More than 50 cluster representatives learned how to avoid legal troubles at a meeting Thursday, Oct. 5, at the Reston Association.
Ken Chadwick, legal counsel for the Association, explained the most common liability pitfalls that clusters often face, particularly in light of the new governing documents passed early this year.
Each of the 132 clusters within RA is its own non-stock corporation, said Chadwick.
“You want to make sure at all times that your corporation entity is up and running,” said Chadwick. If lost — for failing to file an annual report, for example — a cluster could become an association where all individuals could be named in a lawsuit, according to Chadwick.
“Thus, if you do nothing else, please be sure that your clusters maintain their corporation status,” said Chadwick.
Chadwick also pointed out that while clusters have their own covenant standards, the Association handles enforcement issues. “They are responsible for making sure everyone complies,” said Chadwick. “The clusters don’t really have the authority to enforce covenants.”
Trying to prepare for the unexpected, several cluster officials asked about special assessments during the meeting, which was sponsored by the Cluster and Condo Exchange Committee.
Chadwick said that each cluster board, which must act in the best interest of their cluster corporation, could be placed in the difficult situation of collecting a special assessment if an unforeseen disaster occurred.
Chadwick suggested that boards should err on the side of caution and issue the assessment. “Cluster special assessments then need to be approved by members,” said Chadwick. By issuing the assessment, though, the board demonstrated that it acted in the best interest of the cluster, evading potential lawsuits.
Dick Rogers of Golf Course Island Cluster asked when RA was planning to update cluster standards in accordance with the new governing documents.
“Be on the lookout,” said Chadwick, reporting that the board was planning to approve standards at a meeting this year.