 Good morning or good afternoon everybody and thank you for joining us today on Condo Insider. I'm really excited to have with me as my guest, Mike Golojus with Pahlehua Townhouses. He's also one of my fellow HCCA board members. So he's been on board with us for a couple years now. So today we're going to talk about what a condo board duty and responsibilities are. So it's going to be the two of us having this conversation. I often get a lot of questions, especially after a seminar about what exactly a board member is supposed to do, especially for the new ones, the newbies that come on board. So we're going to start off with going through some of the statutes. So where does it all start? So we're on our slide number two. And actually it started when the potential home condo owner signed that purchase agreement because even though we're not on the board, we still have to comply with all the governing documents, the declarations, the bylaws, the house rules, all the, and if you have covenants, you know, like some areas have certain things that you can and cannot do around the property. So it really starts with knowing that and then also reviewing the Hawaii Revised Statute 514B or 421J. 421J applies to plan unit communities like Everbyte Gentry. So Mike, I want to really thank you for being on board with us. So you've been a board member for a long time. So what would be your suggestion for people to start with? Start with, I really recommend they read their declarations as they come out on the DCC and ours so they know what their association, what they're required to do by not only 514B, which the law, but what their own association needs to do. And besides that, they also need to review and their bylaws that run their association. And by doing that, then going back to review 514B helps them out a lot in knowing what their responsibilities are for a board member. There's other things too, but I mean, those are the basics. And of course, Kondo Insider has a lot of good programs that could help them out too. But people don't really understand what they are. And I know it's coming up what a fiduciary is and that type of thing. But it's all important to understand the rules first. Okay. Next slide. So you mentioned fiduciary duty. So here's 514B 106, which is the board powers duties and limitations. So it's highlighted in here in it's bolded that each board member owes the association of fiduciary duty, and to exercise the degree of care and loyalty that's required of an officer or director of an organization under chapter 414D, which is the nonprofit corporation act. So we actually have several statutes that not just 514B, we have 414D, not to mention, I think we have to also do fair housing. But if you don't comply, then you're going to be in breach of your fiduciary duty. So along with fiduciary duty, so next slide is really the explanation. You want to kind of review what a fiduciary duty is? Well, I can't see that slide. So a fiduciary duty is an individual in whom another person has placed the utmost trust and confidence to manage and protect property or money. So how would you apply that? Or how would you explain it? Well, for me, it's to understand your budget, what your condo association has set aside for their normal maintenance, but also their reserves, because you have to be able to pay for things in the future. And you have to look out what's best for the association and that's what's best for individual homeowners or yourself as a homeowner. You have to look out for the responsibility, the overall association, so that you're doing things and having the money to do the necessary prayers in the future. And we've seen what's happened when for one reason or another association has not been able to. There's special assessments or there's a big loan that has to be taken just because funds weren't there to do the projects that needed to be done. And some people do get on the boards to figure out, I'm going to stop raising maintenance fees. I mean, I've heard that one before and that's really isn't it. That's a red flag already. Yeah, because I've told even our board, I said, I'd rather see a $5, $10 yearly increases versus a $5 or $10,000 special assessment. That's true. I mean, it's just incremental, so it's not going to, you don't really feel the $5 or $10 so to speak versus you have to come up with a $5 or $10,000 man, that's really going to hurt your pocket. Right, that's true. So when we learn as we go into fiduciary duty, we also have to realize as a fiduciary, we have to watch out for conflicts of interest. That is true. So the actual definition by statute of conflict of interest is used as a means in which an issue in which a director has a direct personal or pecuniary interest not common to other members of the association. So it has to be disclosed that relationship. True. And I've had it on our board that some people have had to disclose that, hey, one of the contractors you're considering, I know the person personally, and they'll recuse themselves in voting on that particular thing. Exactly. Yeah, or even hiring an employee. Yeah, they used to be my tenants way back when they're fine, but really you really should have no conversation regarding that person, right. That's true. And one of the main things, because even 421 Jay, if you're in a pud at like a ever by Gentry, you have to disclose the nature of that. And then you also cannot vote on that issue, but you got to make sure that that disclosure is recorded in the meeting minutes. Right. Yes, definitely. And it's, it's important. And, you know, and especially in the condo, sometimes, you know, board members just like others need to have things that they want to do to their unit that need to have board approval. And you need to disclose, hey, this is my unit and I will not be voting on this. Right, right, right. Okay. Let's go to the next slide. So the responsibility, so now you're on the board. So what exactly is your responsibilities? So we have like things to do like the upkeep of the condo property. So we have to deal with all the common elements of landscaping, painting, parking lots, if you have a pool, and you have to do basic cleaning around the property, you know, sweeping up, whatever, picking up the trash. Then the other big responsibility is the fiscal. We got to deal with the budget and the reserves, plus the insurance requirements. That's right. So it's our responsibility to, to learn how to read the budget, which could be an experience in itself in the very beginning. And then it's experience itself to get to understand how to read the reserves, you know, and we don't, I don't think everybody expects you to get it in the first time. It kind of takes a little while to kind of get the hang of reading the budget, going through the reserves and how they all play together, you know, and then with the budget and reserves, then we start doing the assessments for maintenance fees, figuring out how much, how much the rate and the fees are going to be for the year. Right. And I would, I would, I would like tell anybody that they're boasting to me that they haven't raised maintenance fees in a couple of years. I'd be like, something's wrong with your property. I agree with you. That's true. Even if it's a small amount, I've heard that over and over again. It's true. People don't like to raise them, but if you don't raise them a little bit, you may be raising them a lot. Yeah, because I don't like the $20 jumps. I'd rather have five than 10. I don't like the $20 jumps. It's, you know, it just is really scary, you know. And truthfully, when I first got on the board, that happened to us. They had relied on some funds that had come in from a settlement and they hadn't looked at really the maintenance fees and all the other aspects. So when I got, we had a fairly sizable jump in maintenance fees because we had to wait to cover the reserves and maintenance that was needed. Yeah, yeah. And then we also have the responsibility of maintaining certain records. So, you know, even though a lot of the records are with the managing agents usually, but still we have to make sure that certain ones are maintained and that they're available to owners upon request, according to the procedures that are set up for that. Right. And then we also have to make sure that there's the rules compliance. So making sure our decor and bylaws and then the house rules and also the other other architectural stuff are all being complied with. So we have to make sure and even with that is hard to rule enforcement. That alone is a challenge in itself. You know, making sure everybody's window coverings are all white. They're not storing a bunch of stuff on the lanai where it looks like someone's living there. I mean, you know, another bed of extended bedroom, you know. But what other things can you put in as a board member that you've seen challenges on with rule compliance? Like I said about rules compliance, you know, things like picking up dog feces. You know, in fact, if you want to change the rules, you can change it that the owners have to pay for a DNA test. So if you need to, that you can follow up to find out which dogs may be doing that, you know. That's just one thing. But are they keeping their areas squared away? You know, what are your rules about what can be stored in front of the doorway or can't be what can be on lanais and other things like that? And in a recent fire inspection we had a couple of people still had arbor cues up on the second lanai and they can't do that. Yeah, it has to be five feet away from a building from a wall. Right, right. And we're also responsible for the upkeep, the repairs. Right, that's true. Repairs comes with painting. Yeah, we've been painting, replace siding, the sprinkler system, that's an ongoing battle with our we've got a good resident manager though because he can do all that. But now there's things that we have to contract out to, but the things he can handle, he does and he does a good job of it. But yeah, you're right, all the different maintenance things. He's doing some sidewalk repairs because we don't want the tripping hazards, things like that, you know, and it carries. And ours the townhouse so it's more flat, but you know, high rises, they've got their own issues that they have to worry about, whether it's elevators or parking spaces underneath or whatever, the lighting for that, etc, etc, that goes on. Yeah, I have to tell someone they couldn't keep their shoes outside, outside the door, because it was a trip hazard. And they were kind of upset. I go, no, you have no idea. That's why you can't have mats outside, no footwear outside, anything where someone can trip. I go, you know, I go, even in my house, I'm like, the shoes go against the wall, not why we need to walk and triple. And you know, some people got like big feet, you know, feel like I'm looking for boulders, you know. And the other part of our responsibility is, as board members, and even the employees that we hire need to welcome our owners, make them feel that they're part of the community, you know, we have to comply with all the fair housing, ADA, pets, you know, all of those things, you know. That's true. You're right. And we, our resident manager gets ahold of them quickly so that they're welcomed and then, and also has them fill out the things. So we have an emergency contact for them and we have their car information so that we know it's theirs. So they don't get towed. Yeah, the big thing, don't get towed. Okay, let's move on to, on to the next slide, which is, wow, we need to know a lot. It's almost like we need to go to college to learn how to be a board member, right? There's a lot of things we need to know. But it's not like we have to be experts in those fields, right? We can hire professionals to help us. You know, so like, like I would not know how to measure the chemical balance of a pool. I just kind of know that they got to do certain things. It's got to be a certain color or something like that, right? You know, so it's not like you have to, and then plus two, there's other resources available to even to help you learn some of the things that you need to take. Like with Hawaii Council, we have our seminars four times a year. And then once a year, we do an all day board of director training. You know, we just had it, what, a couple months ago, last month. But there's a lot of educational things that you can take. Our seminars are only like, what, 90 minutes, you know, four times a year. Every once in a while, we might add in a new one. If it's a hot topic, something that we really want to get the word out to everybody, what other ways can they learn? Condo Insider, that's one. That's right. No, and going and talking to other board members from other associations. We've done that in the past. I mean, we actually made a couple of trips out to Mililani and went to a couple of board meetings there. You know, we'd had beforehand, so we were invited to be there. Reading and studying up on these things and going to the seminars is really important. And I think when we can get back into in-person seminars, the rules would be so valuable because you can talk to other people, you know, so really the networking you get from attending the in-person ones, if we can ever get back to it, is really, really good. It is. Oh, yeah. When you're sitting around that table, you find out a lot of information and they find out information from you. You know, it's surprising what people do or don't know. It's a good way to find out what works and what didn't work, you know. And people who are really getting to the point that they were welcoming and looking forward to the next seminar so that they can meet up with their other people that they've engaged in, right? That's true. Okay, so let's go on to the slide business judgment rule. So as board members, we need to exercise our independent judgment. Just because everybody else on the board, you know, you're new to the board, you know, and you see the little clicks or whatever, you know, and everybody seems to like go into one direction, but you're like, no, that doesn't seem right, you know. And so you vote again, you say, no, my opinion is no, this is not good for us, you know. So you have to be able to really exercise your business judgment rule. Don't vote just because everybody else is voting the same way. It's okay to be the other guy that says no, right? Correct. And we have people that happens, and I'm glad that does happen. So it makes us all think again, you know, hey, was that the best decision? And maybe overall, we still in the majority think it is, but it's good to be thinking of different opinions and viewpoints on different topics. And it's like the budget review. And are you following up on delinquencies? And have we heard recently from our attorney or, or however we're handling getting that checking up on delinquencies? Now, one of the one crazy comment that someone told me was that they're the board had asked the reserve study specialist to review a repair estimate. And we proposed that I go, he does reserves. He doesn't know about plumbing, you know, or siding repair. Oh, he's not the expert that you would see to get advice from, you know, you would really seek advice from, from maybe that attorney that has that construction litigation experience. And plus two, it should go to the attorney anyways, to review that contract, right? You know, and you always got to have a scope of work, make sure that that scope of work is detailed out. So everybody knows they're all on the same, same late playing field, you know. What other advice would you give a new board member? Their advice, really talk not just to your own board members, but find out other ones. That's why it's important that when we have in-person sessions or even the ones that are online to attend, so that you listen, pick up information. So as you read through some of these documents, sometimes the first time you're in them, they don't make any sense at all to you until you've had a chance to talk to people and see it in action and ask questions. And I mean, that includes talking to your managing agent, your resident manager on a discussion basis, not that you're their boss or anything else in that aspect, but you know, trying to find out what's going on in your particular association to make it better for you and understanding. In fact, one of the things you could do and you can ask for them and some associations have them online anyway, go through past minutes and see what has been passed, what hasn't, what actions have been taken by the board. And that's your opportunity to go back and read the history, kind of like a history of that situation. Like why did they not, why did they choose, you know, to paint this one area yellow versus the rest of the area is like a brown, but this one section is yellow? Could be a really good reason, you know, like they wanted to highlight that area because of, you know, maybe because the lighting is not good. So if they put a lighter paint, it's going to be easier for the other lighting to kind of like, you know, blow off a bit, you know, that kind of stuff, stuff that it doesn't seem that we may not think of the reasons why. But once we understand why the board did something previously, then it could actually make sense, you know, you know, like a certain kind of landscaping, you know, they, they, they, they really want the certain kind of plant because number one, it's low maintenance or, you know, the sun hits it and that type of plant is perfect for the sun, especially if you're on the west side or if your property gets the afternoon sun, you don't want to put a plant there that take a lot of water, but now you're wasting water, so to speak, you know. And, and the type of trees, we've, we've had to take some trees out because of the damage they were doing, but we wanted to replace with other trees that would grow, but you know, and not cause that kind of damage. Right. Yeah. So it's really good to learn that, that background so that you're, you're informed and you're not fighting with the board because there's, there's decisions are always based upon reasons and maintenance and upkeep is always going to be at the top of the list. One of those reasons, you know. You're correct there. And, and people, you know, if they're new on it, they don't understand, you know, some of the things that have gone on the past. And that's why it's good to have new board members, but it's also good to have people that have been around for a while so that, you know, they can discuss and give reasons why things have happened in the past and new people. So maybe they'll see some new directions or new ideas that that are helpful in the association. Right. You know, and I always tell, I always remind some old board members, I said, you know, we always have to remember what we were like when we first started, you know, and you know, you've been on here a couple of years now. So you already kind of know everything. I mean, how it works, but we have to be welcoming to the new ones because not all of us want to be here forever. You know, you want new blood in there. Sometimes new blood can bring in new ideas that we never thought of, you know, so you really want that. I always try to make everybody feel like they're welcome now to have their input. You know, like, what do they say out of the mouths of babes? You know, same thing. We brand new. Something, you know. Any other closing remarks on what you want to offer to a new board member? Attend the meetings. Because that's very important, you know. And each board is all different. Ours meets basically monthly. There's some dunce we don't, but normally other associates, I know only meet quarterly, but whatever it is, show up, be prepared, read those minutes before you show up to the minute meetings. Yeah, there's a lot of time there. So you have your questions. If you do have questions, what's going on? Yeah. Review the minutes and take your notes. So you see something that was like, well, I don't remember this, but take your notes and bring it to the meeting, you know, but you really should be prepared and review that board packet before you actually go into the meeting. I mean, it takes like 30 minutes to go through the packet unless you have like some proposals and stuff like that that came in, you know, that's making the packet a lot bigger. But you know, you have to conduct yourself in a business manner. This is a business. You need to run it like a business. So you need to be informed and ask the questions. And like I say, no question is a stupid question, right? Right. So one question I always have asked, you know, if they have a contract coming up, if there's not three bids, you always want to ask the question, why didn't you get at least three bids? That's just a standard we try to follow. Now, there's sometimes there's a reason why you don't have three, but have it come out and then decide whether you want to push again for more bids or go with what you have. Right, right. Yeah. Any other closing things you want to give some of our newbies? Engage, you know, be there, you know, you're going to have your questions, you're going to wonder why they're doing things a certain way and you may have some ideas. Bring them forward, you know, get them out there. You know, some people, it's the old inertia, they'll just go on the same way unless, you know, something gets in there and people start asking questions and bringing up things and looking at it a different aspect. I think that's very important to have that input. And so that, you know, you're engaging the other board members and making them think sometimes, you know, because they've gotten stuck in their ways. Okay, I, you know, I really appreciate you being on here with me, Mike, because I think this is kind of going to be one of the first, I'm actually going to forward this to someone because she's new to the board and she's a board president. So it's a big project. You took a big, big thing in your retirement, you know. This is going to be my first one that I'm going to send to her. You need to read, look at this one, review this one, you know, but I really want to thank you because our time is coming to a close. So Mike, I really appreciate you being on the show for me today and going through it. I think it's always good to hear it from experiences from other board members, seasoned board members on what it's like and what we need to do. So we hope to see you guys, you people again next Thursday at three o'clock for another Condo Insider. Thank you. Thanks, Mike. Thank you.