The Board of Directors
Association owner/members look to their board of directors to provide the caring leadership and service that makes living in their community association desirable. The board of directors is overseeing what might be one of the largest assets association members have- their homes. This is why owners want their association to be run as a business and the board members to conduct themselves in a professional, business-like manner.
General Responsibilities for the Board of Directors
Board Members and Directors are responsible for:
- Playing a participatory role: attending board meetings, arriving on time, being knowledgeable– researching board issues and being ready to discuss and vote on such issues.
- Reading, understanding and being in compliance with the governing documents.
- Adhering to their fiduciary duty to the association.
- Placing the interest of the association above their own.
- Overseeing and treating the association services and facilities as a business.
- Overseeing the management company (should one be in place) which in turn over-sees banking, budgets, insurance, utilities, landscape, taxes, etc.
- Giving notice and holding regular board meetings and annual meetings, pursuant to Arizona Open Meeting Law, A.R.S. 33-1804/A.R.S. 33-1248.
- Following and enforcing the rules and regulations, the CC&Rs, bylaws. Collecting assessments fairly and consistently.
- Giving reasonable notice of CC&R violations with an opportunity to be heard be-fore levying reasonable fines.
- Complying with owner’s request to inspect and review records of the association as allowed by Arizona law, A.R.S. 33-1805/A.R.S. 33-1258.
- Providing open communication to the membership such as a newsletter, bulletin board, website, etc.
- Preparing an annual budget and adhering to the budget.
- Having a reserve study completed and adequate funds to fund the reserve if the board chooses, or if required by the documents.
- Having financial records audited or reviewed, or a compilation done yearly as stated in the governing documents and pursuant to Arizona law, A.R.S. 33-1810/A.R.S. 33-1243.
- Protecting the association and board by having the required insurances in adequate amounts.
- Hiring professionals, when necessary, and following their professional advice.
- Maintaining active corporate status by paying the annual renewal fee and filing the required annual report with the Arizona Corporation Commission.
- Preparing for the annual meeting; notifying the membership and planning for mail-in or absentee ballots pursuant to Arizona law, finding potential new officers, and establishing a voting process in an open and fair manner.
- Having an approachable business-like manner as a board member.
- Filing state and federal taxes annually, and, if a planned community, paying property taxes in a timely manner.
Where Does the New Board Member Begin?
Start by learning the basics.
- Read the association documents and the minutes of the previous year.
Declaration of Covenants, Conditions and Restrictions CC&Rs): The declaration outlines the standards for the community and establishes restrictions on the proper-ty. CC&Rs provide that assessments be used for the upkeep and improvements of the common areas. Additionally, the CC&Rs set forth the rights, duties and obligations of the individual property owners and the board of directors.
Articles of Incorporation: Sets forth the purpose of the corporation. The articles of incorporation name the original board of directors, establishes membership and voting rights, and typically directs that the board adopt bylaws.
Bylaws: Sets forth the duties and terms of the officers and directors and sets the fiscal year and annual meeting date, quorum requirements, voting requirements and provisions for amendments.
Rules and Regulations: Rules and Regulations are usually adopted by the board of directors and typically regulate the use and enjoyment of common areas and/or owner’s properties. Rules cannot conflict with other association documents.
2. Know where to find the state statues that govern the association or condominium and have a working knowledge of them: Arizona Revised Statutes: www.azleg.gov
The following Arizona state statues may govern your community association:
Title: 10 Corporations and Associations
- Chapter: 24 General Provisions – Non Profit Corporations
Title: 33 Property
- Chapter: 9 Condominiums
- Chapter: 16 Planned Communities.
Association board members must also be familiar with federal laws. See our Mulcahy Cheat Sheet on Federal Laws for more detailed information.
- The board should set up a mentoring program to have experienced members train new board members.
- The board should maintain a board book of resolutions, and important actions taken by the board.
- Use professionals to help train board members. Many professionals associated with community associations will attend a board meeting to educate the members. For example: ask a landscaper to come talk about maintaining trees, an attorney to talk about the laws pertaining to associations.
- Learn the basics of parliamentary procedure.
Board Member Responsibilities
President- The community association president is required to fulfill many different roles, but the primary role is leader. The president does not have the authority to do anything beyond the approval of the board.
The president should work closely with the board, management company (should one exist) and residents to establish the over-all goals of the association.
The president should come to the meetings prepared. He/she should understand and use parliamentary procedures and be an effective communicator. The president of the board of directors has a difficult task in that he must conduct a productive business meeting of the board of directors in front of the owner members when the meeting may contain items that are controversial and upsetting to board members and owner members.
The president oversees the association’s fiscal well- being, including directing the budget process, collecting assessments, ensuring that reserves are adequately funded and that insurance coverage is sufficient to protect the board of directors and the association.
The president cannot do everything; he/she will need to dele-gate to knowledgeable people and professionals and use committees and their findings for the good of the association.
Vice President– The vice president substitutes for the president in his/her absence and may be called on to use the same management skills as the president. He/she conducts meetings and presides over the board meeting when the president chooses to stand down from the chair. The vice president should keep himself/herself up to date regarding the association’s pro-grams and agendas so that he/she is prepared to chair the meeting when required. The association’s bylaws may list additional responsibilities.
Secretary- The association secretary is the official recorder of the association’s minutes and is responsible for ensuring that accurate board meeting minutes are taken, error free, safely maintained and kept indefinitely. Once recorded, the minutes are presented for approval by the board at a subsequent meeting. Once approved, minutes may be posted, placed on the website or in the newsletter for owner/members to review. Minutes are the official record of the association and as such can be used by a court of law in court proceedings. It is important to remember that minutes should contain what actions the board takes, not who said what in a discussion. Executive meeting minutes are not subject to review by owner members and should be maintained separate from regular open meeting minutes.
The board of directors may choose to have a professional minute taker. A professional will compile the minutes for the board’s review at the next meeting.
Other secretarial duties include maintaining records of the Association. The secretary prepares and distributes board meeting notices, and also notes actions taken on authorized projects. Additionally the secretary is responsible for all board of directors’ correspondence.
Treasurer- The treasurer is responsible for keeping and maintaining a complete set of financial and accounting records, and ensuring the financial stability of the association.
The treasurer is responsible for reviewing and understanding the association financial records each and every month and being able to give a complete review as to the association’s financial status to the board at the board meeting. Additionally, the treasurer has the responsibility for overseeing the preparation of the annual operating budget. Other key responsibilities include monitoring the progress of the annual audit or financial review pursuant to Arizona law and ensuring the timely filing of appropriate tax returns and monitoring insurance for the board as well as the association.
If a management company maintains the association accounts, it remains the treasurer’s responsibility to closely review the accounts. The treasurer should also put safeguards in place and internal controls to protect association assets and prevent the misuse of association funds. A treasurer who is aware of all aspects of the accounting for the association is also a safeguard for the association’s financial assets.
The treasurer may also oversee a reserve program and work with the board of directors to assure that a proper reserve study is completed and funding is adequate to support the study.