(Connued from page 23)


matters which the officer or executive board member reasonably believes to be within the professional or expert competence of such person.


(3) A committee of the executive board upon which he does not serve, duly designated in accordance with law, as to matters within its designated authority, which committee the officer or executive board member reasonably believes to merit confidence.


While easily the subject of a separate article, recognizing when an expert is needed, and choosing the correct expert, are equally important. Perhaps structural analysis is a bad example (because it is such a specialized field); however, boards should generally err on the side of caution, and should seek independent advice when there is doubt as to the extent of their own capabilities. Once the decision to seek such advice is made, the UCA and UPCA permit reliance only on consultants as to matters which the board member “reasonably believes to be within the professional or expert competence of such person”. Moreover, the following caveat applies:


An officer or executive board member shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause his reliance to be unwarranted.


Board members must therefore be reasonably


satisfied with the qualifications of its consultants, and cannot ignore their own personal experience or knowledge which could call such reliance into question. This applies not only to the qualifications of the consultant, but also to the opinions or advice which is rendered. For example, an attorney board member cannot reasonably rely on legal advice given by a non- lawyer, nor on conclusions which the attorney board member otherwise knows to be incorrect. While it may be obvious, “reliance” is only warranted if the board indeed listens to, and acts in accordance with, the advice that is given.


The advantages of obtaining and following the advice of a qualified expert are clear:


1) The association receives correct advice on a particular subject (is informed and is able to defer to the information if questioned by owners);


2) the retention of a qualified expert is evidence that the board has performed its due diligence (is meeting the standard of care); and


3) decisions which are made in reliance on that expert should withstand legal challenge (are generally protected by the business judgment rule).


Okay, but what does all of this mean? For members of a first unit- owned elected board, best practices recommend a transition study, which is an independent evaluation (independent from the developer or the municipality) of the quality and function of initial construction – a


24 November | December 2021


document to confirm that what the developer promised is in fact delivered. It consists of an engineering/architectural review and analysis of the design, construction, and performance of the components of the association. Generally included are all common infrastructure, stormwater management, and building/ structural components of a community. In many cases, a transition study results in a punch list of construction deficiencies which then forms the basis of negotiations with a developer; in some cases, it reveals significant defects which are thereafter the subject of litigation. In either event, having a transition study completed provides written confirmation that components of an association are properly constructed (or not), and that the lifespan of these components will be as expected.


A reserve study is an essential budgeting tool. Typically prepared by engineers, their main purpose is to evaluate the condition and life span of the components and installations for which an association is responsible 1, and to prepare methods of funding to assure that ongoing maintenance and ultimate replacement are properly financed. For example, if the association is responsible for roof replacement, this study will evaluate the condition of the roof, determine the anticipated remaining life, estimate the expected cost of roof replacement at the end of that time period, and recommend funding methodologies to meet that expense at the time. Reserve studies not only consider the condition and quality of the relevant component (and may indeed reveal significant defects that require immediate attention), but also the anticipated costs of materials, labor, investment income, and inflation. For that reason, it is important to update a reserve study every 3-5 years to 1) confirm that the association’s


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48