Hellmuth & Johnson attorney, Nancy Polomis, discusses various topics with HOALeader.com:
Tips for Handling Pre-closing Condos/HOA Buyers’ ARC Requests
An HOAleader.com reader asks: “A builder owns a lot and has a signed contract with a buyer, but the purchase hasn’t closed yet. The buyers want architectural review approval for a fence now so that it can be installed before they move in.
Some ARC members will categorically deny such buyers’ requests solely because the buyers don’t own the property yet. Another feels that, as long as the builder (current owner) approves the request, it should be allowed, and there’s no harm/risk to the HOA.
Note: The builder doesn’t install fences, and the buyer would pay a separate contractor for the work. The builder and buyer would take any risks of failure to close the purchase after the fence is built.”
Here’s how our experts suggest boards approach this type of scenario.
Builders Usually Have This Right
What we don’t know in this situation is whether this community has transitioned from developer control to owner control.
“It looks like the community has transitioned to owner control,” surmises Nancy T. Polomis, a partner at Hellmuth & Johnson PLLC in Edina, Minn., whose clients include local and developers and condos and HOAs throughout Minnesota. “But if it hasn’t, I’d assume the builder or declarant, if they’re different, may have exemptions. Many documents may exempt authorized builders—that’s what we call them—from the ARC requirements.”
Read full article here.
Is This Condo/HOA Treasurer Doing the Job or Asking Too Much?
An HOAleader.com reader asks: “Has anyone ever asked for material invoices from a contractor? The invoices wouldn’t be specific to just our project but multiple projects for different customers since products were purchased in bulk. Our treasurer is asking for these invoices, even though the contractor has given us time and materials documentation, and is refusing to pay until he sees the contractor’s invoices. The contractor is stating the invoices are proprietary and won’t turn them over.” (You can read and respond to the original post on the HOAleader.com Discussion Forum.)
If You Choose, Contract in a Way That Allows This
“If you’ve already signed a contract to pay your roofer $60,000, it doesn’t matter what they’re paying their suppliers,” agrees Nancy T. Polomis, a partner at Hellmuth & Johnson PLLC in Edina, Minn., whose clients include local and developers and condos and HOAs throughout Minnesota. “If it turns out they got an amazing deal on their materials—which is unlikely in this market—they have a higher profit margin.
Read full article here.
Nonprofit Offers Condos/HOAs a No-Cost Checkup
Last month, we reported on Association Reserves, a provider of reserve studies, and its plan to roll out what it calls Association Insights, a tool to allow condos and HOAs to upload their documents for sale to the public. It will also provide a sort of credit score assessing the association’s financial, physical, and operational health.
This month, we’re covering a possible alternative service, a 501(c)(3) called TransparencyHOA. It offers services to consumers, real estate professionals, boards, and owners in community associations, including a complimentary financial analysis to help associations understand their financial health. Here’s a rundown.
Turn to your experts
“I would be of the same mindset of the attorneys interviewed about Association Insights,” states Nancy T. Polomis, a partner at Hellmuth & Johnson PLLC in Edina, Minn., whose clients include local and developers and condos and HOAs throughout Minnesota. “I wouldn’t recommend that an association have documents that are private to the association in the hands of third parties.
“I don’t think it’s a good idea,” she says. “If it’s on the web, once it’s out there, anybody can use that information, and it could be used to the association’s detriment, particularly in litigation.
“It’s not that the other side in litigation wouldn’t get the information during discovery, but you’re letting them do a lot of free discovery, if you will,” notes Polomis. “In terms of what your budget or reserve account may be, I don’t think that’s information that should be shared with the general public.”
Read full article here.
Making Bad Decisions: Granting Honorary Condo/HOA Memberships in Your Facilities
An HOAleader.com reader asks: “The board president of a self-managed HOA made a motion that passed at a meeting to award honorary community privileges to almost a dozen nonresidents. These honorary privileges will grant them use of the association’s facilities, including access to the pool and tennis/pickleball courts for one year.
The reason for these awards was to thank them for volunteering their time entertaining a small percentage of residents at various social events (for example, band performers). There was no notice to the community that this vote was planned to take place during a regularly scheduled board meeting (it wasn’t on the public meeting agenda).
Here are my questions: Is it common practice to award association privileges to nonresidents? Are there any unintended consequences to awarding these privileges? Since this vote impacts all association homeowners, should there be proper notice to all members that the vote was planned to take place? What type of diligence is needed to determine who should or should not be on the list for obtaining such privileges?”
Nancy T. Polomis, a partner at Hellmuth & Johnson PLLC in Edina, Minn., whose clients include local and developers and condos and HOAs throughout Minnesota, states: “You should see all the ink around that question in my notes. There’s so much wrong with it that it appalls me. I’ve never heard of anyone doing this.”
Read full article here.