Our board sponsored legal committee made up a list of questions and received written answers from our attorneys. Here goes:
Eric, as requested, I reviewed the governing documents to answer the below questions. My answers are numbered in the identical order the questions were asked.
1. All policy decisions should be made by the board, not any individual director or officer. There should be an employee manual setting forth all the policies governing employees. Usually, the manager supervises the employees and makes sure employees adhere to the policies created by the board, but the board can delegate this authority to the President or someone else. In the absence of employee policies, the President can implement those policies, subject to the board’s right to create its own policies. There is nothing in the bylaws on this, nothing in the other governing documents on this and nothing in the statutes on this. As I said, this is normally done by having the board approve an employee manual.
2. Employees cannot take orders from everyone because, inevitably, those orders will conflict, since different people want different things. Generally, the manager acts as the supervisor and instructs employees when needed. This is not covered by the governing documents or statutes. This is something the board must handle by board resolution determining who is authorized to instruct employees. Alternatively, this could be in the contract between the Association and the manager, since the contract acts as the board’s resolution. In the absence of any policy or delegation of authority, it is technically not a violation of anything for a single director to instruct an employee, so the literal answer is yes, a director can instruct an employee. You can argue the President or the manager has this authority in the absence of a board policy, but that still does not exclude any single director from doing the same. The board has to restrict this authority to the President, manager, or someone else before you can say a single director cannot instruct an employee.
3. No. The board has the right by statute to enter into a bulk service cable contract and all board decisions are made by a simple majority of a quorum. The declaration provision mentioned is for material alterations and does not apply here because this is not a material alteration.
4. Required maintenance, regardless of cost, is not a material alteration, and only requires a board decision by majority of a quorum. However, there can be elements of an elevator modernization that constitute a material alteration, but that depends on what work is being done. Any work required to comply with the building code, life safety code, fire code, or other laws are deemed maintenance, even if they would otherwise be considered a material alteration, so they, too, only need the approval of a majority of a quorum of the board. If changes are being made to the elevator for aesthetics, rather than compliance with the law or for necessary maintenance, those aesthetic changes could be material alterations. Whether unit owner approval is needed depends on the cost of the material alteration. If the cost exceeds 3% of the total budget, including reserves, 2/3 unit owner approval is needed, but if the cost does not exceed 3% of the total budget, then only board approval is needed. However, board approval for material alterations requires 2/3 of the board, not a majority of a quorum. Keep in mind that, if this is a material alteration and only board approval is needed because the cost does not exceed 3% of the total budget, the money must come from the budget. The declaration prohibits levying a special assessment in that particular case. If you need anything more specific, you have to tell me exactly what changes you are making to the elevators and why, so I can advise whether any of those changes constitute a material alteration.
5. The way the declaration works, the purchase and sale contract does not have to be provided to the Association, unless the seller makes a demand for the Association to buy the unit in the event the Association disapproves the sale. Assuming the seller made that demand, the seller must provide the contract as part of the seller’s notice of intent to sell the unit, with the application and other buyer information. At that point, the Association can review the contract and then decide whether to approve or disapprove the buyer. If the Association disapproves the buyer, the review of the contract does not matter because the declaration requires the Association to purchase the unit under that contract, so the Association cannot make any changes. Notwithstanding the above, the contract is always provided as part of the application process simply because this is what everyone thinks is required and because that practice is pretty much universal, so you will most likely always get to review the contract.
6. No. The board has no authority to require a uniform form of lease. You must amend the declaration to add that power.
7. I think there are three problems with this indemnification agreement. First, I believe it is just for the first time an owner wants to use an Association employee and it does not exist in perpetuity, so you need a new indemnification agreement each time an owner wants to use an Association employee. Further, if a different employee does work for the same owner, a new indemnification agreement is needed because it only applies to the employee named in the agreement. Second, the employee portion should be removed. Instead, an employee manual (which you should have for all employee policies) should include whatever policy you want for employees working for owners. Third and most important, you should not allow this practice. I know it is easy and convenient, but it only leads to problems, which is what happened with the prior security guard, so it is worse with maintenance employees. Employees do favors for owners, so the owners become advocates for those employees whenever the Association wants to discipline or fire those employees. Even though prohibited, it is very difficult to stop employees from doing work for owners during normal business hours. The best policy is to prohibit employees from working for owners, whether during or after working hours.
8. Committee meetings require a quorum of the committee to conduct business, just like the board.
9. Yes, a director can disclose how the director intends to vote prior to the board meeting. This is not a secret vote and there is nothing wrong with any director disclosing to anyone how that director intends to vote, whether by email or any other means. It is usual and customary for directors to email each other prior to a meeting and reach a consensus on how the board will vote on a particular matter, especially for more complex or more complicated issues. Of course, the actual vote must occur at a board meeting with discussion.
If you have any questions, please email or call me.
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Second and Third Question:
Does the President of the Board of Directors have authority under the Bylaws to implement policy regarding the Chalfonte employees? Can a Board member question and/or order a particular performance from a Chalfonte building employee or do those powers rest with the building manager and/or Board President?
The issue here is the concept of unilateral authority. The current President of our association sent out a letter to the employees (see copy attached) directing them NOT to speak to any resident or BOD member about any issue. And that doing so could result in disciplinary action and/or termination of employment. This is troubling to most residents and BOD members on two levels. 1.) Does the President have the authority to act unilaterally to impose these restrictions on an employee, without BOD approval and 2.) Can you as a BOD member restrict who an employee speaks to and threaten them with termination? As a foot note to this, when I took your Condo BOD course, Mark Friedman made a very strong point to all of us present that no one has unilateral authority to act without a vote of the majority of the BOD members. We need a written legal opinion on this item.
Fourth Question:
Can the building manager restrict a Chalfonte employee from working in a unit owned by a resident on the employees personal time?
In a recent Human Resources Committee meeting, the building manager stated that all NEW employees were prohibited from working for owners on the employees own personal time. Only “Old” employees, who have been doing it for years, can work for owners. The idea being that once the “grandfathered” employees leave, no one can do work, ie. Taking care of apartments, doing repairs, cleaning, etc for any residents. Needless to say, this is a very unpopular statement. So in addition to the legal ideal of can the manager impose this restriction, we need to know if there is any reason why we should not let employees work for owners (especially since we are implementing the hold harmless agreements). We do need a written Legal opinion
Fifth Question:
Does a Comcast Cable contract signed by the Board in 2016 require a 66-2/3 vote under amended Article 5, Section 5.2.b.of the Declaration of Condominium?
Please note that this contract is for $4,000,000. Several of the members of the Board have questioned why a contract of this magnitude was not subject to the Article above. We do need a written legal opinion.
Last Question:
Can a director or any board member express how they intend to vote on a matter before the voting in an email or any other form of communication to other Board members?
This issue is that the meeting minutes from a Board meeting were altered so facts were deleted. Several Board members sent out emails saying that they would not vote to approve minutes that were altered/censored to not reflect the real events. We do need a written legal opinion.
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