Planning for the Future in HOAs: Start with Knowing the Past

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Planning for the future starts with knowing the past.


Years ago, during my messy office phase (hey, that’s a sign of a creative mind, right?), one of my partners asked me what would happen if I dropped dead the next day.  Would anyone know what I was working on, where it stood, and what was coming up?  I’ve since spent a fair amount of time thinking about and implementing succession planning for my firm and for my clients.  

But that doesn’t apply to community associations, right?  They’re perpetual for all practical purposes, after all.  Well yes, and no.  

The new year is a great time to plan for the future.  There are many useful articles and resources discussing planning for a community’s physical and financial future needs, and it’s great to see that reserve studies and professional property inspections are now common.  As an attorney, I tend to focus on governance issues.  Future planning from a governance standpoint may seem unnecessary.  After all, your association probably seems to be ticking along just fine, just the way it always has – or at least that’s how it seems.  A proactive approach to governance allows a board to confirm to the extent possible that the community is, and stays, on the right course.  

Generally, three questions come to mind when I consider how to assist an association in preparing for the future:

1.       How did we get here?

2.       How do we run this organization?

3.       Does everyone know their jobs?

How we got here:  Institutional memory.

Institutional memory is often overlooked in association planning, as I suspect it’s overlooked by many volunteer boards.  Let’s start with what it is, generally:  

Organizations spend a lot of time and resources developing knowledge and capability. While some of it gets translated into procedures and policies, most of it resides in the heads, hands, and hearts of individual managers and functional experts. Over time, much of this institutional knowledge moves away as people take on new jobs, relocate, or retire. Knowledge also degrades when a new senior executive or CEO introduces a different agenda that doesn’t build on earlier knowledge, or contradicts what was done previously.

Ashkenas, R., “How to Preserve Institutional Knowledge,” Harvard Bus. Rev. (Mar. 5, 2013), .  

I take a somewhat broader view of the concept of institutional memory than Mr. Ashkenas, and would include the books and records of the association.  While these are more formal records, they are not often organized in a way that allows easy transmission as association boards change.  

Many associations in Vermont have long histories.  There are common interest communities in Vermont that existed for decades even prior to the effective date of the Vermont Common Interest Ownership Act (the “Act”) in January, 1999.  The prior act – the Vermont Condominium Act – was essentially an enabling statute, providing little guidance regarding community governance and record keeping.  Even after the Act became effective, there was a learning curve for everyone, and records went astray as boards, unit owners and property managers changed.   

Some associations are fortunate enough to have longstanding board members, property managers, unit owners or counsel, and they can be a great source of institutional memory.  They may know generally what happened, when it happened, and why – or at least know enough to set you on the right track to determine those things.  When these people move on, by leaving the community, retiring or simply stepping away from any role in association governance, however, the important contribution they make to the association may suddenly disappear.  

Minutes, resolutions and other documents are another source of institutional memory.  These are generally organized chronologically, and may or may not be complete.  They may be in paper or electronic form, and may be retained by one or more board members, or a property manager; they may or may not be passed on as boards change.  Locating any specific issue can be challenging no matter who keeps the records.

A well indexed record book, whether paper or electronic, can bridge the gap between personal recollection and records.  Board resolutions and decisions can be indexed by subject, with cross references to minutes where the subject matter is discussed.  This will enable future board members to determine what policies the association has previously adopted and why, as well as how it has ruled in prior similar situations.  It can also allow future board members to determine whether longstanding practices are consistent with the policies or rules the board has actually adopted, preventing unfortunate surprises.  

How to run this organization: the Governing Documents.

When is the last time you had counsel review the governing documents – the declaration, bylaws and rules - of the community?  The Act became effective in 1999; major amendments became effective in 2012.  All of the provisions of the Act apply to communities created after January 1, 1999, and many apply even to communities existing prior to that date.  

Even if the governing documents were drafted after 2012, it’s wise to have them reviewed periodically for at least three reasons.

First, unfortunately, not every lawyer drafting governing documents is knowledgeable in the requirements of the Act.  For example, a bylaw allowing an executive board to meet without notice to members would be perfectly acceptable for a Vermont nonprofit corporation, but is invalid for a Vermont common interest community association, even if it is organized as a non-profit corporation.  Another discrepancy between the Nonprofit Corporation Act and the Act that frequently arises concerns executive board action without a meeting, and the open meeting requirements of the Act generally.  

Second, laws change, and provisions that were permissible when the governing documents were drafted may become impermissible over time.  For example, many associations have rules prohibiting clothes lines which may violate Vermont’s “right to dry” statute, which was adopted in 2009.  Other laws are widely misunderstood, as some associations which restrict animals in the community have discovered when they receive complaints of discrimination after attempting to enforce no pet rules to require removal of emotional support animals.

Finally, with amendments over time, the governing documents may become difficult to follow.  This is particularly true in the case of rules, which tend to be more frequently amended than declarations and bylaws.  When newly adopted rules are added at the end of existing rules, or set out in separate documents altogether, it’s easy for inconsistencies and general confusion to arise.  Periodic review can help avoid both problems.

The governing documents provide the framework for decision making by the board and guidance to unit owners and property managers.  It’s wise – and only fair to all concerned – to ensure that they are up to date, so that they provide accurate guidance to board members and unit owners.  Periodic review also provides the association with an opportunity to discuss any changes necessary to allow the association to respond to changes in technology or culture and to maximize community engagement.  

Ensuring that everyone knows their job: Board education.

Association governance rests with volunteers serving on executive boards, and it’s in everyone’s interest for them to understand their roles and duties.  The requirements of the governing documents can be overwhelming – and may discourage unit owners from volunteering to serve on the board.  A training session with the association’s counsel can provide an overview enabling new  and returning board members to understand association governance generally and to understand when they should seek advice concerning issues that arise, as well as reminding them of the rules that apply to board service and actions.   The entire board can benefit from asking questions and the discussions that follow, ideally fostering cohesion and setting the stage for more productive meetings in the coming year.  

Planning for the future. 

It may seem that I haven’t focused here on planning for the future, but taking the steps I’ve outlined should put the association in a position to respond efficiently and consistently with Vermont law to situations that arise in the future, with reliable resources that remain even with changes in board composition or property managers.  They will also give the board a foundation on which to consider future evolution of the community.