Board of Directors in a Homeowners Association
Helpful tips for the board
On this page, we have gathered the essential information about being a board in a homeowners association - about the responsibilities that come with it, how to ensure good cooperation, the tasks you need to be able to solve, and much, much more.
Below, you can read about the composition of the board, task allocation, and the responsibility that comes with being a board member.
A significant responsibility
It is essential for both board members and the rest of the homeowners association to remember that being on the board is voluntary. Members dedicate their free time to solve the tasks within the board. Despite this, being on the board comes with significant responsibility - the association's "life," finances, ongoing property management, and maintenance are all aspects for which the board is accountable. We always recommend that boards have director's and officer's liability insurance.
Board composition and task allocation
We often see that boards consisting of members who work and function well together are the best boards. Each member brings something different to the board, and when working together to find common solutions, it typically functions much better than when results and board work depend on individuals. The most crucial aspect when forming a board is, therefore, that there is mutual respect and a shared commitment to the association and community. Once the board is established, it is essential to identify the tasks the board needs to address in the upcoming year and allocate these tasks in a way that leverages each member's skills and prevents any individual member from being burdened excessively with board responsibilities. Remember that board work is voluntary.
Collaborate with other partners
Few boards can handle all tasks on their own. Therefore, we recommend that you collaborate with partners who can ease your workload. This may include an administrator, auditor, bank, operational and construction consultants, etc. Only through such collaborations can your board function optimally.
Business rules and job descriptions
We recommend that you document your considerations about tasks, agreements about consultation, and collaboration as an addendum to the business rules. By setting concrete frameworks for task resolution and agreements on collaboration and consultation, it can be beneficial to document them as job descriptions for individual board members and/or as a working basis for any workgroups.
Some of the most crucial aspects of our work with you are the good collaboration and close dialogue. Only in this way can we be a valuable collaborative partner, complementing and assisting you in the best possible manner.
To succeed in creating the perfect collaboration between your board, us, and your other partners, it is essential that you involve us in your considerations when defining the tasks to be accomplished in the upcoming year(s). As tasks are identified and distributed, you may also benefit from asking yourselves:
Where and how can the administrator complement the board, and what coordination is necessary to make this work?
How should the property's operations be organized, and what kind of operational advice is required to make the operations function as desired?
How is the association's financial structure set up, what tasks does it entail for the board, and what collaboration is needed with the bank and auditor in this regard?
Which renovation and development projects concerning the association's property should the board prepare and/or execute, and what is the board's need for advice and collaboration with building consultants and the administrator?
What other tasks has the board identified, and what kind of advice and collaboration does the board require from the administrator, lawyer, auditor, bank, operational advisor, building consultant, and/or other consultants?
The framework for the board's work and decisions is fluid. In other words, there is no definitive list of what the board's tasks and competencies actually entail. Popularly, it is said that the board should handle all tasks and decisions related to owning and operating a property owned by a homeowners association. This means that the board can make all the necessary decisions to make the homeowners association function. In this section, we attempt to specify the typical tasks and duties of a board and, most importantly, the decision-making authority that members must possess.
Briefly on the board's discretion
Specifically, the board must initiate and make decisions necessary to implement the decisions of the general assembly. The decisions must naturally stay within the association's budget. The board can also make decisions that arise from the general assembly's decision to carry out a project, seek advice, or similar. Again, the budget will limit what the board can decide. A decision at a general assembly should always include at least three elements:
A description of what the general assembly decides. What should happen, and which decisions need to be implemented?
How much will the decision/project/initiative cost?
Where will the funds come from? (Should they come from the association's equity, should loans be taken, or should the owners contribute more?)
Decisions that do not include these three elements may be rejected by a chairman, as the general assembly has not been provided with sufficient information about the scope of the decision.
As previously described, there is no definitive list of what tasks a board should engage in. To ensure that the board addresses necessary tasks, it is important for the board to identify recurring and particularly important tasks throughout the year and to organize how these tasks will be addressed.
Rules of procedure for the board
The board can advantageously formulate rules of procedure that define the board's tasks and distribute them among the board members. Typical tasks for a board may include:
Dialogue and coordination with the administrator.
Dialogue and problem-solving with the owners.
Dialogue with the association's auditor, including holding an annual accounting and budget meeting.
Monitoring the association's potential joint loans.
Ongoing control and management of the association's finances, including budget follow-up and supervision of payments and loans, etc.
Dialogue, control, and management of any caretaker/groundskeeper.
Management of and agreements regarding events and meetings, e.g., general assemblies, meetings with the administrator and others, weekend work, and social gatherings.
Control and management of projects, especially maintenance and renovation of the association's property - in collaboration with the administrator and advisors.
Handling ad hoc tasks.
