Question: Our state statute states: "Unless otherwise provided in the governing documents, the homeowners association board of directors shall adopt and amend budgets for reserves in an amount adequate to repair and replace major capital items in the normal course of operations without the necessity of special assessments, provided that the amount set aside annually for reserves shall not be less than 10% of the budget for that year." What does "adequate" mean?

Answer: If a special assessment is required to pay for reserve repairs or replacements, the board has not been reserving adequately and can be held responsible for the shortfall unless the members refused to approve (if their approval was required) annual budgets adequate to fund reserves. In other words, the board cannot be held accountable for something under the control of the members.

For most condominiums, 10% (the default amount in the statute) is not nearly adequate. Most condos should set aside 25-35% of their monthly fees into reserves (more, if the common elements are extensive or the number of owners small). Only a properly prepared reserve study with a funding plan based on the "fully funded" funding model will instruct the board how much is adequate.

Question: In our HOA, the board hosts a party for the residents at the clubhouse and one of the main draws seems to be the free drinks. This year, Margaritas are featured but there's beer and other spirits. Do you think there is liability for the HOA when booze is not just allowed but served free?

Answer: It is a very bad idea for the HOA to host parties serving alcohol particularly when it's free. The free part is bound to get out of hand unless carefully controlled. The insurance agent can explain the liability angle. A BYOB (Bring Your Own Beverage) party is okay as long as someone is monitoring for excessive consumption and cutting off offenders.

Question: Our board received an email from an owner concerning a board action with which the owner disagreed. One of the directors (not the president) took it upon himself to respond in an abusive manner. The owner naturally took offense and forwarded the abusive email to other owners. This has caused a firestorm of criticism and quite a bit of embarrassment for the rest of the board. The offending director refuses to apologize. What should we do?

Answer: This director acted inappropriately and everyone knows it but him. The board president should apologize to the resident as soon as possible on behalf of the rest of board to disassociate itself from this kind of behavior. If the resident shows up to the next board meeting to continue the matter, the president can simply repeat the apology and ask him to direct future emails to the president only or manager, if you have one.

The president should speak directly and clearly to the abusive director and remind him that he is entitled to his opinion but should respond to member inquiries with respect or not at all. He should be told in no uncertain terms that his actions were inappropriate and he should make amends so that the rest of the board doesn't have to continue dealing with the fall out. He may ignore all this advice but it's important for the board to take a stand on the matter and not appear to defend him by silence.

Email, as you point out, can easily careen out of control. To avoid this kind of thing in the future, remove all personal email addresses from newsletters and websites and use one official email address for HOA business which is responded to only by one designated person (usually the president or property manager).

Question: At what point is a response justified to a homeowner who repeatedly writes letters to one board member (not the board as a whole) making false accusations and blaming that board member for the inability to sell their unit and complaining about the HOA fee amount. At what point is irrational complaining cross over to harassment and worthy of a response?

Answer: The operative word here is "irrational." As tempting as it may be to respond, let it be. Whatever the response, it will only serve as fodder for more rant.

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Published: March 10, 2010

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Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .