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Building a Board of Directors: Tips for Education and Responsibilities

Being elected as a board member for a resort association board comes with a lot of responsibility, occasional complications and conflict, and is, in general, viewed as a thankless job.

It is also an excellent way to serve the member-owners of a resort and to actively participate in the decision making and strategic planning. The board members/volunteers play a critical role in the health and sustainability of a resort. But this job comes with many responsibilities, both to other board members and the resort owners. The role of a board member is not to be taken lightly as these individuals must be engaged in and committed to the oversight and improvement of the association.

Board Responsibilities

 The primary responsibilities of an association board are to do the following:

  • Keep owners informed of matters that would be of concern to them
  • Attend meetings and conduct association business
  • Care for and maintain the common property
  • Oversee the prudent use of association funds
  • Propose and/or approve a budget
  • Levy special assessments
  • Formulate rules of operation for common areas and facilities
  • Select professionals to serve the association
  • Enforce covenants and, if necessary, authorize legal action
  • Collaborate to accomplish the association’s mission and purpose

This is certainly not a comprehensive list, but broadly covers the regular items to be dealt with.

Fiduciary Duties

Within exercising these responsibilities, a certain set of fiduciary duties apply to board members that should be in the forefront of all decision making: the duty of care, the duty of loyalty, the duty of good faith, and the duty of obedience.

  • The duty of care is exemplified by proposing and making decisions that are in the best interests of the association and its owners, giving the same care and concern to their board responsibilities as any prudent and ordinary person would, and actively participating in board meetings.
  • The duty of loyalty is shown by the board members’ mindset of putting the interests of the association ahead of their own interests. The board members’ decisions should be made without bias or preference towards their own agendas.
  • The duty of good faith is demonstrated by making decisions and acting with integrity, impartiality, and looking out for the interests of the association over those of others.
  • The duty of obedience is exemplified by ensuring that the association complies with laws and regulations, such as state statutes, governing documents and best practices in general.
For more information or questions on building a board of directors, please contact a member of Withum’s Hospitality Services Group.

It is also helpful to remember, in all decisions and discussions inside and out of meetings, that a board member has the responsibility to protect owners’ confidentiality if information is provided in confidence to them regarding personal matters, regardless of whether they affect the association.

Onboarding New Board Members

When new board members are elected, the onboarding process can shape their experience. Those with history and institutional knowledge of the association can provide a lot of insight– and not to mention, new board members can provide fresh ideas. It is important to keep in mind that both parties can learn from each other and to share the information at hand.

As new members are onboarded, it is beneficial to have a board retreat. Information can be disseminated for them to read and study on their own, but it is much more effective for the board to meet in person to discuss the items together and bring the new members up to speed. Some items to be discussed are:

  • The responsibilities of a board member and the duties described above and what it means to be a fiduciary.
  • The type of association and who owns what, i.e. what is the association really responsible for.
  • A recent history of association business, such as budgets, financial results, collections of assessments, legal matters and disputes, contract negotiations, events, past and upcoming maintenance projects, etc.
  • The governing laws of the association, including state statutes, association governing documents and rules and regulations.

In addition to providing a background that will let new board members get up to speed quickly and make informed decisions, this process will also familiarize new board members (and remind existing ones) of their larger responsibility.

Some states are requiring new board member education, but even in those that do not, there are resources for outside consultants, such as attorneys and accountants who serve the industry, to conduct training. This option may be a cost, but can provide invaluable information to all board members.

Effective Meetings

 In order for a board to have productive and successful meetings where voices are heard and business gets done, meetings need to be organized and monitored to accomplish the tasks at hand. Ineffective meetings can decrease board member engagement and efficacy. Here are a few simple tips for conducting board business effectively and efficiently:

  • Prepare and circulate a draft of an agenda approximately a month in advance. Invite comments and business matters from other board members.
  • Adequately notice the meeting so that business can be legally conducted.
  • Send a final agenda to board members a week prior to the actual meeting with any other necessary documents for discussion, such as internal financial statements, reports, legal matters, etc.
  • Give ample notice to any professionals that may need to attend the meeting, such as consultants, accountants, or attorneys to ensure all necessary parties to making a decision are present.
  • Observe a strict policy of time limits for discussion and be sure to leave ample time for owners and other participants to ask questions. Adopt a parliamentary procedure to assist with this.
  • Start and end ON TIME!

The decision to become a board member is not something that should be taken lightly, but it can provide a great forum for learning and engagement in a community. For those considering serving, some due diligence is in order to understand what will be expected and even required in service to a particular association.

Authors: Rebekah Albert | ralbert@withum.com and Lena Combs | lcombs@withum.com

Hospitality Services

Republished with permission from Resort Trades, copyright April 2020.

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