The homeowners association (HOA) brings continuity and order to a community, preserving the architectural integrity and maintaining common elements. The association has responsibility for its common elements, management and operation of the association’s business affairs.
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.
But what are the board members’ specific responsibilities? It’s important to know this going into membership, as actions taken in service to the HOA could lead to D&O liability claims.
An association president is typically the powers comparable the chief executive officer of a corporation.
The duties include leading board meetings, executing contracts, orders, and other documents.
When signing documents, the president must specify the capacity they are signing in order to avoid any personal liability since the president’s signature normally binds the association under a doctrine of inherent powers.
The president is also in charge of the day-to-day administration of the association and has the authority to order specific actions in furtherance of the board’s policies. The position serves as spokesman for the board of directors in most matters relating to general association business.
A vice-president is required to perform the duties of the association president in the absence of the president. The vice president does not automatically possess inherent powers to act in the capacity of the chief executive officer, and may act for the president only when the president is actually absent or otherwise unable to act.
The vice-president may take on the additional duties as are defined by the board of directors. Often, the vice-president will chair one or more substantive committees like that of architectural review.
The secretary of the association has responsibility to keep and maintain a record of all meetings of the board and the membership and is the custodian for majority of official records. The secretary is no mandated to actually keep the minutes of the meetings, but will be responsible for obtaining someone who will do so as a recorder or assistant secretary.
As the steward for the minutes and other official records of the association, the secretary is responsible for ensuring access to those records by the members of the association and their authorized representatives.
The treasurer is the guardian of the funds, securities and financial records of the association.
If the association has a management company that handles the funds, the treasurer’s duties will include overseeing the appropriate people to insure that the financial records and reports are properly kept and maintained. Generally, the treasurer does not have the authority to bind the association or the board of directors in dealings with third parties.
Treasurers aren’t forced to perform daily record keeping functions if the responsibility is transferred to a management company, but the treasurer will ultimately be responsible for insuring that the financial records of the association have been properly maintained.
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 deliver functions based on policies established by the board of directors. All of the officers have a strong obligation to act with utmost good faith towards the association.
About Scott Litman Insurance Agency
At Scott Litman Insurance Agency, we are dedicated to protecting HOA’s like yours. We have a unique understanding of the industry and the common risk exposures that you face in your daily operations. In fact, we find that 90% of the policies we review are missing coverages that violate the Covenants, Conditions and Restrictions (CC&R), exposing the board, HOA and management to lawsuits– which is why our comprehensive policies are tailored to meet your specific needs at competitive prices. For more information about our products, contact our experts today at (855) 999-4505, or fill out our online form.