By: Barbara G. Hager
We at Bender, Anderson and Barba P.C. hope you all have a Happy Thanksgiving. I am thinking today especially about all the board members of our client associations, who work very hard! Thank you for all you do in service to your associations! We know it is a lot more than just going to a meeting once a month, and it is certainly not just pushing papers.
There is a lot expected of board members in performing their duties. Directors and officers have serious legal duties: the duty of care, and the duty of loyalty.
The duty of care means, in all that the Board does, it must work in the best interests of the association, and, just as it says, make decisions carefully. No rushed decisions and no decisions “pushed through” by one particular Board member. All directors should discuss the decision, review all the related documents, contracts, spread sheets etc. It should be noted specifically in the minutes that there was discussion and review of related documents prior to the decision. With complex matters, such as major construction projects and loans, professionals should be consulted, and their reports reviewed closely.
Board members also have a duty of loyalty. That means that a director’s decision is always based on what is good for the association as a whole, not on what is good for a particular unit owner the director is friends with, or for a particular director’s personal financial interests. It also means no board member may contract with or do work for the association unless it is in the best interests of the association, and that Board member recuses him or herself from the vote. The board should be particularly resistant to granting contracts to board members or companies with which board members are associated. There are complex legal requirements regarding conflicts of interest in the event that a board member is hired to do work; contact us before moving forward.
The board of directors makes decisions and “speaks” with one voice. No board members should be out in the community talking with unit owners about decisions the Board has or is going to make. Only the board as a whole communicates those decisions. Additionally, board members should be particularly careful not to promise a unit owner that some repair matter “is the association’s responsibility.” The matter of responsibility must be checked with the Declaration, Maintenance Standards and Maintenance Matrix (if you have one). Not every problem the unit owners have is the association’s responsibility! Do not let yourself feel pressured to agree to something simply because a unit owner pushes you or screams at you about it. Also, do not let pressure from unit owners cause your board meetings to become contentious; always listen and respect one another as the Board reviews and decides each matter.
Keeping these principles in mind, you will all do well, as careful and loyal board members, which in turn will help your communities flourish.
Again, we thank you and wish you well in your service to your common interest community.