I am a lawyer. I read, on a regular and ongoing basis, governing documents, statutes, contracts, and other such documents. I am asked to provide my opinion on various legal issues and, in doing so, I review the relevant documents and applicable law, and provide a course of action. And yet, all the legal knowledge in the world will get me nowhere if I don’t use a little common sense in my application.
What is common sense? Merriam-Webster defines it as “sound and prudent judgment based on a simple perception of the situation or facts.” Sometimes I need to step back from the legal arguments and potential remedies used to craft my legal arguments, and look at the big picture…..what is the best possible solution for this problem taking all things into consideration?
I’m not saying to ignore the law or your governing documents. I’m saying as a Board member, you need to make sure your decisions are informed. Read and understand your governing documents, but use some common sense when applying them to the surrounding circumstances. It might be more beneficial to apply practical knowledge and experience, rather than black letter law, under the circumstances. Even if you have a standard course of action for a particular issue, variables over time could make that course of action less than perfect. You need to play the scenario through to reach the correct decision. Remember the BIG picture should provide longevity in the financial and other successes of your community.
Here are some simple examples of common sense applied:
- Using Fines: Your governing documents require all RVs to be parked in the garage or out of the community. An owner stores his RV on his driveway every weekend. You fine him the standard $25.00 fine for each time the Owner stores his RV on the driveway. Do you think he will start storing his RV offsite because of the fines? No, he’ll likely just pay the fines because it’s probably cheaper to pay the fines than to store the RV offsite. There is no incentive to comply. Make sure your fines provide the incentive to comply.
- Filing Insurance Claims: High winds took down your entry monument. Your insurance policy has a $1,000 deductible. The damage to the monument is $1,500. If you file a claim, you save $500, right? Maybe not. Your premiums might increase because of this claim, eating into that extra $500 in savings pretty quickly. It might be better to pay for this repair out-of-pocket.
- Use of Self-Help: Owner is going through foreclosure and has abandoned the property. Weeds are growing, grass needs mowing, and other owners are starting to complain. If your governing documents contain the right to self-help, it might be tempting to use this remedy immediately, but if the property is still in the owner’s name, then you’re going to have to eat the costs incurred to clean up the yard. If, on the other hand, you wait until the bank takes title, you should be able to recover all costs once the bank closes with the new property owner. See also our article regarding the proper use of self-help.
- Short Sales: In our last edition of Community Essentials, you learned about short sales. In a short sale, the association is asked to accept an amount less than the full balance owed in order to facilitate the sale. You might be tempted to reject the offer if it is substantially less than the balance, but is it at least as much as the super lien? Remember that short sales are used as an alternative to foreclosure. Chances are if the short sale doesn’t go through, the bank may move forward with foreclosure, and the Association could end up with only 6-months worth of assessments (i.e., the super lien). So, don’t automatically reject these offers – think them through.
As a Board member, you are required to make informed decisions. This requires asking questions and fully understanding the totality of the situation. And, while not all decisions will require deep analysis, people and events are not cookie cutter. At one time or another, a special situation could warrant special action.