“Plan for what it is difficult while it is easy, do what is great while it is small.” Sun Tzu
During this time of economic uncertainty and concerns over the COVID-19 pandemic, community associations should take an ‘inventory’ of the current conditions of the association and have a continuity plan in place just in case something tragic happens. For example, what happens if the President of the Board of Directors suddenly passes away? What happens if only one person has access to certain documents, accounts, records or passwords? What happens if someone has a ‘falling out’ with the current Board of Directors and refuses to assist the current Board of Directors? Having a continuity plan in place now may save your Board of Directors significant time, energy, effort and money in the future.
Below is a sample checklist of considerations that your Board of Directors may wish to consider:
- Step 1: Analyze where the following items are located:
- Banking records including:
- Name(s) of banking institution(s)
- Account numbers for each banking institution
- Passwords or access to the banking records
- Debit cards
- Physical checks
- Petty cash
- Accounts receivable and accounts payable
- Other financial records
- Association records including:
- Modification requests, approvals and denials
- Meeting Minutes (including closed session meeting minutes)
- Communications with the Association’s attorneys
- Invoices (both paid and unpaid)
- Insurance policies
- Keys to any pool, clubhouse, community storage area or association mailbox
- Physical equipment including:
- Pool items such as lawn chairs, umbrellas and benches
- Community holiday lights or decorations
- Lawn equipment such as rakes, shovels or hoses
- Clubhouse furniture
- Storage items like cleaning supplies and toilet paper for community bathrooms
- Sandwich board(s)
- Banking records including:
- Step 2: Determine who has passwords to the following:
- Association e-mail account(s)
- On-line banking
- Security systems
- Regulatory filings such as Annual Reports through Michigan’s Department of Licensing and Regulatory Affairs
- Step 3: Identify the individual(s) with possession of and/or access to all the above items. For example, your association may have individuals with access to bank accounts or other documents who have not lived in the community for years.
- Step 4: Once everything is cataloged and identified, analyze whether the individuals with possession of and/or access to the documents/information are the correct people. Have an open and honest discussion as a Board of Directors whether to add or subtract people with such access or possession. Determine whether physical items should be consolidated into a central location.
- Step 5: Complete a continuity plan. If something happened to the individual(s) with access or possession of these items, does the association have a plan in place to address the issue?
- Step 6: Evaluate the continuity planning on a routine and consistent basis. Simply, doing a plan once and forgetting about it does not help if things change over time.
This checklist is not exhaustive, but it is a starting point for the Board of Directors to begin analyzing continuity planning now instead of asking “what if” in the future. Moreover, your Board of Directors may discover issues that have been overlooked for years and which may require the involvement of a community association attorney. Alternatively, the Board of Directors may want to modify the Rules and Regulations to address any concerns raised during the process. Performing an inventory now may be a worthwhile investment to avoid larger issues in the future.
Joe Wloszek is a Member of Hirzel Law, PLC where he focuses his practice on condominium and homeowner’s association law, commercial litigation, commercial real estate, large contractual disputes, and related real estate matters. Mr. Wloszek has been a Super Lawyers Rising Star in Real Estate Law from 2013-2020, an award given to only 2.5% of the attorneys in Michigan each year. He was also named a Top Lawyer in commercial law by DBusiness Magazine in 2014, a Michigan Top Lawyer in real estate law by Michigan Top Lawyers in 2016. He is a Certified Real Estate Continuing Education Instructor through the State of Michigan and the former Chair of the Oakland County Bar Association Real Estate Committee. He can be reached at (248) 480-8758 or email@example.com.