Mountain Glen’s March 2014 newsletter includes an article titled, “WHAT HAPPENS TO A HOMEOWNERS’ ASSOCIATION IF NO BOARD OF DIRECTORS EXISTS?” In the article, it states that it is becoming more difficult to recruit volunteers to serve on homeowners’ association boards. Directors who have served faithfully are finding it too stressful and often resigning in midterm, leaving vacancies that cannot be filled. If the Association does not have a board of directors, the Association may end up in receivership. A management company is no substitute for a board of directors.

Every effort is made to recruit qualified and experienced members to serve on the association’s board of directors. If a viable board does not exist to protect and preserve the association, a judge may appoint a receiver to do so in lieu of the board.

Initiating the appointment of a receiver must be done with the assistance of an attorney. Because of the nature of the remedy, the association will be responsible for the attorney’s fees. Most owners will not want to take this step unless the situation is a very serious one that is endangering their property values. The legal fees will likely end up being very costly to the membership.

If proof is made to the satisfaction of the Court that the association cannot maintain an active board of directors and there is an immediate threat of damage or destruction to property, and to property values in the community, the judge will appoint a receiver to: (1) take control of association assets; (2) to impose emergency special assessments if necessary; (3) obtain reports from qualified consultants concerning what repairs are needed; (4) and enter into contracts for the necessary work.

The receiver will likely be an attorney, a bankruptcy trustee, an accountant, or a similar professional including a management company representative who has expertise in community association management and will be required to make periodic reports to the supervising judge and I assure you, collection of delinquent member assessments will be included as part of the receiver’s report. The association will be required to pay all resulting expenses, including the receiver’s hourly fees.

If there is an existing on-site manager or outside management company, that person or company will stay in place and will perform the day-to-day functions as usual. The receiver will take over functions that are normally performed by the board, especially in the areas of solving whatever problems triggered the receivership in the first place. This will involve handling and overseeing the day-to-day operations of the association in accordance with the governing documents and all applicable laws.

The receivership will be terminated when the court finds that the association can operate under its own auspices governed by a board comprised of the owners. Potential volunteers experienced and qualified in managing a homeowners’ association must be assured that the other owners will support them by serving on committees and doing whatever possible to ensure the smooth operations of the community.

In an effort to avoid this costly alternative for the Mountain Glen community, your board of directors feels it necessary to advise the members homeowners of the potential of receivership and related expenses, and are imploring members to volunteer.

If you would like an electronic copy of Mountain Glen’s March 2014 newsletter, send your request to mountainglen@gmail.com