Your home is more than just a place to live, it’s an investment. In fact, Community Associations are centered around the idea of helping maintain and improve property values in order to protect the investment of every member, or homeowner, in the community. Just like any investment, careful management and strategic planning are essential for long-term growth and prosperity. This is where your condo or HOA Board of Directors comes into play.
Your HOA Board of Directors serves a very important role in your community. Similar to the board of directions for a corporate entity or a city council; the board is a representative group of members who make decisions for and safeguard the future of your community.
Whether you’re a resident looking to understand your community’s board, a homeowner considering running for the board, or a current board member seeking clarity on your role and responsibilities, this guide is for you.
The Role of the HOA Board
Why Does an HOA or Condo Need a Board of Directors?
The Board of Directors is the legal body representing the interests of community’s members - the homeowners.
Your community association is, at it's heart, a business. In fact, most Condos and HOAs are incorporated not-for-profit entities. As a corporation, the association has a number of legal obligations, including managing the community's finances and making sure that it complies with all local laws.
To do this, your association needs a board of directors to make decisions on behalf of the community. The board provides leadership and guidance, while representing the interests of homeowners in the community.
What rules or guidelines restrict the HOA Board?
The community is controlled by a series of documents that were created when the corporation was initially formed. These documents are collectively called the Governing Documents. The governing documents define every aspect of how the corporation should be run, from how many members should be on the board, to what color the doors should be painted. The board’s responsibility is to follow and enforce the governing documents, and to add to or amend them as the needs of the needs of the community change over time.
What are the legal duties of an HOA Board Member in Utah?
The state of Utah specifies three legal responsibilities that every board member must adhere to: the duty of good faith, the duty of care, and the duty of loyalty. Collectively, these duties are referred to as the board member’s Fiduciary Duty.
(2) A director or an officer described in Subsection (1) shall discharge the director or officer's duties:
(a) in good faith;
(b) with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and
(c) in a manner the director or officer reasonably believes to be in the best interests of the nonprofit corporation.
The Makeup of the HOA Board
Who Makes Up the HOA Board of Directors?
The HOA Board of Directors is the legal body that governs the HOA corporation, made up of a representative body of the association’s members. In an association that is still under development, the developer, as a majority owner in the association, appoints its own representatives to the board. However, when the number of homes sold in the community reaches a tipping point defined in the governing documents, the developer will turn over control of the board to the homeowners. After this ‘turnover’, the board members will be elected by the members at the annual general meeting.
Who is eligible to serve on a Utah HOA Board of Directors?
While the state of Utah requires only that a board member be over the age of 18, the governing documents of the community will define who is eligible to serve on the board. Typically, eligibility requirements include that the individual is a member in good standing (meaning a homeowner who is up to date on their assessments) with prohibitions against those with criminal records.
How many people should be on my Utah HOA Board of Directors?
In Utah, all non-profit corporations are required to have a board consisting of at least 3 board members. Your community’s governing documents should specify the number of board seats available for your board.
The Responsibilities of the HOA Board
What exactly does the HOA Board do?
If you are elected to the board, you will have various responsibilities and duties. These include policymaking, rules enforcement, oversight of maintenance and repairs, contract negotiation and vendor control, capital planning, financial management, and ensuring compliance with federal, state, and municipal laws and regulations.
The board may also create temporary and permanent committees to delegate certain duties or research. These committees report directly to the board.
What do Members of the HOA Board need to know?
While the board can bring on any number of advisors such as lawyers and community managers, at the end of the day, they are responsible for making decisions on the community’s behalf. Therefore, it is important that board members have a solid understanding of the governing documents and a familiarity with state and federal laws that govern community associations. Ongoing board member education plays a critical role in helping board members stay informed and enabling them to make better decisions.
What are the HOA Board of Directors Officer Positions?
Every board member is just one part of the primary decision-making body for the association. However, the board can appoint officers as a distribution of duties among the members. Your governing documents will outline the specific officer positions available on your community's board, but your board can also choose to appoint officers as needed. Some of the more common positions include the President, the Vice President, the Secretary and the Treasurer. Some communities also have an appointed Parliamentarian. Board members are also often appointed to serve on various standing or temporary board committees.
Who is the most powerful officer on an HOA Board of Directors?
While each officer position on the HOA board has their own responsibilities, every board member, regardless of their position, carries exactly the same power - one vote. No board member, whether they are president or treasurer or member at large, has more than one vote or the power to override the majority. And no board member can make decisions alone without the backing of the board majority.
What does an HOA Board President Typically Do?
The President of the HOA Board is the primary legal representative of the board. He or she will be responsible for bringing meetings to order, calling special meetings when necessary, and signing all official documents on behalf of the board. They can also sign checks up to a certain dollar amount authorized by the board.
What does an HOA Board Vice President Typically Do?
The Board Vice President is a deputy to the President. They will take over as acting president in his or her absence and may also be called upon to serve as temporary secretary during meetings. Depending on the governing documents, the Vice President may also be authorized to sign checks or contracts up to an amount authorized by the board.
What does an HOA Secretary Typically Do?
The Secretary of the community association is responsible for developing the agenda, recording the meeting minutes, recording votes, logging action items, and distributing these notes to the board members after each session, and in advance of upcoming sessions.
What does an HOA Treasurer Typically Do?
The HOA Board Treasurer oversees all financial matters for your community association. They are the primary intermediary with the community's accounting team, as well as the primary contact for the community's operating and reserve accounts. The Treasurer is responsible for preparing periodic financial reports for approval by the board. The treasurer should also be in charge of the annual budgeting committee. Depending on your governing documents, the Treasurer may also be responsible for managing the community's reserve fund investment strategy.
What does an HOA Parliamentarian Typically Do?
If your governing documents specify, one board member may be appointed as the Parliamentarian. The Parliamentarian is responsible for interpreting the rules of order and parliamentary procedure, as well as making sure that the board follows them. This may include settling disputes as to what procedure to follow, timekeeping, and tabling discussions that extend outside the boundaries set for the current meeting. (We recommend that if this is your role that you invest in a pocket copy of Robert's Rules of Order!)
What does an HOA Board Committee Member Typically Do?
The board has the power to create temporary and permanent committees for whatever purpose they feel is necessary. Common examples of committees include the annual budget committee (temporary) or the architectural control committee (permanent). Often, at least one board member will preside over the committee but other committee members can be appointed from the board, the community membership or even outside experts and advisors.
Other HOA Governance Questions
What Does the HOA Board of Directors Get Paid?
Most communities’ governing documents (and even some states laws) prohibit payment for the board of directors, so the vast majority of HOA Board Members are unpaid volunteers. Although board members do not get paid, the ability to play a direct role in protecting the community and providing strategic direction for its future can be very rewarding.
What rights do homeowners have over their HOA Board?
As the representatives of the community, the board is accountable to the membership. As a homeowner, If you feel an HOA board member is not performing their duties to your satisfaction, you can vote to replace them in the next election. Homeowners also have the right to run for a seat on the board, provided they meet the eligibility requirements. Additionally, homeowners have a right to speak to the board in open board meetings during the time set aside for comments.
Where does the management company fit into HOA Governance?
Your community’s management company is hired by the board of directors to manage the day to day operations of the community. As such, the management company is considered an agent of the board, and is answerable to the board. The management company (and by extension the community manager) does not have the power to make decisions on behalf of the community, only to implement decisions made by the board.
We hope this guide answered your questions about the HOA Board of directors. If you have more questions, please don’t hesitate to reach out! The chat box in the bottom right corner of our website will connect you directly to an HOA Strategies representative who will be happy to answer your questions or point you in the right direction.
At HOA Strategies, our mission is more than just managing properties; we are focused on helping communities safeguard their investments and shape their future. With our commitment to excellent customer service, integrity in financial management, and dedication to creating thriving neighborhoods for future generations, we strive to be your trusted advisor in all matters related to HOA governance. If your Utah community association is seeking a trusted advisor to assist your board, look no further; contact HOA Strategies to request a proposal today!