Congratulations and Condolences...

You're on the Board!

By Arlene-Frances Ring & Kenneth M. Clayton, ESQ.

Congratulations! You've just been elected to the board of directors. First, there is the feeling of elation over what you have just accomplished. (Be honest now, everyone privately has a rush!) Then the realization sinks in and you ask, "Oh my goodness, what have I gotten myself into?" The answer: more than you have bargained for!

Unfortunately, too many people run the board to "beef up" their resumes and don't take the job seriously. It has a commitment that should not be taken lightly. There are serious consequences for your actions as well as your inactions. Another all too common scenario is that many owners seek a position on the board of directors because they have a "secret" agenda. The argument has been made that serving as a director is a full time job, however, some say serving as a director is an easy job requiring very little time and effort.

Know the director do's and don'ts!   Whatever line of thought you may subscribe to, you still have a duty to run the association as a corporation. Even though the association is a not-for-profit corporation, it should still be run as a business. Try visualizing yourself as a corporate executive (which is what you are) and how a board member of a for-profit corporation such as IBM, EXXON, or MICROSOFT would behave. As a director of your association, you're a leader. You are expected to take charge and carry out your duties in a professional manner.

Many directors feel that since they are not getting paid for the job, they can "take it easy." Keep in mind, however, that the manner in which you execute your duties will set the tone for the association. Often directors choose not to enforce their documents because they don't want to make "waves." Other directors fear repercussions if they actively enforce the association's governing documents. This is not a popularity contest. It is highly unlikely that you will win the "most popular person" award. As a director, it is your obligation to make tough decisions. No one said (or at least no one should have said) this job was going to be easy. If they did, they lied!

I have yet to meet a director who did not have to make at least one difficult decision during their term, if any director truly felt that they did not have to make at least one difficult decision, then one should question if this director was truly serving the community or merely being a figurehead. Unfortunately, it is becoming an ever-increasing trend for owners to sue the board of directors for failing to fulfill their fiduciary duty to the association. This same shortcoming is being given as a reason for owners refusing to pay their assessments. Today's owners want to see what their board of directors is doing. They are no longer content to just pay their dues and accept with blind faith that their elected leaders are acting in their best interests.

While your association is a corporation and must abide by the state statutes governing corporations, never forget that this is your neighborhood. You have to live there. Unlike an executive with IBM, when you retreat to your castle in the evening, your "shareholders" are right next door and you have to live with them. Don't become on of the "dreaded Gestapo." Be reasonable and fair in your decisions and thought process.

Don't make decisions by yourself. Keep in mind that you are only one of several directors. Each decision should be a board decision, not your personal decision. When going through the process of making a decision, remember to act in the best interests of the association. You must try to "put on blinders" when making decisions that effect the association.

Do not act in your own personal best interest, or at least not in your own personal self interest. If there is a vote to be taken or matters to be discussed in which you have a personal interest, remove yourself from the room while the remainder of the board is discussing the issue (called "recusing" yourself) and abstain from the formal vote after stating your reason for abstention. There is a misconception that if you are the president of the association, you must abstain from voting at board meetings unless there is a tie. You should always vote on all issues unless you have a personal stake in the issue at hand. Examples of when you should not vote would be if the board was voting on your request to change the color of your home or if a relative of yours had submitted a proposal to provide services to the association.

Learn to recognize other directors' hidden agendas. Knowing this information better assists you in dealing with such board members and finding ways to better channel their efforts. All directors have pet projects they would like to see brought to a successful end, but they should be projects that are in the best interests of the association as a whole, not just a chosen few. You might want to have a director assigned to each of the committees within the association, although not necessarily the chairperson of the committee.

Educate yourself!   The most important step you can take in becoming a successful director is to become educated. Familiarize yourself with your association's documents (declaration of covenants and restrictions or declaration of condominium, articles or incorporation, bylaws, and rules and regulations). In particular, learn the provisions regarding director duties, meetings, assessments and covenant enforcement. You may want to place the documents in a three-ring binder and then use divider pages to mark special sections. Highlight the frequently used sections, such as annual meeting and board meeting requirement, document amendment provisions, collection of delinquent assessments provisions and use restrictions. While it is not necessary to memorize the association's documents, you should become familiar enough with them so that you are comfortable.

Make sure your association has provided you with a recorded set of documents and all of the recorded amendments to these documents. If you are looking at an unrecorded set, you may not be working with the legally binding documents of the association. How do you know if the documents are recorded? There will be stamped information on each page showing that it was recorded in the OR Book _ , Page _ in the Public Records of your county. Each page of your documents should have this stamp with successive page numbering. The exception will relate in the case of older homeowner association rules and regulations, which often are not recorded.

Remember that you were elected to enforce the association's documents. This doesn't mean that you enforce only what you think should be enforceable. A director can't pick and choose what will be enforced. This opens up the association, and possibly the director, to all sorts of liability. Eventually, you could find yourself in a lawsuit where you are on the losing end because you "selectively" chose what document provisions you wanted to enforce.

Keep abreast of industry laws and trends!   Not only do you need to become familiar with your association's documents, you need to keep abreast of the laws and trends affecting community associations. The legislature makes changes to chapters pertaining to community associations. New software for keeping the association's books and for creating eye-catching newsletters are coming out constantly. How do you find out this information about the ever-changing laws and community association trends? The following are some suggestions on how to keep abreast of community association industry happenings:

• Certain law firms and other interested trade organizations offer free seminars on association law. Some of these seminars also include practical, day-to-day advice for directors. Not only should you try to attend these educational events, but you should encourage your other board members and owners to attend. Distribute flyers to the community inviting the owners to attend or post the information where you display your meeting notices. This is a great way to get some free advice and a chance to talk to directors in other associations about their problems and what successful (or unsuccessful) solutions they implemented.

• Set aside a portion of your budget for industry periodicals.

• Become involved with organizations that cater to community associations such as the Community Associations Institute (CAI) and the Institute of Real estate Managers (IREM). The two aforementioned organizations are education oriented and offer informative monthly meetings. In addition, CAI offers outstanding publications such as their GAP reports, which cover topics like collections, contracts, bid specifications and even information on how to be an officer in your association. Reimburse board members for their expenses when attending educational functions. Simply have them present you with a receipt for their attendance fee. Don't forget to budget for these items.

• Hire professionals who practice primarily or specialize in the community association industry. For example, there is a difference between hiring a real estate attorney and a community association law attorney. This thought also applies to insurance agents and accountants. If your association does not employ professionals such as attorneys, accountants and insurance agents, begin a search for these professionals. Even if you do not have an immediate need, hire them no w before you have a problem. Some of theses professionals have complimentary services that can benefit your association in the interim before the need arises to utilize them. In addition, they will have secured the necessary documents for the occasion when you will have a need.

Get to know the owners!   One of the most important things you can do as a director is getting to know the owners. Upon being elected to the board, consider dividing up the owners' telephone numbers and having each director call the owners individually to introduce himself or herself. This could be one of the most important things you do as a director. Remember, the time will come when you will need your community's support and this is one way to start building interest. No one wants to be a "number." By making the first contact when there is not a problem, a foundation of trust is laid. It is the first step toward establishing a positive relationship with the community and earning their support.

If an owner provides you or the board with their proxy for a meeting, consider writing a note afterwards thanking the owner for their vote of confidence in you and expressing your appreciation for their assistance in making their voice heard at a meeting even though they could not attend. Little things like thank-you notes will go a long way in forming better relations with your owners.

The rewards of serving on the board can be tremendous. There can be great satisfaction in knowing you've taken an active role in shaping your community. By serving on the board, you are afforded the opportunity to meet your entire community and to make new friends. Conversely, you might make new enemies as well, but the rewards will outweigh the negatives. So, our condolences for the trials and tribulations you will encounter and our heartiest congratulations for undertaking a challenging endeavor. Welcome to the world of community associations!

* Arlene-Frances Ring is director of public relations and client services for Clayton and McCulloh in Maitland, Florida and a former board member of a community association.

* Kenneth M. Clayton, Esq. is a partner at Clayton & McCulloh.

 

 

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