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Residential Real Estate
Nov 16, 2020

Three Primary Responsibilities Of Your HOA’s Board Of Directors

Sponsored Content provided by Mike Stonestreet - Co-Owner/President, CAMS (Community Association Management Services)

If you own property in a community association, you've probably had some form of contact with your community's board of directors. And, while you may have a general grasp of the role the board plays, it is important to understand the main functions of a community association's board of directors (and committees). Boards and committees play an essential role in not only the successful management and operation of your community as a whole, but also in the preservation of your property values.
 
Three Main Roles of the Board of Directors

Though a community association's board serves several functions, there are three key areas of the community for which they are ultimately responsible. A well-formed board will be able to put personal preferences aside, understand their individual roles as board members and as fiduciaries, act with good faith and make decisions based on what is best for the entire community.
 
1. Maintain the Common Areas/Elements of the Community

While the association's membership is largely responsible for maintaining their individual properties, the association's board of directors holds the responsibility for maintaining the common areas and, in some cases, the limited common elements of the community. Common area maintenance can include things like maintaining private streets, entrance signs and contracting landscapers to maintain the grass in the common areas throughout the community. This also includes the maintenance and upkeep of amenities like pools, clubhouses, gyms and playgrounds. Board members must always be careful to closely consider their governing documents to be sure of their scope of responsibility as it differs from association to association and may vary depending on the type of association you're in.
 
So, board members are supposed to get out there on the community's private streets and fill potholes themselves, right? Well, not exactly. The board is responsible for finding reputable service providers who can perform whatever type of work may be needed at a fair price. They're also responsible for ensuring that work needed throughout the community is completed at appropriate intervals and for planning ahead for big capital repairs that will arise throughout the years. When seeking out high-quality service providers and allocating funds for future repairs, board members will often work closely with community managers and employ the use of reserve studies to help them prepare their communities for the years ahead.

2. Ensure Compliance with Governing Documents

Another major role of the board of directors is ensuring that association members remain compliant with the community's governing documents. This may be one of the least popular functions of the board - let's face it, no one likes to be told what to do. Compliance enforcement should not be considered punitive in nature, but rather aimed at promoting uniform, esthetically pleasing communities which in turn preserves property values for all members. Board members must be intimately familiar with not only their community's governing documents, but also any local, state and federal laws that affect their communities. These documents should also be readily available for the membership as this creates an atmosphere of transparency and allows members to look at documents themselves whenever they may need.
 
It is important to be sure each member of a community association has received a copy of the governing documents and to give a copy to new residents when they move in. Afterall, it's pretty difficult to follow a rule if you're unaware of it, right? But, even if the clubhouse has been wallpapered with copies of the governing documents, there will still be those who choose not to abide by the rules. In these instances, boards must have compliance policies and processes in place that are applied consistently. Though these policies and processes will vary by association, there is typically a process of giving residents notice and a chance to correct any compliance issues before heading down the road of hearings and fines.
 
Overall, it is best for association members to understand that the vast majority of boards aren't seeking to be punitive when sending compliance notices (or having them sent by the management company on their behalf), but rather sticking to the set of rules that was adopted when the community was formed. For those purchasing property in community associations, it is highly advisable to read over the governing documents before finalizing your purchase to ensure there is nothing in the documents that may dissuade you from moving into that community.

3. Conduct the Financial Business of the Association

Managing the finances of the community association they represent is another significant function of the board of directors. Financial management can cover a multitude of tasks such as collecting assessments, paying the association's expenses, drafting and/or approving annual budgets, maintaining reserve accounts, record keeping, establishing financial policies and handling all association financial accounts. Sounds like a lot, right? The financial management of the association is vital and sometimes an arduous task for board members to undertake but is arguably one of the most important ones as it ensures that the association has the funds it needs to pay its bills and maintain the common areas as well as be prepared for the future. Those associations who employ professional community management companies will often delegate these types of tasks to the community management company, but at the end of the day, the board is still ultimately responsible for the financials of their community association.
 
The Role of Committees

If you live in a larger community, your community probably has some committees that serve specialized functions within the association. Committees are typically comprised of non-board members and while they make recommendations to the board, the authority to make final decisions still lies with the board of directors. Committees may have a board member liaison as well as a chairperson who will disburse written reports to the board based on whatever that particular committee is charged with handling.
 
There are generally two types of committees - standing committees and ad hoc committees. Standing committees are those that are responsible for ongoing tasks - for instance, the ARC, a social committee, landscaping committee, things like that. Ad hoc committees are those that are formed for a specific purpose and will last for only the duration of that purpose - for example, exploring a specific community issue or nominating board members.
 
The use of committees can save a lot of time for board members as it allows them to focus on the business aspects of running the association while committee members focus on the specific issue they've been assigned. Committees are also a great way to increase resident participation, open the association up to varying opinions and allow for a more diverse representation of the membership. It is important that committees have charters that clearly define their purpose and authority.
 
As you can see, being a board member is no easy task. There is a lot involved and, if you're going to volunteer for such a position, you must be prepared to do the work. But, if you're able to put the welfare of the community first, exercise good judgement, remain calm in heated situations and be committed to the community as a whole, volunteering for a board or committee position may be the right choice for you.
 
If you'd like to learn more about becoming a board member, educational opportunities and resources for current board members, or how the services of a community association management company could benefit your association, please reach out to the experts at CAMS today.
 
 
Mike Stonestreet, CMCA, PCAM, AMS, is Founder/Co-Owner of CAMS (Community Association Management Services). CAMS began in 1991 with Stonestreet and a few employees in a small office in Wilmington but has since grown to over 300 employees serving eight regions across North and South Carolina.

His current role at CAMS focuses on mergers and acquisitions, culture alignment and high-level business relationships. Stonestreet is an active member of the NC Chapter of the Community Associations Institute (CAI) and has spent time on their board of directors, serving as the chapter President in 2019.

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