Ed Hoffman: 0:00

What we're seeing is the the frequency of certain things has increased substantially, so hostility and just negativity, directed, harassment directed directed towards the board or individual board members and the manager. I mean the managers, they're kind of taken the brunt of of most of it, because they they're oftentimes the the face, you know, that's there, that's the managing agent for the association, and they're the people that deal with the owners the most

Announcer: 0:35

HOA Insights is brought to you by five companies that care about board members, association, insights and marketplace Association reserves, community financials, Hoa invest and Kevin Davis, Insurance Services, you'll find links to their websites and social media in the show notes.

Robert Nordlund: 0:50

Welcome back to Hoa insights, common sense for common areas. I'm Robert Nordlund, and I'm here today for episode number 104, with a special guest that I heard at a recent conference, and I came up to him right after the program to see if he could share that same presentation with our podcast audience that speaker, Ed Hoffman, is an expert in the practice of community association law, being one of the under 200 associate Association attorneys in the country that have their college of community association lawyers, professional designation. He's a prolific author and well received speaker, and certainly he captivated my attention during his presentation, and he practices law in the great state of Pennsylvania. I wanted to have ed on the program to share what he's learned from working with boards over his years, and specifically how things have changed over the last few years. We want to give you our podcast listeners the understanding and insights you need so that you can create great communities. Last week's episode was number 103, and it was an interview with a fascinating board hero who's taken it upon himself to minimize his southern California Association's exposure to wildfires. Those have been big in the news lately, and if you missed that episode or any other prior episode, take a moment after today's program to listen from our podcast website, www.hoansights.org or watch on our YouTube channel. But better yet, subscribe from any of the major podcast platforms so you don't miss any future episodes, and those of you watching on YouTube can see the HOA insights mug that I have here, got one course for me having to do with reserve funding, which you can browse through from our HOAinsights.org website, or the link in the show notes, you'll find we have some great free stuff there, like board member zoom backgrounds and some specialty items for sale, like this mug. So go to the merch store, download a free zoom background, take a moment look around, find the mug that you like, and email me at podcast@reserveside.com with your name, shipping address, mug choice, and mention episode 104 mug giveaway, and if you're the 10th person to email me, I'll ship that mug to you free of charge. Well, we enjoy hearing from you responding to the issues you're facing at your association. So if you have a hot topic, a crazy story, or a question you'd like us to address, you can contact us at 805-203-3130, or email us at podcast@reservestudy.com Well, this episode was prompted by Dave from Phoenix, who asked, in our upcoming election, candidate statements are almost what I can describe as unkind. We have two opposing factions here. It's not just the election. You can see it in less friendliness as people pass in the halls. Is this normal? So let's get right to it. Ed, welcome to the program. And how would you respond to Dave? Well,

Ed Hoffman: 3:53

first I'd say, Hello, Dave. And next I'd say, well, thank you for having me on Robert before we really get started here. I appreciate being able to speak to you and your podcast watcher slash listeners. Dave is absolutely correct. And there's been a there's been a kind of a shift or a sea change in how in it, at least in my opinion, with respect to civility and community associations, especially over the last five years. And I know you attended the law seminar presentation, and there I spoke and asked the ballroom full of people, how many people think COVID impacted the industry negatively, and even to today. What I mean, I don't mean necessarily by sickness, but I mean just the shift in mindset that occurred as a result of COVID because of because people were locked down, and what we saw happen in associations was. Because people that oftentimes you never heard from, they all of a sudden, were active and were contacting management, contacting the board, because they were there. They weren't going anywhere. They were stuck, and they were complaining. I shouldn't even use the word complaining, bringing matters to the board at slash managers attention, where previously, that person didn't because they had nothing else to do for many hours a day, they weren't commuting to work. They could have been working at home. Not everyone could actually work at home, right? So you had a lot of situations all around the country where all of a sudden there were people that were there that weren't there before. And what I mean by the break in in it break in psyche, more than anything else, I think that it shifted the mindset of people. They became more apt to to be combative and aggressive when it relates to bringing things to the board's attention. So what I what I've seen more than I've ever seen in my career to date, in the last five ish years since the pandemic, is the number of recall elections to remove either a board member, multiple board members, or the entirety of the board, where we we would seldom see that. I mean, I did. I've been doing this a while, and you would see it come pop up every few years. I was seeing multiple of them happening every year, sometimes in the same community, which is really, real, really, yes, really wild, right?

Robert Nordlund: 6:36

So multiple, multiple warring factions within the same community, you

Ed Hoffman: 6:40

would, you would like to think that that's not the case, but obviously, sometimes the documents are drafted in a way that lead to that, right? Unless you change, unless, yeah, unless you change the documents. So, but, yeah, there's been a situation where, since since the pandemic, things have really shifted. It's impacted boards. It's impacted managers, and it's just it's not I don't think it's getting better. I think the civility is actually getting worse. One example would be a rise in director and Officer liability claims across the board. You could speak to almost any, any specialist in the industry that we all, we all know the same people who who do this on a national level, and they, they'll tell you the same thing, that there's a massive change in the amount of DNO claims. And DNO used to be, if you remember back in the day, it used to be literally related to the claims would be related to the board breached its fiduciary duty, meaning they shouldn't have spent the money they made a decision that impacted the finances of the association. Now, a lot of Do you know claims are being brought alleged that the board breached its fiduciary duty, and then insert, insert the allegation. So because they are not trimming the bushes the same for my neighbors as they are for me or or trash can violations, I don't believe that everyone else is getting everyone else is getting fined for trash can violations, but I am so now I'm suing the board of directors and the association. You know in the background, you can we know that the association had 150 trash can violations to 150 people over the last couple years. It's not just the one owner, right? But the allegations have shifted in the plaintiffs lawyers. They're, they're representing them, if they're, if they're in at the court level, are throwing everything into the wind because it's a fee shifting statute, right? So the Fair Housing acts a fee shifting statute, and if they they prevail on one allegation, they get all their attorneys fees. It's been very interesting from a litigation standpoint, and from a from a General, General Counsel standpoint, meaning seeing what's happening with the elections and just governance in general, and then the difficulties that that have occurred since, since pandemic.

Robert Nordlund: 9:07

Well, I've got a few follow up questions. I'm imagining you've seen a real change in how your law practice has changed, the different types of things that you deal with on an ongoing basis. Yeah, I

Ed Hoffman: 9:18

wouldn't necessarily, necessarily say that law practice has changed too much. We still, we ultimately still do the same kind of work. But what we're seeing is the the the frequency of certain things has increased substantially. So DNO claims have obviously risen, like, like I previously stated, also hostility and just negativity directed harassment, directed directed towards the board or individual board members. Can even committee members, depending on what committee they are and the manager. I mean, the managers, they're kind of taking the brunt of of most of it because they. There, oftentimes the the face, you know, that's there, that's the managing agent for the association, and they're the people that deal with the owners the most So, and I'm seeing manage a good managers leaving, either leaving that location and asking to be reassigned, if they were the larger management company, if it's feasible or, or, um, quitting that, that management company and going to another one, hoping that there's a better gig for them, right, greener pasture, yeah. Or, I've seen this. I've seen this now more over the last few years, leaving the management industry entirely, just leaving and going and doing something else. Their manager is actually staying in the community association industry and but they're going with other vendors and picking up other positions with them, because they're not getting the day to day abuse that they were facing at times as a manager.

Robert Nordlund: 10:54

That's interesting. We are getting some managers, nicely credentialed managers, reaching out to us saying, Hey, I'm good with numbers. I like budgets. Seems like life might be nice preparing reserve studies. And now I'm understanding why that might be the case. They've, they've been sitting on a fire and Robert

Ed Hoffman: 11:15

not all the time. I mean, not every time, yeah, but I'm See, I'm yeah, I'm seeing it. Some people just want a career shift, but, but I'm seeing, you're right, though, but I'm seeing, I'm seeing the fire is, is the problem more often than than it used to be? Yeah,

Robert Nordlund: 11:29

well, before we started recording as we were just catching up on what's been going on lately. You also talked about how hard it is on the managers for a couple of reasons. One of the reasons that you said the board not supporting the manager. What does that look like? What I mean by

Ed Hoffman: 11:43

that is, if the manager comes to the board and the manager is actually so the manager has two boss ultimately, two bosses at an association, typically, the first is the board of directors, and the second is if it's a third party management company, not a direct relationship, where the management company or the association is employing the manager directly as an employee, they would also have a relationship. Their actual employer would be the management company,

Robert Nordlund: 12:10

right? The boss of the management company or director of property managers,

Ed Hoffman: 12:13

yeah, whoever it is, yeah, you know. So it'd be like the office, the assistant to the regional director, or something like that. So at the end of the day, whoever the manager, goes and reports the trouble to meaning, I'm getting harassed. I'm getting abused people. This person is scaring me. There's too much aggression going on by owners coming into the office, the board has to listen to that, and the board has to escalate that, right? And what I mean by that is the board has to Shut, shut down the the owner who's coming in and doing that. And then, if they were for a management company, a management company can't sit on its hands, and the management company should support its own employee, and the management company should take actual steps to to help the manager. And I've seen again, this is probably in the last year or two, managers getting reassigned, more often than not, to different properties. And it's not a fault of the management company. It's not a fault of the board. It's the fault of the people who are causing those problems, and at least the management company is willing to move them somewhere, right? But that that doesn't solve the problem, because if someone else comes in, you know, it's like a faucet keeps dripping unless you put a new washer in, yeah? So if you don't fix the faucet, it's going to keep dripping, and that's what happens with with this kind of thing, and the other side of the coin is board members leave good board members leave good committee members leave these volunteer positions. By the way, they're not getting paid. Basically, they say, I don't have time for this. And it's a four letter word. It begins with S, I don't I'm not doing this for free for this type of abuse, right, or this type of harassment, and I'm not sleeping at night. I've heard, I've heard all of this from people, and that's, again, I think, since, since the pandemic, I've I'm hearing more of this I ever heard in my career. Folks,

Robert Nordlund: 14:12

you're hearing it. Hear from an attorney who's on the front lines dealing with associations and Ed you've been doing this for decades.

Ed Hoffman: 14:19

Yeah, yeah. I started off. I kind of had the opposite upbringing, as they as they say in the industry, as most HOA lawyers, I shouldn't say most, but many of them were developer lawyers. They were real estate lawyers, rep that represented developers and were drafting documents and and I was, I had the opposite background. I was never really a traditional real estate lawyer. I was in the trenches getting hired to represent associations, even I wasn't their general counsel. I was getting hired, typically by insurance companies, to come in and litigate cases and defend the associations and lawsuits. So I kind of have the back that the reverse and then moving forward as I defended so. Many of them, they for, as they say, some, for some odd reason, started to like me and hire me, and the rest is the the rest is history. But, um, you know, one led to the other. It's always something right? I want

Robert Nordlund: 15:12

to talk about fixing the problem, but I'm looking at the time. Let's take a quick break to hear from one of our generous sponsors, after which we'll be back with Ed to talk about more common sense for common areas and how we can address the actual problem. Tired

Unknown: 15:27

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Robert Nordlund: 16:04

Now we're back Ed right before the commercial break. We're talking about how there's a lot of problems out there that are potentially forcing board members out, committee members out, managers out, making life difficult for them, and that's going to continue unless you solve the problem, the underlying irritation. So how does a board begin to touch that irritation? And in Kevin Davis's words, lower the temperature in the room, make things a little simpler and easier there at the association, so the tensions don't run so high.

Ed Hoffman: 16:39

So I guess the first thing we should, we should bring up, is that the reason why this is a problem, and consistently is a problem, is associations weren't are not set up. We're not set up, and still are not set up to deal with mental health issues, right? And mental health is driving the bus on a lot of what's, what's happening these days with this type of behavior. So associations are meant to manage the property and manage the finances, right? That that's their, literally, their entire function. They're not social services agencies. They're not they're not there to to manage, typically manage people, especially other owners, you know adults. The premise is adults should be adults. So that's the starting point. And then where you where you go moving forward is, as far as lowering temperature, there's, in my opinion, at least what I've seen time and time again, and whether it's in court or outside the court or just meeting with owners at an annual meeting, or meeting one on one with owners in the board, is there's a clear lack of communication many times between the board and or management and the owner or owners. And what I mean by that is, I don't know how many times I've, I've heard I just, I just wanted someone to listen

Robert Nordlund: 18:07

to me, to be heard, to feel that person, to feel like someone cares. Yeah,

Ed Hoffman: 18:11

and there are two sides. Listen. There are two sides to every story. And a lot of those three, yeah, yeah. A lot of those people did, did have the opportunity to be heard. In fact, our statutes, most of the statutes in most jurisdictions, require an opportunity to be heard if there is a like a violation issue, and you're going to find them some states, I'm also licensed in New Jersey, they have mandatory ADR provisions in there. Pennsylvania, we don't have mandatory we have voluntary ADR in our statute that was put in however many years ago, but it's not mandatory. Some documents, and I say probably 5% of the of the communities I represent have some sort of mandatory, mandatory ADR provision in their documents. What I say is, don't, don't overthink this. If there's no ADR requirement, don't overthink it. And this is also assuming, by the way, it's not a hostile, aggressive situation. Yes, if it's dangerous, call the police. Don't, don't get in the same room with people. And this is, this is not what I'm recommending. Doesn't deal with that, nor do you ever want it to be in that situation. Not your job, but, yeah, but let's offer to meet with them. Let's offer to meet with them and try to hash this out and and a lot of times, boards say, I we don't want to meet with them, because all they do is harass us. And I'm like, I get it, but maybe they'll stop harassing you if we're able to talk to them. Could be a pipe dream, but guess what? It's worked sometimes. Let's talk about personality.

Robert Nordlund: 19:44

The every board has a personality made up of a bunch of different people, different characters. And we've all seen the television dramas where there's good cop, bad cop, that kind of thing. Is there perhaps a role on the board for. Someone to be the peacemaker. So if this person in unit number 13, I was like to use unit number 13 if they don't like the board president, maybe you don't have unit number 13 owner meet with the board president, maybe you have the Member at Large, who's the smiling guy or the smiling lady? And they say, oh, you know, yeah, sometimes he or she chooses the wrong words, and maybe that person can that kind of defuse some of the issues. Sure,

Ed Hoffman: 20:32

if we already know that there's a personality conflict between a board, a board member or multiple board members, and the owner that's that's complaining. We're not going to try and sit them down with the owner. We're going to have different board members. And I usually want the manager in there as well, because they're, again, they're the ones that are bearing most of it. And then I offer, I, you know, I offer the board, I'll make myself available if you want me there. And most of them do, by the way, interesting, yeah, because they, I guess, because I'm, even though I represent the association, I am the only one there without skin in the game with respect to being an owner, right? So I'm more of a neutral party that way. I'm not neutral when it comes to asserting the association's rights and remedies, but I'm trying to actually get some sort of conciliation to occur. That's my function at that meeting. And if it's feasible, great. If not, then we're Guess what. We're back to where we

Robert Nordlund: 21:33

already were. And I don't know what your hourly rate is, but I'm thinking that if a board has a real problem with the person in unit number 13, it may be worth a couple hours of your time to sit down. And I'm not gonna say arbitrate, but allow just the air to clear and make the problem go away. Is that maybe some of the best money they can spend? Maybe,

Ed Hoffman: 21:56

yeah, depending on the situation and the other side of the coin is, and I'll spend, like, you know, 45 seconds on this, neighbor to neighbor disputes between owners, you know the, you know, the fence line and owners, when owners, when they hate each other, yeah, and I've had really, really crazy things happen in that, in that area, But the regulations under the Fair Housing Act have changed in a manner where there, if there's some sort of discrimination alleged, then the association likely has a duty to at least offer to step in and try and help resolve the dispute, rather than just letting it go as alleged I've had in the last two years. And I'm not kidding you when I say this, I've had three or four situations where both parties are accusing the other of discrimination. So it's like cross discrimination, and you don't even and coming in cold, you don't know what's happening. You don't know who to believe. Yeah, a lot of boards don't want to deal with that, because they say, Well, if that's not our business, it's neighbor to neighbor disputes. And I say, right, but when it rises to the level of alleged discriminatory conduct, the Federal Fair Housing Act now places some responsibility on on the on the association. In fact, I had a a HUD person tell me on a on a conciliatory call, once your client is able to send the violations to people, because the guy said, I read your documents, and you could send violations to people for for a trash can violation, at the same time, you're not willing to keep the piece there. And it even says in there, if things become a nuisance or annoyance for an owner, in the document, the association shall XYZ. And you know, the hub HUD understands it. So here's the other thing, though, that takes to the tango as well. Both owners would have to show up. And usually when we offer this one says yes, the other one doesn't. And probably 60% of the time, maybe 70, the other 20% of the time, to 30, both say no, and then 10% of the time they say yes. So

Robert Nordlund: 24:15

it is hard to get them in the same room to even talk it through. There's a visceral

Ed Hoffman: 24:19

hatred of by the owners, and that's never a good situation to have, right? Yeah,

Robert Nordlund: 24:26

okay, well, let's get back to what we can do for our audience. Here. You talked about communication, and I think that, I believe that nature abhors a vacuum, and so if there's absence of communication, people are going to make up their own narrative. And so you've got to try to get ahead of that. And maybe that's the standard things, the newsletter, the board meetings. Maybe it may be the board members intentionally check the mail twice a day just to get out and walking through the halls smiling. Can you work those? Little things over and over and over again, so that you're starting to bridge that gap between the board and homeowners and make the board members more human, make them more accessible, get some communication out in the open. Because if you who is it that said, the only problem with or the biggest problem with communication is thinking that it has happened something like that.

Ed Hoffman: 25:23

Yeah, and I get an association realm in Pennsylvania. By the way, we have no Sunshine Law, for lack of a better word, as it applies to Association, board meetings. So we don't board meetings. Don't have to be open to members in Pennsylvania. We have to, generally the requirement is under our nonprofit Act and other other things, like bylaws, you have to have an annual meeting once a year. And some communities, that's the only time that the board is seen or heard from directly. Is at the annual meeting. We don't have a requirement. And this is the issue, if people are, if the a lot of the P A lot of the people, they're not happy or alleging there's a lack of transparency. Oh, they're operating in secret. Yeah, right, there's a lack of transparency. However, the law doesn't require them to have open meetings. Sometimes I nudge the board, depending on how many people are saying it, while you open up, 25% of them, four times a year open up if they're meeting monthly or and that's up to the board to decide how it wants to do that. I have boards that don't have a requirement, and they have every meeting is open everyone. I like that. And I have well, and I have other boards in some communities, it's hard to get things done, though, when that happens, right? And I have other boards that decide two times a year or three, but at least they're opening them up, and the transparency is something that triggers a lot of people, or lack thereof?

Robert Nordlund: 26:50

I was gonna say lack thereof. Yeah, if you can, the more you can do to have it be our community and not the board versus the homeowners. I think that's gonna go a long way to settling problems down, releasing tension and real

Ed Hoffman: 27:03

quick story. I've had multiple communities where a person was the squeaky wheel, complaining, complaining, complaining. There's no transparency. The board's acting in secret. They're doing everything wrong. I think there's illegal things going on. They're stealing money, whatever it would be. That person then runs for the board. That person gets on the board. That person then gets on the board and starts working with the board and realizes none of that is true. And then I say to the board and to that person, wouldn't it have been nice if you were able to convey all of this in a way that everyone already knew that there was nothing nefarious or or, you know, going on. If there was more transparency, then it's kind of like the light bulb goes off.

Robert Nordlund: 27:46

Yeah, no, I think that may be the gem of this program right there, getting the information out. The board, being transparent. Say, look like a magician does. Look I got nothing up my sleeves. We are just volunteers trying to run this place. The bills are going up, so we need the assessments to go up. I still remember, I'm dating myself. There was a Seinfeld episode. Where was it? Do you remember Jerry's dad was down in a condo in Florida? Yeah? Del Bo got elected. Yeah, there we go. Got elected to the board, and Jerry Cadillac, Cadillac, Cadillac. Yeah, right. The time was just so unfortunate. Kind of last question I want to try to bring this to a close here on the podcast, we talk about the four C's. The boards need to care. They need to be curious. They need to be courageous, and they need to communicate. Well, does that capture it for you? Or how? What? What kind of words do you use to characterize, you know, this board over here, they're doing a great job, because they are X. I

Ed Hoffman: 28:47

think all those attributes that you, you brought up are indicative of a well functioning board, right? And, and whether it's those specific attributes or others, I think, I think the what makes boards successful, in a general sense, is due diligence, communication with the owners to tell them what's going on, and also foresight, having foresight to understand what's coming up and how To communicate that with owners what money might be spent big projects. You don't want to drop something on them that a million dollar project is coming up just out of the blue. You want to start a year ago if you knew about it, not, not if a bridge collapses in your community from a tropical storm or something, which I've seen. So that's a different situation. But that being said, you never want to be in a situation where someone, especially a judge, is looking at the board and saying, What did you know and when did you know it right when you're dealing with spending other people's money,

Robert Nordlund: 29:54

good records, good meeting minutes, all that kind of stuff, and having that available for people to review. You. Thank you, Ed, It's great talking with you. I'm so glad you're able to join us on the program here today. Any closing thoughts to add at this time?

Ed Hoffman: 30:06

Ah, no, I thank you for for having me out. I would, I would submit that, you know, boards and this, I guess the closing thought, I actually do have one boards and managers shouldn't get discouraged over this. And I think, I think what, what they need to understand is, there they can't be called upon. They have a lot of perfectionists that serve on boards. Can't be called upon to be perfect, but you should be you should be doing your due diligence as a board member and fulfilling your duty. And board members should always, always understand that there's help around the corner, meaning professionals, the statutes and the documents always provide that part of the process is call you know, if it's a financial issue, call your CPA. If it's an engineering issue, call your engineer. If it's a reserve issue, call your Rs. Do I get the reserve study done. Call your attorney, rely on the professionals to help you. Don't make all decisions, and you mentioned the vacuum. Don't make all decisions in the vacuum, because that's actually how you stay out of trouble.

Robert Nordlund: 31:12

I like that. Well, if you'd like to get in touch with Ed, you can visit his law firm's website at hoffmanhoalaw.com that's H O, F, F, M, a n, H O, A, law.com and Ed you said you practice in Pennsylvania and New Jersey? I'm

Ed Hoffman: 31:28

licensed in New Jersey. I just primarily practice in Pennsylvania though.

Robert Nordlund: 31:32

Well, we hope you learned some HOA insights from our discussion today that helps bring you, helps you bring common sense to your common areas. You think I could get that right? Well, we look forward to having you join us for another great episode next week.

Announcer: 31:48

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