The responsibilities of HOA board members are vast and overwhelming. While professional assistance can certainly help, board members must still understand what is expected of them. In doing so, they can make sure their duties are fulfilled and step in when professional services falter.
What are the Responsibilities of HOA Board Members?
Every homeowners association is led by a set of volunteers known as the HOA board. Condominiums are the same, with a condo board calling the shots. These board members must juggle a multitude of tasks necessary to keep the community running smoothly.
Here are the most crucial responsibilities of a homeowners association board member.
1. Budgeting and Collection
Associations rely on consistent funding to cover daily expenses and long-term needs. It is the board’s responsibility to anticipate costs, determine regular dues, and maintain a stable revenue stream. Board members must also stay within budget or, if there’s a shortfall, propose solutions to bridge the gap.
2. Reserve Planning
The reserve fund protects the association from financial ruin. It is essentially a savings account set aside for major repairs and replacements in the future. It covers both anticipated large expenditures and emergencies.
Board members are responsible for funding and managing the reserves. This includes following a reserve study for contributions, adhering to strict investment policies, and communicating summaries with owners.
3. Accounting and Financial Reporting
Sound financial management relies heavily on accurate accounting and financial reporting. One of the key HOA board member responsibilities is to keep detailed records of books and transactions and to generate financial statements. These statements include the balance sheet, the income statement, and the cash flow statement, among others.
In addition, boards are responsible for tax preparation. Even though HOAs are nonprofits, they still pay taxes and file tax returns. Of course, hiring an accountant can help with this task.
4. Risk Management
Community operations carry risks, and it’s the board’s duty to mitigate them to the best of its ability. This means securing appropriate insurance coverage for the association. It also involves taking steps to reduce risks, such as addressing safety hazards and enforcing policies.
5. Common Area Maintenance
Board members are responsible for the maintenance and upkeep of the common areas. Common areas include landscaping, sidewalks, and amenities. Condo board responsibilities can also extend to hallways, elevators, lobbies, and shared plumbing or electrical systems.
6. Rule Enforcement
When it comes to homeowners association board of directors responsibilities, rule enforcement is a key aspect. Boards must enforce the CC&Rs, bylaws, and rules. This includes handling violations, issuing notices, and applying penalties when necessary. Enforcement should be consistent to avoid disputes or claims of unfair treatment.
7. Vendor Coordination and Oversight
Boards must select contractors for services like landscaping, security, and maintenance. They must review contracts, monitor performance, and ensure the association gets the best value.
8. Resident Communication
Homeowners have a right to know what’s going on in their community. Boards must keep them informed about projects, issues, and finances. Not only does this help build trust, but it also ensures transparency and accountability.
9. Administrative Duties
Board members must conduct regular meetings, keep minutes, and maintain association records. Many states require open meetings (ORS 94.644 for HOAs and ORS 100.420 for condos) and give owners the right to access certain documents.
10. Legal Compliance
Associations must comply with state and local laws, and it’s the board’s job to ensure there aren’t any violations. When in doubt, it’s best to consult legal counsel or an HOA management company.
Fiduciary Duties of HOA Board Members
The fiduciary duties of HOA board members include the duty of care, the duty of loyalty, and the duty to act within the scope of their authority. Breaching these duties can be grounds for personal liability.
1. Duty of Care
The duty of care asserts that board members must make decisions with careful consideration. They must do their research, perform due diligence, and explore every option before deciding.
2. Duty of Loyalty
The duty of loyalty requires board members to never abuse their power. Also known as the duty of good faith, this duty requires boards to always act within the best interest of the community. Board members must not engage in self-dealing and must disclose potential conflicts of interest.
3. Duty to Act Within the Scope of Their Authority
Board members might be the leaders of the association, but they don’t wield unlimited power. They must always act within the confines of their authority as granted by the law and the governing documents.
Understanding HOA Board of Directors Positions
Small associations might have only three board members, consolidating the roles of two or more officers into a single role. Meanwhile, larger associations may benefit from more board members, ranging from five to seven. An odd number of directors is ideal, as this prevents tie decisions.
While board sizes can vary, it is generally best to choose a size that supports the four basic officer roles: president, vice president, secretary, and treasurer. Here are the HOA board responsibilities of each position.
President
The president is the chief of the whole board and community. They serve as the face of the organization. They preside over meetings, facilitate discussions, and carry out decisions. To be a good HOA president, one must have excellent leadership, management, delegation, and communication skills.
Vice President
The vice president takes over the president’s role when the latter isn’t around. They essentially support the president in everything they do, helping preside over meetings and move discussions and decisions forward. Because of this, they must be familiar with the president’s duties and possess the qualities of a good leader.
In some communities, the VP leads the committees. They must also perform all the tasks assigned to them by the president. In smaller associations with only three officer roles, the VP position is often the one left out.
Secretary
The secretary is responsible for maintaining association records. They deliver important notices, prepare agendas, and take meeting minutes. If an owner asks to examine certain documents, the secretary helps fulfill that request, provided the documents are not sensitive or confidential.
Treasurer
The treasurer manages the association’s finances. They collect dues, process invoices, and issue payments. With the help of the rest of the board, the treasurer leads in reserve management, financial reporting, and tax preparation. They are also responsible for budget planning and execution.
Non-officer Directors
Aside from officer roles, the board also includes non-officer members. These directors don’t have specific responsibilities. Instead, non-officer HOA board members’ duties include fulfilling assigned tasks, participating in discussions, and voting on decisions, along with the officers.
A Two-Way Street
Understanding the responsibilities of HOA board members is important to both leaders and residents. Board members must be aware of what’s expected of them. Meanwhile, residents must know these duties so they can hold board members accountable.
CWD Group offers management services to community associations in Oregon and Washington. Call us today at 503-488-2008 or contact us online to learn more!
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