Last year at this time, I blogged on recommended New Year Resolutions for HOA boards. In that posting, I focused on boards taking a serious look at the fiscal health of their communities and their plans to fund reserves. While that posting was based upon policy issues, I thought it would be worthwhile this year to address the individual development of directors with a focus upon excellence. With that in mind, here are some New Year Resolutions directors of homeowners’ associations (“HOAs”) may want to consider:
● Assess any personal agenda you may have for serving on your HOA board. It’s not unusual for a director to have a personal agenda when running for or being appointed to a position on the board of their HOA. After all, directors live in their HOAs and are impacted by the decisions made by their boards. However, every director should personally assess what their personal agendas are and to take steps to ensure those agendas do not interfere with their fiduciary duty to act in the best interests of their association. Being real about personal agendas is the key!
● Become familiar and comply with your HOA’s Conflicts of Interest Policy. Conflicts of interest can sometimes go hand in hand with personal agendas. As a result, it’s essential for every director to commit to becoming familiar with and complying with the Conflicts of Interest Policy. This Policy should spell out exactly what constitutes a conflict of interest, how you should disclose potential conflicts of interest and whether you are required to recuse yourself from discussing or voting on the issue which is the subject of the conflict.
● Recognize and deal with personal biases and emotions. From time to time, directors have strong personal biases or emotions against individuals in their associations, other directors, management or vendors. Sometimes these biases and emotions can impact their ability to act in the best interests of the associations they serve. It’s essential for every director to be honest with themselves about these biases and emotions. If you are unable to act appropriately because of them, you should seriously considering recusing yourself from discussing or voting on issues in which you cannot rationally act in the best interests of your community.
● Officers should understand and act within the scope of their authority. Generally speaking, officers of HOAs have limited authority to make independent decisions on behalf of the associations they serve. Chairs, Vice Chairs, Presidents, Vice Presidents, Secretaries and Treasurers should review the scope of their authority in the governing documents (typically found in the bylaws) and take care not to exceed their authority. Exceeding this authority could result in liability to the association and even to the individual officer. In addition, reviewing the authority designated to the board in your governing documents will be illuminating. While boards may delegate authority to act by written resolution to officers or other agents of the HOA, it is essential to understand that they cannot delegate to these individuals the responsibilities associated with this authority. In addition, officers should take care not to exceed any additional authority delegated to them.
● Make sure you are consistently sharing key information with all directors. Sometimes officers or directors do not share information they have obtained with all members of their board of directors. This is prohibited under the Colorado Common Interest Ownership act which provides at C.R.S. 38-33.3-303(1)(b) that: “Notwithstanding any provision of the declaration or bylaws to the contrary, all members of the executive board shall have available to them all information related to the responsibilities and operations of the association obtained by any other member of the executive board. This information shall include, but is not necessarily limited to, reports of detailed monthly expenditures, contracts to which the association is a party, and copies of communications, reports, and opinions to and from any member of the executive board or any managing agent, attorney, or accountant employed or engaged by the executive board to whom the executive board delegates responsibilities under this article.”
Taking personal stock of yourself and your role as a director or officer of your association will assist you in ensuring that you are acting in the best interests of your community. It will also make you a valued and respected resource for the other directors and residents of your community.
If there are any topics we can blog on that would assist you in better governing your communities, please feel free to pass those topics along to me at: firstname.lastname@example.org.
Happy New Year and thanks for making your associations great places to live!