By Elizabeth Caswell Dyer, Sopra Communities, Inc.
It’s tough to be a volunteer HOA board member in Colorado these days. Just last night, I was watching a PBS show called “The Trouble with HOAs”, and depending on who was being interviewed, the board was doing too much or caring too little. It’s no wonder that sometimes boards are accused of overstepping their duties and authorities, as most volunteers wish to be helpful and they may not know where to draw a line.
Here are some ways to avoid overstepping or abusing your power if you are a board member:
Reasonable Policies and Rules: It’s important to have a working knowledge of your governing documents, and to have any new policies, rules, or handbook reviewed by the association’s attorney to ensure they don’t conflict with your governing documents, statutes, or case law. It’s also prudent to take a step back when drafting anything new to ask whether the new policy or rule serves the entire community, builds community, or is geared towards solving one person or one group’s behavior that isn’t the majority? Also ask if the new rule or policy positively maintains or increases property values. Those are useful benchmarks to compare against when contemplating adding or removing anything in regards to the governing documents.
Selective Enforcement: The Golden Rule cannot be emphasized enough: treat others as you wish to be treated. There is a secondary Golden Rule for associations: treat everyone the same, or as close to the same as possible (as there will always be an exception to a rule). There is nothing inherently fair or equitable about living in an association. At the same time, consistent enforcement of reasonable rules and policies helps a community feel that their experience within the community is reasonable, fair, and equitable.
Conflicts of Interest: Associations in Colorado should have a Conflict of Interest Policy in effect. It is important for board members to be familiar with the document and to take it seriously. If there is even a whiff of a Board member making money via their inside knowledge of the Association, such as an upcoming foreclosure, can quickly destroy a community. Just don’t do it.
Misappropriation of Amenities: Unfortunately, there are not perks to the many hours of service required of board members. They should not have “first dibs” for reserving a clubhouse or pool, the best storage unit, or parking spot when it becomes available, etc. Actions such as these undermine the trust of the neighbors in the board, as these actions are self-serving over the fiduciary requirement to put the needs of the organization before one’s own interests.
Hold Regular Meetings with Posted Minutes: The healthiest communities share some basic traits: service on the board is not monopolized by a select few, and transparency. Having regularly scheduled board meetings with the minutes posted to a website or portal (with controlled access to it, of course), go a long way towards non-board members having organized access to the business of their community. This facilitates trust and for those who might be concerned about whether the board is conducting business appropriately, actions speak louder than words. A consistent practice of meetings and minutes is, to quote Martha Stewart, “a good thing”.
Emergency Management:Another way that Boards unknowingly overstep is when something goes wrong. At 2am, nobody wants to be the person telling their neighbor that dealing with the gushing water is not the association’s responsibility. A great way to proactively be ready for these unfortunate situations is to have the association’s attorney draft what is called a Maintenance & Insurance Chart. To create the document, the association’s attorney pours over the various sections of your governing documents, mostly the Declaration of Covenants, to define what the association must maintain, repair, or replace, and what is the responsibility of unit owners. This chart is beloved by insurance adjusters and it facilitates an easier claim for both owners and the associations. Not knowing where an association’s responsibility begins and ends can lead to board members getting into unit repairs and costing the association needlessly. It’s also important to keep in mind that whoever makes the call to a restoration company is effectively the one hiring them, so if you don’t have what is affectionately called an “M&I Chart”, be careful about making the calls yourself if you are a volunteer board member. It’s easier for the association, or the association’s insurance, to pick up all or part of a bill related to an emergency after the fact, versus an owner refusing to pay a bill because they did not technically hire the vendor.
At the end of the day, it’s important for board members to be familiar with their governing documents, and to have good expert partners to help guide you through the ever-changing world of leading the multimillion dollar corporation that is your Association. Your circle of care is key to your success, and this includes your management team, your insurance agent, your tax accountant, and your attorney.
Elizabeth Caswell Dyer is the CEO and founder of Sopra Communities, Inc., which is a local company dedicated to providing community management services in the Denver Central Business District and surrounding neighborhoods since 2010.
