the building and available to contractors in a timely manner.

Unseating a Board Member

What happens if owners are faced with a renegade board or board member? The obvious solution is for owners to vote the people, or person, off the board. But this can be difficult if the board fails to hold an annual meeting, which is when the voting is supposed to happen. Some boards operate by default, which means that they stay in power because no one else wants the job. In some associations, regular board meetings can become casualties of a laissez-faire attitude of members and owners, according to Rubin and others.

Board members are required to act in the best interest of the association, to follow the bylaws, enforce rules, and attend meetings. They are also expected to work cooperatively with other board members, and to not act on their own. For situations other than suspected criminal activity, boards should seek to resolve their differences through discussion and mediation. If no solution is found, the board should encourage the member to resign. If that fails, condo documents provide for the removal of a board member, often with or without cause, by a majority vote of the board or in a special meeting with a specified quorum of owners.

If an owner wants to unseat a board member, he or she should consult the Declaration of Trust on procedure. Usually this involves getting signatures of a majority of owners, calling a special meeting, and then following up with owners so that enough of them turn out to vote.

“The property manager or condo association lawyer may offer guidance [on removing a board member], and most of them are professionals and put the association first, but they work for the board and may be concerned about keeping their jobs,” says attorney Rubin.

Renegade board members need to be shown the exit, sooner rather than later, if a board is to be able to conduct business effectively. The entire condo complex suffers if decisions are postponed because a board member fails to show up at meetings or makes deals with contractors on his or her own. This can impact areas such as maintenance, and has a slow but far-reaching effect on the complex’s attractiveness to potential buyers.

“As a board, we work in good faith, but we will exercise our right to enforce the rules,” says Ward. “We trust that people are adhering to the board directives.”

The Rule Book

The condo documents provide the template for all the activities and responsibilities of both volunteer boards and homeowners. Real estate lawyers encourage owners to become acquainted with the rules before the need arises. “When things start breaking down, people go back to the ‘founding fathers,’ the condo documents,” says Foley.

“We just wish people would read these things before they buy,” Rubin says. “It really is communal living, it’s not like living in your own house. Condos really are a democracy.”

April Austin is a freelance writer and a frequent contributor to New England Condominium.

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2 Comments

  • Alan Arno http://www.condologic.blogspot.com/ on Sunday, June 26, 2011 9:28 PM
    "Typically, a buyer receives a copy of the condo documents from the lawyer hired to represent him or her in the sale." Yes -- AFTER the purchase. I don't understand how "buyer beware" applies if the seller isn't required to provide the Declaration of Trust and other governing documents before passing of papers. In Massachusetts, at least, there is no requirement on anyone's part (Association or seller) to provide the buyer with these docs. No one would sign a contract without being given the contract to read first. But condo buyers do it every day of the week. Sure, buyers should make sure they read these docs first. If the seller isn't forthcoming with them, they can get the docs at the Registry of Deeds or possibly at the condo's web site, as the article mentions. But realistically, how often do you suppose a buyer has done that before they find themselves sitting in the realtor's office signing the offer to purchase?
  • I have a question. Should the entire Board Of Directors be acknowledged on Association Memos that go out to the membership......Please get back to me at your earliest convenience ..