The terms “reasonable” and “unreasonable” are frequently used in the Community Association legal industry. Both the Arizona Planned Communities Act and Arizona Condominium Act use the terms “reasonable” and “unreasonable” throughout various sections of the legislation. For instance, ARS 33-1242 grants the association the authority “after notice and an opportunity to be heard,” to “impose reasonable monetary penalties on unit owners for violations of the declaration, bylaws and rules of the association.” ARS 33-1817(B) (3) provides that “approval of a construction project’s architectural designs, plans and amendments shall not unreasonably be withheld” by the association or design review committee.
In advising Board Members in Arizona, I typically receive questions about whether or not a particular decision is legal. In rendering my legal opinion to my client, not only do I try to provide advice and options for the client to stay within the confines of the law, but I also try to provide my clients with the best practice and/or advice on how to find a reasonable solution that will help keep them out of legal trouble and be a win-win situation. In my experience, the Boards that I work with that communicate well and that make reasonable decisions, have fewer problems, than those who make unreasonable decisions. While these words may sound obvious, being a Board Member for a Community Association can be extremely emotional, demanding and stressful, and sometimes the reasonable solution may not seem all that clear or judgment may be clouded by the emotional aspect of the position. I am hopeful that this post will provide Board Members with some tips and tools to make more reasonable decisions on behalf of the association.
First, it is important to keep in mind that if a Board decision is challenged in Court, ultimately the determination of reasonableness will be a question of fact for the jury to decide. There will be a number of factors that will likely go into each analysis, but I’m always trying to think ahead to how a court/jury would look at the Board’s decision if it proceeded to a lawsuit. Therefore, Board Members should also treat the determination of what is reasonable in a particular situation, on a case by case basis. What is reasonable in one set of circumstances may not be reasonable for the next case. Factors may include, but are not limited to: the costs associated with the decision; how the Board has treated a similar situation in the past; if the Board is allowed to grant a variance; the ultimate goal or outcome desired.
Second, the Board should understand the scope of its authority in making decisions by reviewing the Association’s governing documents. Some Articles of Incorporation, CC&Rs and Bylaws give the Board broad authority to make decisions. Others limit the Board’s authority in certain ways. For example, if an Association’s CC&Rs give the Board enforcement power and require each homeowner to maintain the landscaping on his/her Lot, but does not provide details of what the landscaping should entail, would it be reasonable for the Board to require that each homeowner hire a professional landscaping company to maintain the landscaping on his/her own Lot? In my opinion, this would be an unreasonable requirement outside of the scope of the Board’s power and authority.
Third, the Board should learn how to communicate better with the homeowners/members in the community. A Board or Board Member may be automatically perceived as unreasonable if he/she is not willing to listen to homeowners and not willing to open the lines of communication. Advances in technology give Boards additional ways to communicate with homeowners through email, electronic newsletters, websites, and social media. With that being said, the use of email in people’s everyday lives can create a greater sense of urgency or an expectation of a quicker response time. I advise my clients to try to acknowledge receipt of emails within 24 hours and to let the person know when they can expect a Board answer or decision. Individual Board members should not be making decisions on behalf of the whole Board. Therefore a reasonable response may be, “[t]hank you for your email. The Board will add this topic/question to the agenda for the next Board meeting. Please feel free to attend to hear the Board’s discussion.”
Fourth, there is a balancing act between being flexible and also being consistent. One of the most prevalent complaints I see homeowners make is that the Board is selectively enforcing the governing documents. While some governing documents authorize the Board to grant variances in certain situations, in most cases the Board should aim to enforce each provision equally and consistently among homeowners. With that being said, the Board is governing a group of neighbors and sometimes it can be more effective and reasonable to do the “neighborly thing.” For example, if there is a person in the association who lives alone who recently broke his/her leg and cannot adequately maintain his/her landscaping, rather than levying a fine each day and/or week after hearing the reasons for the violations, the Board could consider discussing alternative options to keep the yard maintained. Maybe a Board member or other neighbor would be willing to volunteer and do a cleanup, or maybe the Board can help the neighbor find a landscaping company. This solution is more reasonable in my opinion because the end goal for the Board should be compliance and trying to improve and keep up the property values.
Fifth, the Board should learn how to complete a cost/benefit analysis. The costs associated with some decisions do not always outweigh the benefits. There are many times when the Board should consider whether a specific decision could end in litigation or an increase its insurance premiums. The Board should look at its options and conduct a cost/benefit analysis of a situation if there is a risk of litigation. While the prevailing party in a breach of contract lawsuit is entitled to its reasonable attorneys’ fees, there are certain causes of action where the prevailing party may not be awarded its attorneys’ fees. Therefore, the Board should discuss the risks of litigation with its legal counsel. In my opinion, part of being reasonable is using “preventative legal.” Further, the Board has a fiduciary duty to do what it believes to be in the best interest of the Association. As such, if the Board does not have expertise or knowledge in a certain area, it should consult with legal, a CPA, reserve specialist or other expert in the field to help make the reasonable and best decision.
Finally, the Board is going to have to work to get along in order to make a reasonable decision as a whole. Board members bring different experiences and expertise to the Board, and there will likely be many different personalities on the Board at any one time. In my experience, Board conflict can be reduced if each Board Member understands the type of persons he/she is working with. I recommend that Board Members working together each take a DiSC profile personality test. The DiSC profile test provides a report about your personality and in my experience helps improve communication among team members. My employees take the personality test prior to starting at Mulcahy Law Firm so that I can better communicate and work with each individual employee on my team. I would encourage you to consider taking the free test. Here is a link to the free Disc personality test: https://discpersonalitytesting.com/free-disc-test/. In my experience, sometimes knowing that a person may react a certain way or speak a certain way helps relieve some of the emotional responses you may have if you didn’t know that is just the way the person is. Emotional decision making can lead to unreasonable decision making.
It is important to remember that sometimes there is no right or wrong answer. Sometimes the Board can only do its best, given the circumstances. In these cases, my advice is to have justifications for the ultimate decision and consult with experts if you are feeling uneasy or unsure.