There are various opinions on the role of community and condominium associations. But, generally speaking, the main purpose and authority of the association is to maintain common elements and ensure compliance with the association’s governing documents.
Property owner associations typically operate with three bodies of community governance:
- Owners, whose only direct power is voting for - or to remove -directors, amendments and certain special assessments, and perhaps ratifying the budget, approving assessment increases and other specific items outlined in each association’s governing documents.
- Board of Directors, which has the most direct power to govern and manage the affairs of the association. State statutes and he governing documents (i.e., Declaration of Covenants, Conditions and Restrictions or Declaration of Condominium, articles of incorporation, bylaws and state statutes) set the responsibilities and power of the board. The board has a fiduciary duty to act for the benefit of the community as a whole and cannot act in self-interest.
- Committees, which study issues and may make some decisions, but only under the power and direction of the board. Committees have no power themselves, unless the governing documents state otherwise.
The role and responsibilities of owners include paying assessments in a timely manner to ensure the financial stability of the association. Owners who follow the rules and regulations of the association promote harmony within a community.
When an owner votes, his or her vote should be an informed vote, made after learning something about the board candidates and topics being considered. Study any issues on the agenda for annual meetings.
Remember - once board members are elected, they will be making many decisions on behalf of the association. Volunteer to serve on the board or help the board on committees or special projects, especially in areas of personal expertise.
The role and responsibilities of the board, in a nutshell, are to make most of the decisions for the association. The board should always use the “business judgment rule” and exercise sound business reason when making decisions.
The board is responsible for the care, maintenance and enhancement of common property, as well as community finances and risk management, including proper insurance and funding reserves for future capital repairs and replacements of common elements. It must establish, enforce and interpret rules and regulations, and oversee employees, management companies and volunteers.
The role and responsibilities of committees are to aid the board in its work and involve more members in the governing of the association, with the added benefit of providing a training ground for possible future board members. Committee members are usually appointed by the board.
It is strongly recommended that committees have charters that define their roles and authority. It is critical the board knows what its committees are doing. If a board member is assigned to be a committee liaison, he or she provides communication to and from the board. It is typically not recommended that the board member serve on the committee, unless the governing documents state otherwise.
There are three forms of management:
- Volunteer or self-management, where the board and committees manage the entire association themselves. With this type of management, it is important that members keep up with current legal requirements and have proper insurances in place (as mentioned in an earlier article).
- Association-employed manager, in which a dedicated manager is employed through an employment contract and with the assistance of additional onsite staff.
- Professional management company, which meets the needs of most associations and is much more affordable than an onsite manager and staff. A professional management company typically manages more than one association through management contracts.