If you're stepping into a new role on your HOA board or just looking for a refresher, you've come to the right place. Being an HOA board member comes with big responsibilities, but it also provides a great opportunity to make a positive impact in your community.
In this article, we’re covering the core principles that every board member needs to know. From the election process to fulfilling fiduciary duties, this guide will help you confidently navigate your new role and contribute effectively to your community’s success.
Board Structure and Responsibilities
Election and Appointment: Board members are elected by homeowners, and once elected, specific roles (President, VP, Treasurer, Secretary) are assigned. While the board can delegate certain tasks, it cannot delegate its authority—the board remains the ultimate decision-maker, the "boss" of the HOA.
Key Responsibilities:
Decision-Making: Boards are responsible for making critical decisions affecting the community.
Budget Approval: Boards must approve and oversee the HOA budget.
Policy Setting: Boards establish policies that govern the community.
Loyalty & Fiduciary Duty: Board members must always act in the best interest of the community, free from personal bias.
Board Positions and Voting Power
Each board position, regardless of title, gets one vote, ensuring all members have equal decision-making power. Common roles include:
President: Leads meetings and represents the HOA.
Vice President: Assists the President and stands in their absence.
Treasurer: Manages financials.
Secretary: Keeps records and meeting minutes.
Understanding Fiduciary Duty
1. Confidentiality: Keep sensitive info private.
2. Loyalty: Prioritize the community’s interests over personal gains.
3. Competence: Act with the necessary knowledge and skills; seek professional advice when needed.
4. Enforcement of Governing Documents: Ensure community rules and regulations are upheld.
5. Impartiality: Stay unbiased in decision-making.
6. Financial Integrity: Keep HOA funds separate from personal accounts.
7. Duty to Annually Disclose: Regularly disclose any conflicts of interest and financial details.
The Business Judgment Rule
This rule protects board members when they:
Act in Good Faith: Make honest decisions with the community's best interest in mind.
Act Prudently: Take actions carefully and responsibly.
Seek Advice: Consult experts when needed.
Stay Impartial: Avoid personal gain in decision-making.
Conflict of Interest
Avoid conflicts of interest. If one arises, the board member must step away from related discussions and decisions to maintain trust and integrity within the community.
Handling Rogue Board Members
A rogue board member acts against the board's decisions or the community's interests. Here’s how to handle the situation:
1. Document the Misconduct: Keep records of actions.
2. Issue a Warning: Formally outline the issues.
3. Start Removal Process: Follow governing documents for removal.
4. Insurance Caveats: Be aware that Directors & Officers insurance might not cover willful misconduct.
Special Committees
Committees help streamline operations by handling specific tasks (e.g., landscaping, safety). They report directly to the board.
Types of Meetings
Homeowner Meetings:
Annual Meetings: For elections and community updates.
Special Meetings: Called for urgent issues.
Notices must be posted 10-30 days in advance, and agendas must be detailed and available for review.
Board Meetings:
Regular Meetings: Held consistently (e.g., monthly).
Special Meetings: For specific matters that arise.
Emergency Meetings: Called for urgent situations.
Notices should be posted at least 4 days in advance, with detailed agendas.
Meeting Formats:
Executive Sessions: Closed meetings for confidential matters.
Open Sessions: Transparent meetings open to homeowners.
Understanding and following these principles ensures effective HOA governance. By staying true to these guidelines, board members can serve their community with integrity, maintain trust, and uphold their duties.