Re: Advice Requested on Co-Housing Condos
From: normangauss (normangausscharter.net)
Date: Thu, 30 Jun 2005 19:06:18 -0700 (PDT)
In California, the Board of Directors is responsible for managing the
property and maintaining the financial well-being of the association.  They
have special fiduciary duties and powers that they agree to exercise when
elected.  If each Board member  exercises Due Care (attends meetings and
makes reasonable inquiries) and Due Loyalty (impartiality to his/her own
interests) these powers theoretically could be given to everyone in the
community. Every Board meeting would in essence be a meeting of the entire
community.  Unfortunately this would require that everyone attend meetings,
which does not happen.  Our meetings count proxies as being present.
Proxies at HOA Board meetings is illegal in California.

Because of the impracticality of requiring attendance of everyone at
meetings, this scenario is unworkable.  It is also unworkable because it
would require every member to be impartial to his/her interests.

As a compromise to help the community work with the Board of Directors, I
have proposed a protocol whereby the Board acts as an advisory body to the
whole community.  Since the Board is legally responsible for all decisions,
it can notify the whole community when decisions made by the latter are not
wise, sound, legal, etc.  The community can then take this new information
and change decisions or abandon them altogether.  If the Board is willing to
accept the decisions made by the whole community after reviewing the Boards
recommendations, then the process is workable.

This arrangement is more risky than specifying that the final decisions be
made by the Board only.  Since only the Board can be guilty of
non-management or mismanagement and only members of the Board are personally
liable, permitting the entire community to have free decision making power
can expose the Board to legal suits over decisions it has no control over.
But it does relieve the Board of acquiring the reputation, so common in
HOA's, of being a haughty, uncaring, unilateral-acting body, which many of
our current members have a strong desire to avoid.

Norm Gauss


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