Community Associations Institute supports statutory protections against unwarranted exposure to liability for volunteers serving on an association board of directors or authorized committee. Responsible judgments can be made without fear of personal loss interfering with that judgment or decision-making process. CAI further supports indemnification of community association volunteer directors and members of authorized committees by providing directors’ and officers’ insurance coverage as a budgeted, common association expense.
This immunity is desirable where the volunteer’s acts or omissions do not constitute gross negligence, illegal, willful or wanton misconduct, and the activities are within the realm of the association’s purposes, functions and duties or the scope of the volunteer’s duties.
In addition to these protections, perhaps the best protection for boards of directors, in particular, is to govern fairly, responsibly and successfully. Toward that goal, it is recommended that boards adopt the Community Association Governance Guidelines, and adhere to the Model Code of Ethics both developed by CAI’s Center for Community Association Volunteers. State and even local laws vary widely so astute boards consult regularly with their legal counsel to ensure they are in compliance.
CAI and the Center for Community Association Volunteers developed the Community Association Governance Guidelines to help community association boards govern fairly, responsibly and successfully. Embracing these 12 basic principles can help any association board increase harmony, reduce conflict and build a stronger, more successful community.
COMMUNITY ASSOCIATION GOVERNANCE GUIDELINES
Annual meetings. Conduct at least one membership meeting annually, providing at least two weeks notice to homeowners and more than two weeks if specified in the governing documents or dictated by state statute.
Assessments. Collect assessments and other fees from homeowners in a timely and equitable manner and in accordance with state statutes and board-approved procedures.
Communication. Provide at least one form of regular communication with residents, and use it to report substantive actions taken by the board.
Conflicts of interest. Disclose all personal and financial conflicts of interest before assuming a board position and, once on the board, before participating in any board decisions.
Elections. Hold fair and open elections in strict conformance with governing documents, giving all candidates an equal opportunity to express their views and permitting each candidate to have a representative observe the vote-counting process.
Financial transparency. Share critical information and rationale with residents about budgets, reserve funding, special assessments and other issues that could impact their financial obligations to the association. Give members an opportunity—before final decisions are made—to ask questions of a representative who is fully familiar with these financial issues.
Foreclosure. Initiate lien and foreclosure proceedings only as a last step in a well-defined debt-collection procedure—and only after other, less disruptive measures have failed to resolve a serious delinquency issue in a specified period of time.
Governance and the law. Govern and manage the community in accordance with all applicable laws and regulations. Conduct reviews of governing documents to ensure legal compliance and to determine whether amendments are necessary.
Grievances and appeals. Allow residents to bring grievances before the board or a board-appointed committee, and follow well-publicized procedures that provide residents the opportunity to correct violations, and to appeal any fine or sanction that is imposed.
Records. Allow homeowners reasonable access to appropriate community records, including annual budgets and board meeting minutes.
Reserve funding. Account for anticipated long-term expenditures as part of the annual budget-development process, commissioning a reserve study when professional expertise is warranted.
Rules. Enforce all rules, including architectural guidelines, uniformly, but only after seeking compliance on a voluntary basis. Distribute proposals for new rules and guidelines to all homeowners and non-owner residents. Advise them when the board will consider new rules and encourage input. Once adopted, new rules and effective dates should be distributed to every owner and resident.
Note: Laws governing common-interest communities vary considerably from state to state. Association boards should consult with attorneys to ensure their association is governed in accordance with all federal, state and local laws and regulations.
MODEL CODE OF ETHICS
CAI’s Center for Community Association Volunteers developed the Model Code of Ethics for Community Association Board Members to encourage the thoughtful consideration of ethical standards for community leaders. The model code is not meant to address every potential ethical dilemma, but is offered as a basic framework that can be modified and adopted by any common-interest community.
Board members should:
Strive at all times to serve the best interests of the association as a whole regardless of their personal interests.
Use sound judgment to make the best possible business decisions for the association, taking into consideration all available information, circumstances and resources.
Act within the boundaries of their authority as defined by law and the governing documents of the association.
Provide opportunities for residents to comment on decisions facing the association.
Perform their duties without bias for or against any individual or group of owners or non-owner residents.
Disclose personal or professional relationships with any company or individual who has or is seeking to have a business relationship with the association.
Conduct open, fair and well-publicized elections.
Always speak with one voice, supporting all duly-adopted board decisions—even if the board member was in the minority regarding actions that may not have obtained unanimous consent.
Board members should not:
Reveal confidential information provided by contractors or share information with those bidding or association contracts unless specifically authorized by the board.
Make unauthorized promises to a contractor or bidder.
Advocate or support any action or activity that violates a law or regulatory requirement.
Use their positions or decision-making authority for personal gain or to seek advantage over another owner or non-owner resident.
Spend unauthorized association funds for their own personal use or benefit.
Accept any gifts—directly or indirectly—from owners, residents, contractors or suppliers.
Misrepresent known facts in any issue involving association business.
Divulge personal information about any association owner, resident or employee that was obtained in the performance of board duties.
Make personal attacks on colleagues, staff or residents.
Harass, threaten or attempt through any means to control or instill fear in any board member, owner, resident, employee or contractor.
Reveal to any owner, resident or other third party the discussions, decisions and comments made at any meeting of the board properly closed or held in executive session.