Governance and Legal Issues Flashcards

What is 'alternative dispute resolution' (ADR) and why might a board prefer it over litigation?

Answer: Processes like mediation or arbitration that resolve disputes without going to court

ADR—including mediation and arbitration—resolves disputes faster and less expensively than litigation while preserving community relationships.

When providing notice for an annual meeting of members, the notice period required by most state laws and governing documents is typically:

Answer: At least 10 to 30 days in advance

Most governing documents and state statutes require advance written notice of member meetings—commonly between 10 and 30 days—to give owners adequate time to prepare.

A board adopts a new rule prohibiting political signs on balconies. An owner claims this violates their First Amendment rights. In a PRIVATE community association, this argument is:

Answer: Generally unsuccessful because the First Amendment restricts government, not private entities

The First Amendment restricts government action, not private associations; however, some states have enacted specific laws protecting political sign display in HOAs.

An association's board wants to amend the CC&Rs. This typically requires:

Answer: A supermajority vote of the membership (commonly 67%–75%)

Amending the CC&Rs usually requires a higher threshold—often two-thirds or three-quarters of all members—because it changes the fundamental property rights of owners.

The 'open meeting' requirement in many states means that:

Answer: Board meetings must be held in locations accessible to all owners, with homeowners allowed to observe

Open meeting laws generally require board meetings to be accessible to owners as observers, though the board may hold certain sensitive matters in executive session.

A manager discovers that a former board treasurer improperly transferred association funds. The manager's FIRST obligation is to:

Answer: Immediately report the situation to the board and recommend involving legal counsel

Financial misconduct must be promptly reported to the board so they can take immediate action, including involving legal counsel and potentially law enforcement.

Which principle requires that board-adopted rules must be reasonably related to a legitimate purpose of the association and applied uniformly?

Answer: The reasonableness and uniformity standard

Courts evaluate association rules under a reasonableness standard—rules must serve a legitimate community purpose and be enforced uniformly to be upheld.