To be effective, a homeowners association needs
a strong board of directors that understands its role and pursues
it with passion and a concise mission in mind. The following outline
provides an overview of board roles and responsibilities.
To form an effective board, directors must have
a clear understanding of the strengths and weaknesses of the association,
its history and what is to be accomplished. Every homeowner association
should have responsibility for its assets as well as its operation
in accordance with standards established by state and federal law,
local ordinances, and the governing documents upon which the entity
itself was created. To the extent that the association has such
authority and control, it is the board of directors that makes
certain these responsibilities are fulfilled.
Understanding the homeowners association
concept:
The homeowners association is the cornerstone of a planned residential community.
It brings continuity and order to the community, it preserves the architectural
integrity and it maintains the common elements. Properly run, the association
promotes the concept of “community” and protects the neighborhood's property
values. In many cases, it collectively makes available recreational and other
facilities that might not otherwise be affordable or available to homeowners
and residents on an individual basis.
Deed-initiated homeowners associations have become
an essential part of the overall concept of residential property
ownership in today's marketplace. Purchase of a home or lot often
brings with it mandatory membership in an association which then
provides the structure for operation and management of the residential
development. With membership comes certain maintenance obligations,
financial responsibilities, and a commitment to abide by use restrictions
and other rules of the association. To a degree, it necessitates
individual conformity for the good of the whole.
The association's responsibilities may be limited
to basic maintenance functions or they may be expanded to include
sophisticated and extensive upkeep of the property as well as delivery
of special services to individual homes (e.g. back door trash pickup).
To be successful, its officers and directors must uniformly and
fairly govern the community, and it must have a reasonable level
of participation by each of its members over time.
Board of Directors
The association has responsibility for its common elements as well as the
management and operation of the association's business affairs - - all
in accordance with standards established by the governing documents created
when the community was first developed. To the extent that an association
(typically a non-profit corporation) has such authority and control, it
is its board of directors that carries out these duties and responsibilities.
Members of the board of directors of an association
serve without compensation unless the bylaws of the association
provide to the contrary. The board's authority includes all of
the powers and duties enumerated in general law, as long as these
powers are not inconsistent with the provisions of the documents
governing the association.
Officers of the Association
The association acts through its officers and agents. The board of directors
makes the policies for the association, but the officers and agents carry
out these policies and administrative functions for the community. Some
of the officers are clerical while others carry out substantive functions
based on policies established by the board of directors. All of the officers
have an affirmative obligation to act with utmost good faith towards the
association and cannot deal in the funds or the property of the association
to their own self advantage. Each association typically has a president,
secretary, and treasurer and may have one or more vice presidents. However,
an association may officially conduct its business with fewer officers
than these, depending upon the laws of a given state.
Fiduciary Relationship and Responsibility
The members of the board of directors and each officer of the association
have a fiduciary relationship with the members of the association. This
fiduciary relationship imposes obligations of trust and confidence in favor
of the corporation and its members. It requires the members of the board
to act in good faith and in the best interests of the members of the association.
It means that board members must exercise due care and diligence when acting
for the community, and it requires them to act within the scope of their
authority.
The fact that the association is a not-for-profit
corporation, or that the members of the board are volunteers and
unpaid, does not relieve them from the high standards of trust
and responsibility that the fiduciary relationship requires. When
a member accepts a position on the board of directors, he or she
is presumed to have knowledge of the duties and responsibilities
of a board member. Board members cannot be excused from improper
action on the grounds of ignorance or inexperience and liability
of board members for negligence and mismanagement exists in favor
of the association and the property owners.
Each board member must recognize the fiduciary relationship
and the responsibilities that the board has to the association
and each of its members. The board's duties must be performed with
the care and responsibility that an ordinary prudent person would
exercise under similar circumstances, and the ultimate responsibilities
of these unique positions cannot be delegated to a manager, a management
company or other third party.
A Recap of the Board Member's Role:
Acting through the board as a whole, a board member should:
Operating a homeowner association carries with it
many of the very same duties and responsibilities as overseeing
any other business. Serving as a board member is a valuable and
rewarding experience that should be undertaken by those who see
it as an opportunity to serve their fellow neighbors while protecting
and enhancing the assets of the community. It is serious business,
but also a task worth doing well in order to safeguard the investments
of all.
Linda A. Bartel, AMS®, LSM®, PCAM®
Principal Management Group of Houston
Houston, TX
