The Process of Reasonable Inquiry

By Patricia Arnold, CCAM, CMCA AMS

What Does the Reasonable Inquiry Process Look Like?

First, the association’s board of directors should define the issue or concern as clearly as possible so that all parties know exactly what the inquiry will cover.

Then the association’s board should look at that issue impartially, without overlaying any set opinions as to the facts to be sought or found, and to make reasonable inquiry with as open a mind as possible.

The preferred option, usually, is to start small, as small as possible, by making a phone call or sending correspondence to a knowledgeable party. Possibly that will suffice, and the board will have the information it needs to make an informed decision. But if it does not suffice, the reasonable inquiry process needs to go up a notch. Does the problem require finding outside expertise to investigate and address it? Can the board find

When an issue arises at an association that challenges a rule or confounds the board of directors in its efforts to resolve, it is time for reasonable inquiry to step in.

that expertise at no charge to the association or will the association need to hire it? And so forth.

The association and its board need to follow the thread of available data until the board can satisfy itself that it has the information needed to get to a reasonably determined resolution.

For Example . . .

Leonard lives up the street in a single-family home. He has owned and lived in that home for more than 30 years. Leonard’s property is adjacent to a homeowner association community that was built and all homes sold eleven years ago.

Leonard adamantly protested the development of the neighboring property into a 90home community association when it was first presented to the building commission fourteen years ago.

Leonard still brags that he stopped the developer in his tracks for nearly three years.

The Process of Reasonable Inquiry Continued from page 25 Eventually, according to Leonard, he, the city, and the developer reached a compromise. The developer would proceed to build the community, and, in exchange, Leonard would have unfettered access to what would become the new association’s RV lot directly across from his home, at no cost to him.

In addition, Leonard would have the option, once every twelve months, to use the association’s meeting and social center for his own private parties, also at no expense to him.

Recently, Leonard approached the association to exercise his right to park a trailered boat and a small camper van in the association’s RV lot.

Nobody on the board had any awareness of such an agreement between Leonard and the firm that developed the association. That Leonard would have been awarded free use of the association’s social center once a year was a shocking revelation for the board and the community.

Reactions to Leonard’s revelations were swift and highly charged. The first reaction of board members and some homeowners could be best described as a “near-violent knee-jerk.” Words of outrage flew back and forth. Homeowners were distraught and in complete disbelief that the developer could have done such a thing and then left no record of it in association documents.

“Impossible!” cried some. “I have my rights!” cried Leonard.

Cooler heads on the board of directors opted for reasonable inquiry. If Leonard’s claim was found to be valid, they would cross that bridge later. The first step had to be finding out if Leonard’s claim to have been formally granted the right to use the association’s RV lot and the community’s social center, with or without financial consideration, had any merit.

The board politely asked Leonard to provide them with a copy of his amended grant deed that supported his claim. Leonard continued looking through his old paperwork to find a copy of that grant deed.

In the meantime, homeowners were continuing to be unstrung about the news. Expressions of personal outrage ran rampant at board meetings, poolside gatherings (pre-COVID), and residential cocktail parties.

Normally, the board’s position would amount to letting Leonard do all the work; let him provide the proof.

However, the board understood the level of emotional distress the issue appeared to be causing the owners. Not to mention that it was jeopardizing what little remained of good-neighbor relations with the neighboring lot owner, Leonard.

Belling the Cat…

Grant deeds are public records. For a fee, anyone may go to the county assessor’s office and, using the assessor’s parcel number for a given property, obtain a copy of any grant deed.

The directors considered having someone on the board drive to the county offices to do a title search on the parcel number they assumed to be for Leonard’s property, and also for the parcel number they knew to be for the association’s property. The board surmised that if such an easement of use had been granted to Leonard and recorded on his grant deed, there might be a similar recordation on the association’s recorded documents.

As it happened, nobody on the board of directors was willing to take on the grant deed research task, even though they all agreed, in spirit, that someone needed to do the research.

The board voted to engage a firm qualified to do an authorized title search, to see if an amended grant deed existed that might reveal whether or not Leonard was granted the access he claimed.

A real estate professional, whom we’ll call Linda, was engaged to do the research.

Linda drove to the county assessor’s office and dug up the grant deeds for Leonard’s parcel and the parcels that included the association’s entire development. Linda reported to the board that on the grant deeds she examined, those of the association and that of the neighboring parcel owned by Leonard, she found no recorded amendment and nothing that granted parcel owner Leonard access to the RV lot or the social center.

The board reported that information to Leonard and to the association membership. Leonard countered with the claim that there must be another recordation and that Linda simply had not dug deeply enough.

The association’s board reviewed the steps it had taken in pursuit of reasonable inquiry: 1. It had heard Leonard’s claim and listened politely to his account of events. 2. It had listened to association owners’ concerns and protests

regarding the matter. 3. It had asked questions of people believed to be knowledgeable – those having been original owners at the time who had prepurchased their lots before the actual construction of the development commenced. 4. Those owners were among the buyers whose preconstruction purchases had been suspended during the time Leonard was protesting the development. 5. None of the pre-sale owners who responded reported knowing anything about Leonard’s claim to access. 6. The board asked the neighboring lot owner (Leonard) to provide the association with a copy of the recorded grant deed, or the recorded amended grant deed, that showed the easement of use for the RV lot or the association’s social center. 7. The board voted to engage a professional to research the grant deeds at the county assessor’s office. 8. The board learned from the researcher that there did not appear to be a grant deed or amended document showing that Leonard had been granted easement or access to any association assets or properties.

Upon review, the directors determined that they had made reasonable inquiry. The board informed the member owners and the neighboring lot owner, Leonard, that it considered the matter sufficiently researched and was satisfied that no such amended grant deed had been recorded.

In its written response to Leonard, the board stated that while the developer may have promised future use of the association’s assets, and while the developer may have shown Leonard a document purporting to provide that access, it appeared that the developer had not recorded any such document with the county assessor’s office. The board left the door open to Leonard such that, should he ever find a copy of the duly recorded amended grant deed he referenced, he was welcome to return to the association’s board for further review and consideration.

Patricia Arnold, CCAM, CMCA AMS, is a career professional community association manager serving the Greater Bay Area for more than three decades. Arnold Management & Consulting is located in Windsor, California, and offers community association training and consulting, expert witness, and interim community management to bridge between contracts while an association conducts a search for new management.

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