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GeorgerwilliamsW
(Indiana)

Posts:705

07/31/2008 3:42 AM
I have been asked to include a provision in draft legislation in Indiana that would require term limits for board members as one way to deal with rogue and abusive boards and to stimulate greater participation. I am concerned that even well drafted provisions in this area would lead to all sorts of unintended consequences. Does anyone have any experience with terms limits for board members? Advice and council will be appreciated.

BruceF1
(Connecticut)

Posts:529

07/31/2008 4:16 AM
Finding volunteers to serve on boards has not been a problem in our community - - - - yet. But, if you check past posts in this forum, I'm sure you will find that there are several associations that do. If you have term limits for board members and you run out of volunteers, what do you do? I would say that what you do need are procedures for homeowners to remove a board member, with or without cause. HOA laws for many states can be viewed online. I would suggest finding some and see what provisions are in other states' laws. Also, the NCCUSL has drafted a law, known as the Uniform Common Interest Ownership Act, which has been adopted by some states. You could see if there are provisions in there that would suit your purpose. You can view it at http://www.law.upenn.edu/bll/archives/ulc/fnact99/1990s/ucioa94.htm You need to be careful when drafting provisions in laws. Play everything out to see what its consequences could be. Be careful what you wish for. Remember prohibition?

GeorgerwilliamsW
(Indiana)

Posts:705

07/31/2008 5:07 AM
Thanks, Bruce. I appreciate your quick response. I think I need to improve my search skills. I did search for "term limits" and came up with nothing. I have to go into advanced search mode to match the exact phrase I am looking for--rather than use the Google quote approach--I discover. Our legislative research service has been digesting all of the existing state statutes as part of the drafting process over the past three years. They (and I)are researching case law as well. There is a lot going on currently that deals with homeowners association law. The NCCUSL draft and its adoption in other states has turned out to be fraught with problems. Were we to use it as a model we would be importing all the horrors and issues that exist elsewhere. We want--and can--to do better than that. What may be a better approach for uniformity is a uniform Declaration of Covenants, rather than the overarching statutes. Inconsistencies and unenforceable provisions in covenants are legion. It looks like the AARP may have a handle on the best approach to model legislation. I am getting nothing by praise for it from my colleagues across the country (except from Texas). AARP released their contribution to the area in 2006. I am not a fan of AARP (nor of CAI), but sometimes they are right on target. As your so accurately observe, unintended consequences that stem from poorly drafted legislation is something one always must guard against. It is vital to go beyond one's personal experience. I am coming to this process with 30 years of legislative drafting experience, but I am not immune to narrow, limited vision. Heeding advice and alternate points of view has always served me well. There is a great range of opinion posted on HOATalk, some well informed, and some not very well informed. It is both enlightening and valuable to have this forum available. (Others are not nearly as good.) I have revised my thinking (which will be reflected in the final work product)on a couple of issues based on the posting here. That, in and of itself, is worth a great deal. I keep reading, questioning, testing, challenging, debating and learning. And I don't take it personally!

BruceF1
(Connecticut)

Posts:529

07/31/2008 5:16 AM
George, I wasn't suggesting you use the UCIOA, other than to see if it contains any provisions you may find helpful. My state is one of the ones that has adopted the UCIOA, so I am curious as to what the problems, horrors, and issues that exist elsewhere are. I think I've seen you post this before, but I've never seen any specifics. Can you mention a few cases or give me some links where I can learn more?

MicheleD
(Kentucky)

Posts:1676

07/31/2008 5:49 AM
I'm trying to think what hideous shape our HOA would be in with board member "term limits." We have a provision that says that OFFICERS may only hold the same officer position for 3 consecutive years. Term limits, it seems to me, would not compel resident participation in any way and can be a real detriment if you do get a handful of people who can take the time to serve year after year. It seems to me a better approach would be to make it easier for HOAs to remove rogue board members.

GeorgerwilliamsW
(Indiana)

Posts:705

07/31/2008 5:59 AM
Posted By BruceF1 on 07/31/2008 5:16 AM George, I wasn't suggesting you use the UCIOA, other than to see if it contains any provisions you may find helpful. My state is one of the ones that has adopted the UCIOA, so I am curious as to what the problems, horrors, and issues that exist elsewhere are. I think I've seen you post this before, but I've never seen any specifics. Can you mention a few cases or give me some links where I can learn more? Bruce, I don't want to get into an esoteric discussion here that has limited interest and gets us off thread and task. Nevertheless, I value your question.It is an important one, worthy of response and discussion. Every statute, even a very bad one, has elements of good law within it. Let me respond this way. Indiana has a long tradition in case law, statutes and public policy that favors individual property rights over covenant restrictions. Most recently, the property rights issue was evident in the explosive voter and taxpayer revolt and the legislation that resulted in major property tax reform last spring. The UCIOA draft tends to be biased in significant ways toward the association and against the rights of the individual owner. One specific: Indiana courts have clearly stated that levying fines is a judicial function, not something a homeowners association should be empowered to do despite covenant provisions. Secondly, while there are many similarities among the various forms of common interest ownership, the differences are too significant to be subsumed in a single statute. Condominiums, time-shares, cooperatives, and single family homeowner associations need separate statutes, unlike the UCIOA approach. One size does not fit all. Right now, Indiana homeowner associations are subject to the statutes originally written for condos. It isn't working well, particularly since homes and lots are owned fee simple. A version of the UCIOA (SB350) was introduced in the Indiana General Assembly in 2006-07 and again last year and did not even get to a hearing. Indeed, in the last legislative session, it did not gain any co-sponsors on either side of the aisle. It was withdrawn by its single sponsor. I hope this is of some interest to other readers.

SusanW1
(Michigan)

Posts:2117

07/31/2008 6:00 AM
I'm for having term limits for OFFICERS on the Board, and that should be stated in the bylaws. (Some presidents do and some don't make general board members, if they can step down from that authority. They tend to be a wealth of history) I'd let the Members decide what Board members to keep, year after year. I am for rotating term-lengths at election time, so the entire Board could never be "all new." I'm for allowing the Board to fill any vacancies, until the next election. I'm for board members being allowed to remove any board member for certain violations, and the word, MAY, can be included in the edict. "Board members MAY remove members for missing 3 meetings without excuse." I'm for the establishment of an Advisory Board that advises/consults the Board and brings some expertise to the Board. They don't meet, rather they are a group of volunteers that can be called on for particular circumstances; no board power or vote.

MaryA1
(Arizona)

Posts:2157

07/31/2008 7:49 AM
Term limits sound good, but for all practical purposes, IMO, it just would not work in most assn's. Small assn's don't have that large of a pool to begin with and even large assn's find it difficult to find willing members to want to run for a position on the board. I've lived in a small assn (49 homes) where it was next to impossible to find willing candidates to run for a board position. Now, in my present assn of 1,700 homes, most years there are NOT more candidates than open positions and most often those running are existing board members. As long as apathy runs rampant in the majority of assn's, term limits for board members will not be feasible, IMO. There are other ways to deal with rogue and abusive boards: recall the errant board members, or quit re-electing them to office. If they're being re-elected because no one else is running; how is term limits going to help?

SusanW1
(Michigan)

Posts:2117

07/31/2008 8:51 AM
Term limits are a double edged sword: on one hand, it "cleans house"; on the other hand, it removes people who are doing a good job. One idea might be to establish a "5 year, then one yr. off, then elegible again" type of option. IMHO - Committees "feed" the Board; therefore, if you have good, well run Committees, then the next role for these folks is on the Board. Likewise, old Board members should be encouraged to get on a Committee. Sometimes, they just "fade away."

RogerB
(Colorado)

Posts:3694

07/31/2008 8:59 AM
George, based on my 40 years of HOA experience I would strongly recommend against having term limits for HOA Board members. Let each Association handle chose whether or not they want term limts and how to handle any problems with their Board members.

Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

JohnK3
(Pennsylvania)

Posts:438

07/31/2008 9:05 AM
George, We have 3 year Board membership terms, but also a provision that does not limit the number of terms a person can serve on the Board. Couple that with a provision(s)specifying the reasons and procedures for removing a Board member, and IMO you get the best options for keeping those willing and able, along with an out for those who are not. If possible, as has been noted, staggering terms helps insure continuity of leadership, which is a good thing.

KirkW1
(Texas)

Posts:1110

07/31/2008 9:10 AM
I just wish there was a way to allow fines while not allowing the HOA to play prosecutor, judge, and jury. If some smart person could come up with a way to put into place a system similar to what happens when a person violates city codes it would be great. The HOA could initiate an action which would then (optionally) be heard by an outside party. The whole thing would ideally be enough to prevent problems (the purpose of fines) while not as expensive as filing a lawsuit. I would even be in favor if the HOA didn't get any proceeds from said actions. This would ensure rules were being enforced for reasons other then the budget. If governments can require HOAs in new subdivisions, then they should shoulder some oversight thereof. For that matter, Covenants could start to follow a checkbox approach. The developer checks which restrictions he wants in the neighborhood before building.

GeorgerwilliamsW
(Indiana)

Posts:705

07/31/2008 9:45 AM
Posted By KirkW1 on 07/31/2008 9:10 AM I just wish there was a way to allow fines while not allowing the HOA to play prosecutor, judge, and jury. If some smart person could come up with a way to put into place a system similar to what happens when a person violates city codes it would be great. Krik, That is the balancing act between individual property rights and common interests. It is going to take some creating thinking and legislation. The first approach is to require associations to have an internal appeal process, one that is independent of the board (perhaps a appeal board elected by homeowners). The second approach is to require that before any fines can be assessed there must be mediation/arbitration. A third approach is to require the association to seek a court order, perhaps from a magistrate or a township small claims court judge to levy fines. Any approach has to be (1) quick and simple, (2) inexpensive, and (3) binding on the association but not on the homeowner. One proposal that has come my way is to mandate that when a fine is assessed, the homeowners association is required to pay in the full the costs of binding mediation.

KirkW1
(Texas)

Posts:1110

07/31/2008 9:56 AM
...Any approach has to be (1) quick and simple, (2) inexpensive, and (3) binding on the association but not on the homeowner. One proposal that has come my way is to mandate that when a fine is assessed, the homeowners association is required to pay in the full the costs of binding mediation. I agree that it needs to be quick, simple, and inexpensive. I don't believe the owner should be able to just get out of it. Perhaps they should retain the right to move to a civil court, but they should be held accountable. As for paying for binding arbitration, only if the HOA is on the losing end. And you have now violated the inexpensive in my view. I think that perhaps if one could appear in a small claims court format in front of a person familiar with CC&Rs. Part of the problem here is they vary so much that you spend money to just get them up to speed on your documents. But the cost to a hearing should be less then $50 in my opinion.

GeorgerwilliamsW
(Indiana)

Posts:705

07/31/2008 10:20 AM
Touche! I am not advocating any of these approaches. I am just passing along the ideas that have been proposed. Apartment owners go to small claims court to get eviction orders and judgments for unpaid rent. Maybe extending small claims court jurisdiction to include assessing fines for violations of covenants and rules is something that ought to be considered.

DwightT
(Idaho)

Posts:443

07/31/2008 11:16 AM
Posted By KirkW1 on 07/31/2008 9:10 AM The HOA could initiate an action which would then (optionally) be heard by an outside party. How about setting up a partnership with some other nearby HOAs? I'll hear your cases if you'll hear mine.

BrianB
(California)

Posts:1732

07/31/2008 12:17 PM
i thought all boards had term limits. we call them "elections" where i come from. and people who don't exercise their right to limit the term of the board at those times, deserve the results.

GeorgerwilliamsW
(Indiana)

Posts:705

07/31/2008 1:06 PM
Posted By GeorgerwilliamsW on 07/31/2008 3:42 AM I have been asked to include a provision in draft legislation in Indiana that would require term limits for board members as one way to deal with rogue and abusive boards and to stimulate greater participation. I am concerned that even well drafted provisions in this area would lead to all sorts of unintended consequences. Does anyone have any experience with terms limits for board members? Advice and council will be appreciated. Everybody, Thanks for all your input. I know now this duplicates earlier threads, and this one kinda' got off the subject. I am not a fan of term limits, but I needed to ask what experience had been out there for purposes of due diligence. Rather than lots of opinions on the topic, I was hoping to find some first hand experience in actual operation that could be shared. There is probably not much more useful that can be said, I suppose.

MicheleD
(Kentucky)

Posts:1676

07/31/2008 1:43 PM
Thankfully, we've not had to deal with "term limits," so there is no story to tell here. But after serving on the board for close to 12 years (maybe more, I'm too lazy to go look up the actual date), I can say that HAD there been term limits, we'd be in a heck of a chaotic state. Over the years we've had one or two board members who had ulterior motives for serving, but, other than one that hung with us for close to 5 years, most of them moved on on their own when they realized it was a lot of work for no (perceivable) payoff. I would say, all in all, we've been fortunate. But we're not so odd a bird now as we used to be. In the beginning, HOAs in this neck of the words were not as active and not as common. Thanks to an active local metro government that works with neighborhoods to revive old associations and start new ones, and that provides yearly workshops for the logistics side of the coin, our entire community can boast many active and effective HOAs. But I have to say, I don't know of a single one that has, or would benefit from, board member term limits.

GlenL
(Ohio)

Posts:1362

07/31/2008 1:48 PM
George while I would love to see term limits imposed on our public officials, I too am against them in an HOA for the reasons everyone else stated. While I think an HOA should be able to impose fines and lien against them after due process; there should be a reasonably high limit before they can be foreclosed on. Since you have input on this legislation I would recommend a few things: Adopt and amend budgets for revenues, expenditures, and reserves in an amount adequate to repair and replace major capital items in the normal course of operations without the necessity of special assessments, provided that the amount set aside annually for reserves shall not be less than ten per cent of the budget for that year unless the reserve requirement is waived annually by the unit owners exercising not less than a majority of the voting power of the unit owners association. * Unless a contract or other agreement is renewed by a vote of the unit owners exercising a majority of the voting power of the unit owners association, neither the unit owners association nor the unit owners shall be subject to either of the following: (1) For more than ninety days subsequent to the date that the unit owners other than the developer assume control of the unit owners association, any management contract executed prior to that assumption of control; (2) For more than one year subsequent to an assumption of control, any other contract executed prior to that assumption of control, except for contracts for necessary utility services. * The ability to suspend the voting privileges and use of recreational facilities of a owner who is delinquent in the payment of assessments for more than thirty days. *** If there is an owner other than the developer, the declaration of the development shall not be amended to increase the scope or the period of the developer’s control.

JeanneK3
(Maryland)

Posts:129

07/31/2008 1:49 PM
I agree that term limits is not a good idea but having a separate appeal committee is. I believe this is already in a one state's laws but I can't remember which one.

GeorgerwilliamsW
(Indiana)

Posts:705

08/01/2008 3:07 AM
Posted By JeanneK3 on 07/31/2008 1:49 PM I agree that term limits is not a good idea but having a separate appeal committee is. I believe this is already in a one state's laws but I can't remember which one. Jeanne, Good point. I believe you may be referring to Arizona. I am currently doing some exploring to find out what other states might have in place to appeal decisions by homeowners association outside of the court system. By the way, I am perplexed that New York state is not appropriately represented by comments posted on HOATalk.

GeorgerwilliamsW
(Indiana)

Posts:705

08/01/2008 4:02 AM
Hey folks, What an incredible discussion! Lots of good thinking here, even though we have gotten off topic. The reality of our world is that participation in the affairs of a homeowners association (and in government)is, more often than not, dismally low. Despite what we want, and despite the ideals of the law, reality trumps everything else. As a result, it opens up the system for abuses by association governing bodies and by individual homeowners themselves. How can we deal with this reality in drafting new legislation? Ignoring it only perpetuates the potential of abuses. Is there a way by statute to recognize or accept that only a few people will participate, and, at the same time, create a workable balance between individual property rights and common interests. Maybe so; more likely not. We can't protect people from their own folly. Yet, long established public policy that has the force of law in adjudicating cases, says we need to do something. (I am actually not in favor of term limits by statute. Such things are best left to bylaws.)

JeanneK3
(Maryland)

Posts:129

08/01/2008 6:52 AM
George: Maryland doesn't have such an appeal body but Montgomery County in Maryland is very consumer friendly and does. Go to http://www.montgomerycountymd.gov/ocptmpl.asp?url=/content/ocp/consumer/comm_ownership_law.asp for details.

GlenL
(Ohio)

Posts:1362

08/01/2008 9:27 AM
Posted By GeorgerwilliamsW on 08/01/2008 4:02 AM How can we deal with this reality in drafting new legislation? Ignoring it only perpetuates the potential of abuses. Is there a way by statute to recognize or accept that only a few people will participate, and, at the same time, create a workable balance between individual property rights and common interests. Maybe so; more likely not. George a small HOA near here actually has it in the documents that all owners must take a turn serving on the BOD. The only way out is to sell before your turn comes up. Wouldn't work in as a law but something small HOA's mite consider. Another off topic point but a prior posting just flashed into mind. This woman was upset because she couldn't serve on the BOD because her name wasn't on the deed. Ohio COA law specifies owner or spouse or if owned by a corporation an agent of said corp. You might include something on who is eligible to serve.

MaryA1
(Arizona)

Posts:2157

08/01/2008 3:08 PM
Posted By GeorgerwilliamsW on 08/01/2008 3:07 AM Posted By JeanneK3 on 07/31/2008 1:49 PM I agree that term limits is not a good idea but having a separate appeal committee is. I believe this is already in a one state's laws but I can't remember which one. Jeanne, Good point. I believe you may be referring to Arizona. I am currently doing some exploring to find out what other states might have in place to appeal decisions by homeowners association outside of the court system. By the way, I am perplexed that New York state is not appropriately represented by comments posted on HOATalk. AZ has a state agency which can hear and settle disputes -- the Office of Admin Hearings. However, this is not an automatic avenue afforded h/o's who've recieved violation notices. A claim must be filed with the OAH and there is a $550 filing fee. If the h/o prevails the filing fee is paid back to them by the HOA. In recent months, a number of the decisions have been appealed to Superior Court thus imposing a financial burden on the h/o and defeating the purpose of this venue to settle disputes.

BradP
(Kansas)

Posts:1742

08/02/2008 10:30 AM
Posted By BrianB on 07/31/2008 12:17 PM i thought all boards had term limits. we call them "elections" where i come from. and people who don't exercise their right to limit the term of the board at those times, deserve the results. Brian hit it on the head....owner apathy is to blame, maybe instead of looking at term limits we should be examining ways to make homeowners exercise their right to vote....perhaps fining them or taking away their amenity privileges. As a board member I had to be re-elected and unless your association has some weird 10 year term most members are elected for 1-2 years.

GeorgerwilliamsW
(Indiana)

Posts:705

08/03/2008 3:06 AM
Posted By GlenL on 08/01/2008 9:27 AM Another off topic point but a prior posting just flashed into mind. This woman was upset because she couldn't serve on the BOD because her name wasn't on the deed. Ohio COA law specifies owner or spouse or if owned by a corporation an agent of said corp. You might include something on who is eligible to serve. Good point! I just put a note in the draft to include it. However, I think I will go the other way, with a specific requirement that only individuals listed on the deed are eligible for board election. Taking another approach opens up too many litigation possibilities. Thanks for thinking about it. I know I don't have all the answers.

GeorgerwilliamsW
(Indiana)

Posts:705

08/03/2008 3:19 AM
Another section I have been asked to include is a process for the Secretary of State to serve as trustee of the assets of a homeowners association which becomes inactive or defunct due to board resignations or lack of board membership. Membership apathy is a genuine problem. It is not clear what should be the trigger for such a trusteeship to kick in. A situation in which all board members resign or lost eligibility to serve (moved away) has actually occurred. It took action by the Secretary of State to petition the court to appoint a trustee to supervise a new election--quite expensive for the homeowners. Does anybody have any experience with this kind of situation? How was it handled?

GeorgerwilliamsW
(Indiana)

Posts:705

08/03/2008 3:21 AM
Posted By JeanneK3 on 08/01/2008 6:52 AM George: Maryland doesn't have such an appeal body but Montgomery County in Maryland is very consumer friendly and does. Go to http://www.montgomerycountymd.gov/ocptmpl.asp?url=/content/ocp/consumer/comm_ownership_law.asp for details. Thank you for the link. Excellent resource! I know that Maryland has some of the largest homeowners associations in the nation, but I was not aware of the Montgomery County involvement.

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