A homeowners association is the cornerstone of a planned community. When run properly, it brings continuity, preserves architectural integrity, maintains common areas, protects property values, and promotes the concept of “community.” Every association should be responsible for its assets and operation in accordance with state laws and the community’s governing documents.
To be effective, an association should have a strong board of directors whose members know the responsibilities that come with their volunteer positions, including the need to govern uniformly and fairly, and have a clear understanding of the association’s strengths and weaknesses, its history, and what needs to be accomplished. The board’s authority includes all of the powers and duties contained in state statutes, as long as these are consistent with the provisions of the governing documents.
This overview can be especially useful for community managers helping onboard newly elected, first-time board members.
The board of directors has a fiduciary obligation to the association and its residents. It requires board members to govern in the best interests of the community by acting in good faith, exercising due diligence, establishing trust, and working within the scope of their authority.
When a member accepts a position on the board, he or she should learn about the duties and responsibilities of their role. Board members cannot be excused from improper action on the grounds of ignorance or inexperience; if they do, they open up the association to potential liability due to negligence and mismanagement.
Operating a homeowners association carries many of the 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 neighbors while protecting and enhancing the community.
The president is in charge of the day-to-day administration of the association and serves as the board’s spokesperson in most matters related to association business. Typically, he or she will preside over all meetings of the board and residents. The president will execute contracts, orders, and other documents on the association’s behalf. When signing documents, the president should indicate the capacity in which he or she is signing to avoid any personal liability since, under most circumstances, their signature will bind the association under a doctrine of inherent powers.
The vice president is vested with all the powers required to perform the duties of the association president. The vice president does not automatically possess inherent powers to act in the capacity of the president and may only do so when he or she is absent or otherwise unable to act.
The secretary is responsible for keeping and maintaining a record of all meetings. In many cases, the secretary is responsible for finding an assistant secretary to record the meetings. As the person in charge of the minutes and other official association records, the secretary ensures that all board members and residents have access to these documents.
The treasurer oversees the funds, securities, and financial records of the association. If the association has a community manager or management company that handles the funds on a daily basis, the treasurer’s duties will include ensuring that the financial records and reports are properly kept and maintained. Unless otherwise stated by the governing documents, the treasurer is responsible for coordinating the development of the proposed annual budget and for preparing and providing the association’s annual financial report.
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Michael Madson, CMCA, is founder and president of MGM Association Management in Meridian, Idaho.