Working With Professionals

What counts as a professional, and what doesn't

This course covers the people and firms an association pays for expertise it doesn't have in house: attorneys, CPAs, reserve specialists, engineers, architects, insurance producers, investment advisers, collection professionals, construction and project managers, landscape professionals, security consultants, and other retained experts. It does not cover the community manager as an employer relationship, that belongs to a different course in this library, and it does not cover routine maintenance vendors.

Every lesson here answers one version of the same question: how does a volunteer board that isn't itself an expert responsibly select, direct, and rely on someone who is.

The hierarchy that controls every hire

Four things determine what a board can do with a professional, in order of what actually controls. Federal and state statute, a licensing requirement, a debt collection rule, a reserve study mandate, overrides anything the governing documents say. The association's declaration and bylaws override board custom. A written engagement letter or contract controls the scope of that specific relationship; a verbal understanding does not bind either side the way a signed scope does.

The business judgment rule sits underneath all three, not above them. It is a shield that protects a board's decision when the decision was made in good faith, with reasonable care, and in reasonable reliance on a professional retained within that hierarchy, not a substitute for following it.

"A director is entitled to rely on information, opinions, reports, or statements prepared or presented by legal counsel, accountants, or other professionals or experts."

Source: Understanding the Business Judgment Rule for Boards, Barker Martin, P.S.

That protection is conditioned, not automatic: the reliance has to be reasonable, in good faith, and on a professional the board reasonably believed was competent in the subject. A board that hires an expert and then ignores what the expert actually said is outside the shield, not inside it. See Board reliance on professional advice.

What boards get wrong most often

"Our attorney was on the call, so it's automatically privileged and can be closed to members." Privilege turns on the subject of the communication and who is present, not on the attorney's presence alone, and it can be waived by disclosure to a single member after the fact. See Attorney-client privilege.

"The HOA doesn't have to follow the Fair Debt Collection Practices Act, so none of our collection process does either." The association itself is generally outside the federal definition of debt collector, but the moment an account moves to outside counsel or a collection agency, that party is very likely covered. See Collection professionals.

"Getting three bids protects the board no matter what." At least one state's bidding statute exempts attorneys, accountants, architects, engineers, and landscape architects from competitive bidding entirely, and even where bidding is required, the board is not required to accept the lowest bid. See Professional scopes of work.