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Homeowner Associations » Professional Liability

Homeowner Associations Board Member Responsibility

Read both the CC&Rs and the Bylaws!
When an individual accepts a position on the board of directors, he or she is presumed to have read the CC&Rs and have a working knowledge of the duties and responsibilities of a board member. Unfortunately, this is usually not the case. Board members should be prepared to:

  • Enforce the Bylaws & CC&Rs
  • Establish sound fiscal policies and maintain accurate records
  • Develop a workable budget, keeping in mind the need, requirements and expectations of the community
  • Establish reserve funds
  • Act on budget items and determine assessment rates
  • Collect assessments
  • Establish, publicize, and enforce rules and penalties
  • Authorize legal action against owners who do not comply with the rules
  • Review local laws before passing rules or sending bylaws to membership for approval
  • Appoint committees and delegate authority to them
  • Select an attorney, an auditor, insurance agent and other professionals for the association


The Covenants, Conditions, & Restrictions(CC&Rs):

The CC&Rs describe the rights and obligations of the Homeowners Association and each owner. They are the governing documents that dictate how the Homeowners Association operates and what rules the occupants of the association must obey.

Some of the main topics in the CC&Rs include:

  • The boundaries of the common area and of each unit or lot
  • The owner usage restrictions, typically including occupancy limitations, pet regulations, and alteration controls
  • The maintenance responsibilities of the association and the individual owners
  • The allocation of association operating costs among the owners, and the mechanism for collecting owner payments
  • The dispute resolution procedure
  • The rights and protection of mortgage lenders.


Bylaws:

The Bylaws describe the mechanics of association decision-making and management.

Bylaws vary between associations, but usually include:

  • Numbers and selection methods for officers and directors
  • Notice, meeting and voting procedures for owner and board decisions
  • Association record keeping and reporting requirements. It is important to note that unlike CC&Rs, the Bylaws are not recorded with any government agency and are thus easier to change.


Remember the Three Duties!

Directors and officers owe three basic fiduciary duties to a nonprofit organization: Obedience, Loyalty, and Due Care.

  • The duty of obedience: The board must be obey state and federal law as well as the Association’s governing documents.
  • The duty of loyalty: The directors & officers must put the interests of the association over their own personal interests.
  • The duty of care: Association duties and decisions must be handled with such care as an ordinarily prudent person would use under similar circumstances.


Document Everything:
The board should appoint a secretary with a Type A personality. If an association is ever sued, the court will look to the minutes of board meetings to help gain valuable insight in making a decision.

 

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