The conducting of homeowners association business by the association’s board of directors is not just a commitment to meeting for couple hours every month or so. HOA directors have a lot of responsibility and the proper performance of their jobs as directors requires directors to be familiar with both statutory law (some federal and some state) and the contents of the association’s governing documents to enable the directors to become familiar with their obligations and the scope of their authority.
Federal Statutes, such as the Fair Housing Act and the Freedom to Fly the American Flag Act, specify certain types of conduct that a homeowners association is prohibited from engaging in and the penalties for violations, which can sometimes include awards of punitive damages– which are not generally covered by errors and omission insurance policies.
Separate and apart from the applicable federal statutes, an HOA’s board members must also be familiar with their duties and responsibilities under the laws of the state in which the homeowners association is domiciled. Typical state statutes impose many different obligations and/or other requirements on board members for such things as financial reviews, reporting to members, the handling of association funds, and member discipline. In order to avoid potential liability, an HOA’s board members need to be informed about the statutes that could impact them.
Lastly, directors must be aware of the content of their association’s governing documents. They specify rights and responsibilities and mandate various procedures that must be followed in different situations. Failing to take appropriate action or not following required procedures can result in actions that were taken being declared invalid and/or otherwise subject the association and/or board members to potential liability.
Serving as a director of a homeowners association involves a lot of responsibility and a serious commitment. Board members who understand their responsibilities and who take the time to learn about the laws that impact their association’s operations and to familiarize themselves with the content of the governing documents for the association will find that their association functions more smoothly and encounters less issues of the type that frequently result from taking inappropriate action due to a lack of knowledge.