Effective governance is the backbone of any community association. The board of directors plays a pivotal role in overseeing the association’s affairs and making decisions that impact the entire community. However, navigating the complexities of governance requires more than just good intentions—it requires a solid understanding of legal principles and best practices. Here are a few legal tips for community association boards to ensure effective operations and decision-making:
- Know Your Governing Documents and Other Applicable Rules:
A thorough understanding of the association’s governing documents, including the Declaration, Bylaws, and rules and regulations, is essential for good decision making. These documents outline the rights, responsibilities, and powers of the association and its board and often differ from other surrounding communities. Board members should also familiarize themselves with any state laws that effect their association, such as state condominium or planned community acts.
- Act in Good Faith:
Board members have duty to the association and its members, to act in good faith and in the best interests of the community. This includes making decisions that are fair, reasonable, and without conflicts of interest. In making decisions related to rule enforcement, the board should maintain impartiality by consistently enforcing all rules and uphold community standards. Acting in good faith additionally includes preparing a realistic budget and collecting assessments to cover regular expenses, as well as building up a reserve fund to save for future repairs and emergencies.
- Follow Proper Procedures:
Community association boards are typically required to follow specific procedures when making decisions, such as providing notice of meetings, maintaining minutes, and conducting votes in accordance with governing documents and state laws. Adhering to these procedures can keep associations out of legal pitfalls.
- Maintain Transparency:
Transparency is key to fostering trust and accountability within the association. Board members should strive to keep residents informed about important issues, decisions, and financial matters. Board members should consider newsletters or other easily accessible platforms to keep residents aware of what’s happening in the association.
- Seek Legal Counsel When Needed:
Complex legal issues can arise in the course of association governance, from disputes with residents to contract negotiations and compliance matters. Board members should not hesitate to seek legal counsel when necessary to ensure their actions are legally sound and in the best interests of the association. A proactive approach to legal issues can help prevent costly mistakes and litigation down the road.
- Plan for the Future:
Effective governance requires continuity and stability within the board of directors. Planning for succession ensures smooth transitions of leadership and institutional knowledge over time. Board members should regularly set and review achievable goals for the association, to try and better things in the community long after their time on the board is over.
Community association governance is a complex and multifaceted effort that requires a solid foundation of best practices. By following these legal tips, boards can ensure effective operations, decision-making, and compliance with legal requirements. With the guidance of legal counsel, community association boards can navigate challenges, promote transparency and accountability, and ultimately enhance the quality of life for their residents. We encourage all of our clients to review our Operations Guide on ATLAS for further insights into effective Board Operations.
