HV Iss. 5, 2018 (w)


2 AssociationHelpNow ™ • Hudson Valley New York: Issue 5, 2018

Loans... continued from page 1.

than 15% of unit owners de- linquent and no more than 10% of the annual budget delinquent by more than 30 days,” Tunnell explained. A loan will allow costs to be spread out over the useful life of a capital item, thus per- mitting costs to be absorbed into ongoing assessments over a much longer period. This helps address the fairness issue as a loan will be paid back by both current and future own- ers who benefit from the capi- tal item being financed. “This helps address the fairness issue as a loan will be paid back by both current and future owners who benefit from the capital item being financed.” According to Tunnel, while each bank will have slightly different requirements, all lenders will want to see a community willing to make sound and realistic business decisions. “If you are consid- ering a loan, contact a lender who is familiar with com- munity association loans and get their feedback. Most are happy to help and will give input into the decision mak- ing process,” he said. n

ask Questions get


come before,” Tunnell said. “Ultimately, board members are making a decision on be- half of the community, and it is essential that they deliber- ate all of the pros and cons of a loan.” Once a community comes to a decision, a board will choose a lender and submit a formal application to the bank. “When finding a lend- er, it is important to find a bank that specializes in loans to community associations. It is becoming more common for an association to borrow money than it was five or ten years ago, but the association definitely wants to work with a bank that has good refer- ences,” Tunnell advised. He added, “A board is act- ing on behalf of the com- munity, so it must make sure that it has the right people around the table to help iden- tify a good lender and good terms.” The bank’s decision is dependent on the financial strength of the community, the ability to service the debt payment and how successful an association has been in collecting assessments. “The easiest measure to identify this is by a delinquency ratio — how many of the current owners are past due. Banks typically want to see no more

Can someone who is suing the association serve on the board?

of the board. The board might not be “pleased” to have a committee member working for the association when he is actively suing the association.

CONTINUES ON PAGE 4. expressly prohibit it, the vot- ing membership should still consider whether such person would be the right person for the position. What was the na- ture of the lawsuit? What was the ultimate goal in bringing the action? If a person sues the association because he or she believes that the current board (or committee member) is not acting in the best interest of the community, and the ultimate goal is to curtail such action going forward, then that per- son may be a good candidate for change in the community. However, if the person brings a claim for personal damages demonstrating that his or her own interests outweigh that of the community, then perhaps that person is not the right person to be representing the interests of an entire group of people. As long as there is no express prohibition, then the community should evaluate each instance as recommended herein. Stacey R. Patterson, Esq. Ansell Grimm & Aaron, P.C. Woodland Park, NJ

Q: Can a member who is su- ing the association run for a board of director position or be a committee member? A: A person suing the asso- ciation does not lose his/her membership rights, and is still free to run for the board. That is not the end of the is- sue, however. If elected, that board mem- ber serves the community as a fiduciary. That means that he must subject his own personal interests to the interests of the membership. He must, there- fore, be “hands-off”with respect to any issue associated with the subject matter of his lawsuit. By no means may he use his po- sition on the board to further personal interests in connection with the suit. The board mem- ber cannot “put his thumb on the scale” when the board is weighing pros and cons and de- ciding matters, if those matters are related to his lawsuit. The same is true of a commit- tee member, but with a com- mittee member, the holding of such a position is discretionary and he serves at the pleasure

Robert C. Griffin, Esq. Griffin Alexander, P.C. Randolph, NJ ———

A: Yes, a member who is suing the association, if other- wise qualified under the asso- ciation’s bylaws, may serve as a director or committee mem- ber. However, if this member should be elected and should serve on the board or on a com- mittee, such member would have a “conflict of interest” with respect to the outcome of the pending litigation and as such, would need to recuse himor herself from any discus- sion and vote with respect to the pending litigation. John H. Gettinger, Esq. Shapiro Gettinger Waldinger & ——— A: Even assuming the gov- erning documents do not Monteleone, LLP Mount Kisco, NY

Send your questions to info@BrainerdCommunications.com. The views expressed in the above column do not necessarily reflect the views of Brainerd Communications, Inc. These answers do not constitute legal or other professional advice. Consult your legal, accounting, insurance and other professionals to assess any situation before taking action. Brainerd Communications, Inc. reserves the right to edit questions and comments. Send in YOUR questions...

AssociationHelpNow is published by Brainerd Communications, Inc., 1 Convention Boulevard, Suite 2, #285, Atlantic City, NJ 08401. All advertising and article content represent the opinions of those authors and advertisers, and may or may not represent the opinions of Brainerd Communications, Inc. Therefore Brainerd Communications, Inc. states that inclusion of such material does not represent an endorsement by Brainerd Communications, Inc. Brainerd Communications, Inc. does not state or certify that such information is accurate. Readers are responsible for any actions taken in relation to such content. Brainerd Communications recommends that readers take additional steps to educate themselves outside of this publication, before using the information contained in this publication to decide a course of action for themselves, their companies or associations. Article content may have been edited for purposes of space by Brainerd Communications, Inc., and not appear exactly as it was provided by the authors. Therefore readers should understand it is possible that such content has been altered. © 2017 Brainerd Communications, Inc. All rights reserved. No part of this publication may be reproduced in any format without the written permission of Brainerd Communications, Inc.

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