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HOA Board of Directors Do’s and Don’ts

According to Building Owners and Managers Association (BOMA), 90% of new communities built in California in the last 10 years were incorporated into a Condominium or Planned Unit Development. The 1970 CAI Statistical Review indicates there were only 10,000 HOA communities in U.S. but by 2015 that number ballooned to 388,000. In the years to come, more Common Interest Development (CID) communities are expected to be built in California and nationwide.

CIDs attract homeowners for a number of reasons – recreational facilities, well-maintained common grounds, and architectural-standards enforcement are among the few reasons that help retain and increase the property values overtime. The Board of Directors, consisting of volunteer homeowners, is responsible for setting the policies and overseeing the operation and maintenance of the association. If you are planning to buy into or already live in a CID, you should consider becoming involved with your community.

There are a couple of things that potential and current Board members should keep in mind when serving on the association board. The Board, as a group, is empowered to make decisions on behalf of the association. With this power comes great responsibility, meaning that the Board has a duty to enforce the governing documents and community regulations. The Board is not only responsible for the oversight of the day-to-day operations, but also entrusted to interview and select the vendors to perform maintenance and repair of the common areas. The Board must review monthly financial statements, prepare the operating budget and update the reserve study on an annual basis. According to the Open Meeting Act, the Board may not take action outside of the properly announced meeting, and all business decisions must be disclosed to the association membership in the minutes. The Board members are strictly prohibited from conducting any business outside of the meeting or without quorum present, with an exception of when a health or safety related emergency occurs. In these cases, the situation should be addressed in a timely manner. Last, but not least, it is imperative for Board members to refrain from discussing any business matters between the meetings, and always keep information confidential.

All new Board members are encouraged to attend an orientation-training course, which may be offered by the association’s legal counsel, or professional organizations such as California Association of Community Managers (CACM) or CAI. Most importantly, Board members should exercise good judgment and prudency when voting on business decisions. Individual Board members should recuse themselves when the matter of personal conflict, actual or perceived, is in question. Following the above guidelines will protect the volunteer homeowners from personal liability and guarantee the protection of the D&O insurance coverage at all times.

Each homeowner should volunteer to serve on the association Board at least for one term, in order to gain the insight and understanding of the inner workings of the community. Serving on the Board of Directors can be a challenging task, and may require a considerable time commitment, but it also provides an opportunity for neighbors to get to know each other, and work together to make their community a better place to live!

 

-by Vlady Dmytrenko

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