Tuesday, July 26, 2016
Five Key Points for New Association Board Members
Below are five key points that will prove invaluable for both potential board members and for those already serving their term.
Becoming elected or appointed to serve on a Homeowner’s Association or Condominium Association’s board of directors can be an exciting, rewarding and enriching experience. It can be an opportunity to give back and contribute to the success and future of a community. However you should also realize the responsibilities that come with the posting, especially with some of the larger associations where you will be at the helm of a potentially multi-million dollar company. You could be accountable to several hundred homeowners, be responsible for large budgets, and you may oversee the complexities that come along with high-rise and/or multi-structure complexes.
1. Know What You Don’t Know.
You are not required to have all the necessary information memorized. The Florida Statutes are constantly being amended and your own association rules and regulations will be ever evolving. While you are not expected to know everything, you are expected to engage the right people to advise you. The most effective way to stay current and meticulously proficient is to engage the appropriate experts – a specialized attorney, a qualified CPA, an efficient manager, and a reputable insurance agent will ensure you have access to the information and advice you need.
2. Be Consistent and Abide by the Documents.
A director on an association board must be consistent and enforce the rules/restrictions as written. Admittedly, this is tough when the restrictions for the community seem obsolete or misguided. Keep in mind though that as a director, the restrictions are provided TO you to enforce. If you feel any part of the restrictions no longer best serves the community, do not just ignore the issue or pick and choose what you’re going to follow and ignore. If the association does not want to follow a rule or restriction, then meet with your attorney to figure out the process and language to change it. Otherwise, consistently follow the rules as written.
3. Be Transparent.
An obligation of being a director is to promote transparency within the association. The owners have a right to information and you’re making decisions affecting their finances and property rights. Therefore, they have a right to know what’s going on with the association. Ways to promote transparency include ensuring the owners are receiving the correct notices, having regularly scheduled board meetings, and making official records and financial statements available. If your association does not have a user friendly, updated website then this is great way to improve association/owner communication.
4. Have a Plan for the Future.
There are two reasons to have future plans for the Association: 1) it defines what you want to accomplish, and 2) it makes for better meetings. First, you likely ran for the board to have an impact on the community. However, how can you have an impact if you don’t have a plan for what that impact is going to be? Anytime you can define discrete goals you’re more likely to accomplish them. Second, I have found that associations that don’t have a plan for the future tend to focus on the past. This means discussions over past events dominate the meetings. If you give your owners an outlook for the future and define the priorities of the community over the next 1, 3, & 5 years, you will be pleasantly surprised how much support you get from the owners, plus how much more efficiently your meetings will run.
5. Understand the Financials.
Association financials can be extremely complex. Although you don’t need to be able to translate every single document, we do recommend you form a basic understanding of the balance sheet, the income statement, the annual budget and the accounts receivable. You should also have a clear picture of the reserves – are you adequately funded? If you can understand these documents you’ll get a baseline picture of the financial health of your community. Then, engage a specialized community association accountant or CPA who can answer any questions that you might have.
If you do those 5 things you will be a key asset to your association, improve your community, and also likely enjoy your experience as a director.
For more information on this issue or other association questions contact bburg@HSMcLaw.com.