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RoundTable Event - September 23, 2017

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Written by Attorney Scott Eriksen

At the end of January, 2015, Charlie Perkins, David Chenelle and I travelled to San Francisco for Community Association Institute’s 36th Annual Community Association Law Seminar. The Seminar is a multi-day exposition of national legal developments in the area of community association and condominium law practice.  Veteran community association attorneys from sea to shining sea discuss important changes to statutory and common law, review particularly relevant legislative movements and present new (or tried-and-true) guidance for addressing the multitude of issues that our clients face on a daily basis.

I have been fortunate enough to attend the Seminar for three years running and I can truly say that it has been a valuable and edifying experience each time. It is engaging and inspiring to hear from some of the most well respected counselors in the field, and fun to commiserate with practitioners who – despite thousands of miles between our geographic locations – face largely the same difficulties and challenges that we do on any given day.  Delinquent unit owners? They have those in California, too.  Rogue board members? Illinois feels our pain. Think you have developer complaints? So does New Jersey.  Hoarding, smoking, parking, etc. – chances are someone from another jurisdiction has dealt with these issues as well.  It’s interesting to hear unique perspectives for addressing these problems (though the solutions from other states are not always an option in the Commonwealth).

Oh, and the Seminar is also a fine spot to pick-up a new community association joke, like this gem:

A man falls very ill one day and goes to see his doctor.  The doctor runs a battery of tests on the man and determines, unfortunately, that the man’s condition is terminal.  “I’m sorry,” says the doctor to the man, “I’m afraid you only have one year to live.”  The man is horrified: “Doctor, that’s terrible news! Surely there must be something I can do to prolong my time.”  The doctor pauses in thought for a moment and then his eyes brighten.  “Well,” he says, “there is one thing you can do…” “What is it?!” the man asks eagerly. “Buy a condominium and then join the Board,” the doctor replies evenly.  “What?  I don’t understand, doctor, will that make me live longer?” the man asks.  “No,” says the doctor, “but it will be the longest year of your life.”

So you see, community association lawyers can be funny at times too (or at least we like think so).  Without further ado, here is a recap of some of the highlights from my experience at the Seminar:

Construction Defects – Who Should be on Your Guest List and What’s On the Menu

One of the interesting lectures that I attended was a presentation on dealing with construction defects at newly transitioned associations.  This is something that our firm routinely handles – in fact, we have pending construction/transition cases right now – so I thought it would be good to get some additional perspective on the subject. The theme of the presentation was that construction defect practice gets more interesting and more complicated every day, with a focus on the evolving theories of construction defect liability and the critical role insurance plays is financing recoveries.  Cleverly titled “Who Should be on Your Guest List and What’s on the Menu,” the aim of the lecture was to provide a general outline for approaching construction defect cases to maximize an association’s recovery while minimizing unnecessary or unproductive legal and other expenses.

 

The presenters confirmed what our own practice has identified over the past few years: one of the unfortunate side-effects of the recent Great Recession has been a rise in issues related to new construction projects.  Whether developers run out of money and leave projects incomplete, cut corners or simply disappear or go bankrupt, the impact has taken its toll on a number of recently constructed associations.  Defects can range from the cosmetic on one end to the structural on the other, or anywhere in between. These issues can present real challenges to newly-minted board members who assume control of the association. For this reason and others, we advise clients that transition is a critical time in the association’s life.  It is important to ensure that the new board has the right team of legal, insurance and engineering representatives even before the new board is elected.  This will help facilitate timely and cost-effective resolution to any defects which may need to be addressed.

 

The big take away from the lecture was this: “Save a seat at the construction defect table for insurers.” The old maxim that you can’t get blood from a stone holds true.  Insolvent or dissolved declarants (often-times special purpose limited liability companies) may not be worth chasing.  However, that doesn’t necessarily mean that an association will be out of luck. Insurance is a potential source of financial recovery when it comes to construction defects, and developer insurance isn’t the only place to look.  Errors and omissions insurance policies for design professionals “could end up being the main course.” According to the presenters, design professionals’ policies are generally more responsive to defect claims compared to standard form CGL policies carried by contactors. Therefore, they suggested, associations should consider bringing a claim for breach of implied warranty directly against design professionals for their design defects.  In addition, the presenters offered that in circumstances where the declarant is insolvent, an association should also consider bringing implied warranty claims directly against lower-tier contractors/subcontractors who caused workmanship defects.

 

Running a Darn Good Meeting

Not long ago I wrote an article on Robert’s Rules of Order.  While I have become increasingly more comfortable with rules of parliamentary procedure over the past few years, running an effective and productive meeting is a critical skill for any association attorney.  Accordingly, when I saw on my schedule a presentation entitled “Running a Darn Good Meeting” I jumped at the chance to learn more.

The presenter for this lecture was none other than Jim Slaughter, a North Carolina attorney and member of the prestigious College of Community Association Lawyers (CCAL).  Jim is a Certified Professional Parliamentarian, past President of the American College of Parliamentary Lawyers and the author of The Complete Idiot’s Guide to Parliamentary Procedure (a book I often consult before meetings). While a course on parliamentary procedure may seem less enjoyable to some than a trip to the dentist’s office, Jim’s easy, southern manner and knack for presenting to large audiences made for an engaging and informative session.

As I mentioned in my last article, Jim noted that Robert’s Rules isn’t synonymous with parliamentary procedure – but that it is the most often used and well-known set of rules.  He focused on effective ways to implement these rules without getting bogged down in the minutiae. In fact, I was pleased (and relieved) that Jim’s overview confirmed the brief outline that I had prepared for our client newsletter not long ago.  Namely:

  1. One Size May Not Fit All: Meeting formality is a sliding scale. Too much can be just as troublesome as not enough, and size matters when it comes to determining how best to proceed. Adopt an approach that works for the size of the group involved.
 
  1. Know Your Documents: The association’s governing documents are important in determining the application of rules of parliamentary procedure.
 
  1. Motions: The motion is the basic building block of conducting formal business at any meeting. Under Robert’s Rules, the motion, made by an authorized member of the body, should be the starting point of virtually all discussions, votes or actions taken at a meeting. Recognized individuals may make a motion by simply stating: “I move to discuss the association’s budget for Halloween decorations…” or “I move that we discuss hiring Sno-Be-Gone to do our plowing this winter…” Most motions require a second in order to proceed. That is, another member of the body will say “I second the motion regarding the Halloween decorations,” or more simply “I second the motion.” Once this has been completed, the subject has been “put in play” and formal action may be taken.
 
  1. Minutes: Minutes are an important record of all meetings. But minutes need not (and should not) be a record of everything that was said at a meeting; rather, minutes are a record of what was done at a meeting. Keeping this in mind will help keep the task of preparing minutes manageable.
Jim also discussed the importance of a good agenda as a way of keeping a meeting on track and on time.  He discussed the utility of proxies (and the various different kinds: general proxies, limited proxies, directed proxies, etc.), and offered advice on what do to when you don’t get a quorum – an issue many of our association clients routinely face.  He left us with helpful handouts and a link to his website, which also contains a wealth of information on the topic: www.jimslaughter.com. I strongly suggest that our board member clients take a minute to review the site as I have found the information to be approachable and useful, with charts and handouts (cheat sheets, if you will) to help you run a darn good meeting yourself.

 

Check back in a few days for more reflections on the conference.

RoundTable Event - September 23, 2017

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