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These decisions relate to property values, membership safety, long-term financial planning, use of property and maintenance of amenities. Sometimes, the members disagree with the decisions made by directors and call special meetings to remove the board, to challenge its authority or to reverse its decisions.
CID attorneys are often called upon to analyze these challenges and determine a question that goes to the very heart of how a community operates: Actually, a better question is: This article discusses these issues. These legal principles mean that, unless the members are given the specific right to vote on an issue, all decisions of a community association should be made by, and solely by, the board.
Typical but not universal examples of each are: These competing views of how an association operates often turn on how the board and the members believe decisions should be made and implemented in their community. In our practice, we routinely encounter these disputes in many contexts.
Each of these situations requires a careful legal analysis and a realpolitik calibration of what actions really must, can or should be taken or approved by the board, the members, or both. There are times when a board may perceive its fiduciary duty requires an action with which the members may vehemently disagree.
A Case in Point—Earthquake Insurance In the last few years, multiple natural catastrophes in California and throughout the nation earthquakes, floods, landslides have increased an awareness of the need to protect association members and assets from harm.
At the same time, the strangely fluctuating earthquake insurance market—with often astronomical premiums, decreased coverage, higher deductibles and real financing implications—have made acquiring earthquake insurance more problematic. Where the board must obtain earthquake insurance Many bylaw provisions are precise in their requirement that a board must obtain earthquake insurance.
This can pose very real practical and political problems for the board. It may be unable to obtain bids sometimes requiredthe coverages available may be of little value because the limits are too low and the deductibles too high, or, simply, the cost may be prohibitive. As discussed below, such boards are, it seems to me, as much at risk as directors who ignore a bylaw provision requiring the acquisition of this type of coverage.
Where the members decide Finally, every now and then, we encounter a bylaw provision that states that earthquake insurance may be obtained, but only with the approval of the membership.
In my opinion, the duty imposed on each director to use good faith and to make decisions that he or she believes are in the best interest of the community requires all boards to research earthquake coverage and determine whether, and at what price, it is available. If the governing documents require a board to obtain earthquake coverage but none can be obtained, a record of that fact should be maintained and communicated to the membership.
The board should then seek an amendment to the governing documents to eliminate the provision requiring the board to obtain the coverage. If the premium can be paid without an increase in assessments or without an increase beyond 20 percent of the existing budgetno membership vote is required.
The board should, however, advise the membership of its decision and the reasons therefor. Can the board ask the members to approve an assessment to pay for earthquake coverage when the documents give the board discretionary authority to purchase the insurance or not?
This is probably the most sensitive issue of all because it invites the board to avoid its obligation to make its own judgment by foisting the issue on the membership. Even worse, the outcome of the vote can be manipulated since a vote to approve an assessment to pay for the insurance would require the vote of only a majority of a quorum of members while, in many cases, a membership vote on the decision to acquire the insurance itself could require a majority of the total membership.
In other words, if the vote is posited as an assessment increase, it would require less membership approval than if the vote were only on the pure issue of whether the coverage should be obtained. In reality, there is no simple answer to the question of whether the board has breached its fiduciary duty learn more about fiduciary duty by putting the matter to a membership vote.
Short of that, asking the members to vote on an issue that should be decided by the board definitely raises the specter of post-earthquake claims for breach of fiduciary duty even if the members rejected the insurance proposal.
However, this will be the exception and not the rule. In certain cases, a board will be able to look to the members to make the final decision on particularly important matters but, where the authority to make a decision clearly rests with the board, its failure to exercise that authority could subject it to future claims.
He has practiced community asociation law since and has dealt with virtually every kind of challenge facing directors, managers and community association members. He is a member of the ECHO board of directors.f) the most appropriate supply or level of service that can safely be provided.
For hospital stays, this means that the acute care as an inpatient is necessary due to the kind of services the member is receiving or the severity of the member's. Jan 05, · A Summary of California Trustee and Beneficiary Responsibilities and Rights (Updated January 5, ) David W.
Tate, Esq. (San Francisco, California), Email: [email protected] Other enterprise risks include ensuring that users are aware of their responsibilities and periodically reporting relevant metrics and information to those charged with governance to help ensure that they provide the appropriate oversight.
Some plan sponsors create an investment policy statement (IPS) to provide a Make prudent decisions FIDUCIARY RESPONSIBILITIES? A fiduciary can appoint others, such as a plan committee or investment committee, to share the fiduciary role.
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Oct 29, · This is a digitized version of an article from The Times’s print archive, before the start of online publication in To preserve these articles as they originally appeared, The Times does. What Are The Most Prudent Decisions Supplyco Can Make About Its Responsibilities To Itself And Others. There are many decisions that are made throughout life. There are countless decisions that are made on a day-to-day basis. Everyone faces some easy ones and also difficult ones. Performance Reporting to Boards: A Guide to Good Practice. 3 1 Preface 4 2 Who should read this report 4 make the right decisions, directors must base them on good-quality, timely information on how their businesses are performing. The quality of performance reporting to boards is therefore one of the key factors affecting companies.
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