The role of HOA board members is important, as they make decisions that directly impact the community. Unfortunately, not all homeowners understand board members’ roles, responsibilities, and positions.
Who are the HOA Board Members?
HOA board members are volunteer homeowners elected by fellow residents. They oversee the association’s operations and management.
Board members, like everyone else, have a duty to abide by the association’s governing documents. They must run the community according to the CC&Rs and bylaws. When making decisions, they must align with state laws, the governing documents, and their fiduciary duties.
What are HOA Board Member Responsibilities?
In an HOA, board members have a wide range of responsibilities. These include but are not necessarily limited to the following:
- Overseeing financial management
- Preparing and approving annual budgets
- Collecting dues
- Minimizing delinquencies
- Managing finances
- Funding and maintaining reserves
- Preparing financial statements
- Handling tax filings
- Purchasing and maintaining insurance policies
- Maintaining common areas and amenities
- Coordinating cleaning, maintenance, and repairs
- Conducting inspections
- Planning and executing capital improvement projects
- Enforcing community rules
- Inspecting the community for violations
- Sending violation notices
- Facilitating disciplinary hearings
- Issuing fines and other penalties
- Hiring and managing vendors
- Selecting and screening vendors
- Communicating with vendors
- Negotiating and executing contracts
- Ensuring the completion of deliverables
- Monitoring performance
- Communicating with homeowners
- Holding open board meetings that homeowners can attend
- Creating and distributing newsletters
- Disseminating announcements, updates, and other information
- Sending notices
- Ensuring legal compliance
- Adhering to federal, state, and local laws
- Complying with the governing documents
- Filing documents with the county recorder and the Secretary of State
Understanding HOA Board of Directors Fiduciary Responsibility
Board members have three fiduciary duties: the duty of care, the duty of loyalty, and the duty to act within the scope of their authority.
Duty of Care
Board members must make informed decisions by researching relevant rules and situations before taking action. This includes reviewing the association’s CC&Rs and understanding the specifics of any issue before voting or enforcing rules.
Board members must make prudent and reasonable decisions. They must use sound judgment at all times, not letting their personal preferences cloud their decisions.
Duty of Loyalty
Board members must act fairly and in good faith. This means prioritizing the best interests of the community over personal gain. They should avoid conflicts of interest. If a conflict of interest does exist, they must make it known and recuse themselves from the decision.
Additionally, HOA board members must maintain confidentiality regarding sensitive homeowner information. They must keep this information private.
Duty to Act Within the Scope of Authority
Board members must operate within the legal authority granted by state laws and governing documents. They are responsible for carrying out their required duties, but they can’t exceed their authority. This means refraining from making decisions that the HOA’s governing documents don’t allow.
HOA Board of Directors vs Officers
Within an HOA board, there are board members and officers. Officers have a designated role and title, while board directors don’t.
Typically, the homeowners vote to elect HOA board members. After this election, the HOA board appoints or votes on the officer roles. While the exact positions can vary from one community to another, the officers usually include the president, the vice president, the secretary, and the treasurer.
What are the HOA Board of Directors Positions?
Depending on state laws and the governing documents, an HOA may have differing board positions. That said, they usually include the president, the vice president, the secretary, and the treasurer. Let’s break them down below.
President
The president serves as the leader of the HOA board. Their duties include:
- Presiding over board meetings;
- Setting agendas;
- Serving as the main spokesperson for the HOA;
- Overseeing the decision-making process;
- Ensuring the enforcement of policies fairly and consistently; and,
- Working with HOA managers, vendors, and attorneys.
The president of an HOA must possess good leadership and delegation skills. They must be a master communicator and can work well with others.
Vice President
The vice president steps in when the president is unable to fulfill their role. For this reason, the VP must understand and have the ability to execute the duties of the president.
The duties of the VP include:
- Assisting the president and assuming their duties when necessary;
- Helping oversee committees and projects;
- Ensuring smooth operations; and,
- Performing any duties assigned by the president.
Since the VP acts as a substitute for the president, they must possess the same qualities. Additionally, the vice president must know how to adapt to changing situations and keep a level head when given responsibilities.
Secretary
The secretary is responsible for all documentation. Their duties include:
- Maintaining all official records and documents, including meeting minutes, correspondence, and governing documents;
- Ensuring homeowners receive notices for meetings and elections;
- Managing homeowner communications;
- Overseeing document access and inspections;
- Filing legal documents; and,
- Serving as a co-signatory on legal documents.
The secretary of an HOA must be detail-oriented and organized. They must also know how to work with the rest of the board.
Treasurer
The treasurer is in charge of the association’s finances. Their duties include:
- Managing the finances of the HOA;
- Collecting dues and assessments;
- Collecting fines for violations;
- Overseeing and maintaining the reserve fund;
- Preparing financial reports;
- Planning the annual budget with the HOA board;
- Handling taxes and tax filings; and,
- Working with accountants, auditors, and tax professionals.
The treasurer of an HOA must also be attentive to detail, meticulous, organized, and good with money. A background in accounting and financial management is a bonus.
What are the Requirements for HOA Board Members?
Each HOA has its own criteria and requirements for board eligibility. Homeowners must review their own governing documents, specifically the bylaws, for this information.
In general, HOAs require board members to be homeowners within the community. Some associations allow non-owners, but this isn’t very common. Some associations allow residents to serve on the HOA board even though their names don’t appear on the title.
Associations also commonly require HOA board members to be in good standing. This means that they have no unpaid dues or ongoing major violations. Some even stipulate that board members can’t have pending litigation against the HOA.
Finally, HOAs also require board members to have no conflicts of interest. This means they shouldn’t stand to gain anything, monetary or otherwise, from HOA contracts. If a board member does have a conflict of interest, they must disclose it and recuse themselves from any related decision.
Of course, state laws may also come into play. California, for instance, has strict laws on what HOAs can prohibit in terms of board qualifications. In Texas, the laws aren’t as strict or comprehensive.
Section 209.00593 of the Texas Property Code outlines the term limits for HOA board members in some cases. Additionally, Section 209.00591 prevents certain individuals from serving on the board.
Do HOA Board Members Get Paid?
Whether or not board members can receive compensation for their service depends on state laws and the governing documents. More often than not, HOA board members don’t get paid. Some states even have laws that prohibit compensation.
There are certain legal risks that come with paying HOA board members. It might interfere with their nonprofit corporation status and create issues with employment law. Additionally, a paid board member might be less willing to let go of their position and elections could become more difficult.
Furthermore, a paid position might attract homeowners for the wrong reasons. Residents might run for a position on the board for financial gain rather than out of a desire to better the community.
As for financial reasons, homeowners would need to pay more in regular dues to cover the cost of paying HOA board members. There is also a greater temptation for long-term board members to misuse the association’s funds.
Code of Ethics for HOA Board Members
A code of ethics holds board members to specific ethical standards. It keeps board members accountable. Also known as an HOA board of directors code of conduct, this code should include:
- Acting within the best interests of the community;
- Treating all homeowners in a fair and consistent manner;
- Practicing transparency with financial management and decision-making;
- Maintaining confidentiality regarding sensitive information; and,
- Following laws and governing documents when making decisions.
On the Side of Homeowners
Homeowners must understand the responsibilities of HOA board members. In doing so, they can keep board members in check and prepare themselves for potential service.
Preferred Association Management Company offers exceptional HOA management services to communities in Central Texas. Call us today at 512-918-8100 or contact us online to learn more!
