Summary of Board Duties and Responsibilities

Briarcliffe Lakes Manor Homes is an incorporated not-for-profit, under the laws of the State of Illinois.

All of the board members should become very familiar with the covenants and other governing documents of this HOA. These documents include:

a.    Bylaws.

b.   Rules and Regulations.

c.    Declarations and Covenants.

d.   Illinois Condominium Property Act.

I.                                     Being a member of the board:

This association is a business. Board members are volunteers, without pay or any compensation. To be a member means “being of service” to others, and putting in the necessary time; however, this is not an “open ended” agreement. But in a case of unforeseen circumstances, it may require more time than expected.

Each member will have specific duties and responsibilities; become clear what they are. If you have specific issues, ask the manager and discuss with the board. Ask questions and engage in an open dialog and inquiry about running the association. Be open and honest with the other members of the board. 

When the opportunity presents itself, get to know the professionals, and that includes the management company, the landscaper, the maintenance company and the attorney, etc. The more you learn about your job and your professional support team, the better able you will be to perform it, and support the others on the board in doing their job.

In today’s world, you should have daily access to a personal computer, printer and email, which may be as important as a telephone.

Become familiar with BLMH as a Private Urban Development, or PUD. Get to know the grounds and the buildings. Each board member is provided with a map of the grounds detailing each street and building, and also each pond and stream. Walk the grounds frequently and get to know this place. The board of the association is only as strong as its weakest link. Everyone on the board should be looking for rules violations, maintenance issues, etc.

Board members have a larger responsibility. If you aren’t ready to take on that responsibility, then you should not be on the board. An alternative is to be a committee member, which does not have fiduciary responsibilities and usually has very narrow and specific duties and responsibilities.  For more on the “Powers and Duties” of the board of Managers, see the Illinois Condominium Act Sec. 18.4.

II.                                          Know your specific duties and assignments:

Be aware of your job duties and responsibilities, and those of the other members of the board. The duties may be unequally distributed, but each member of the board is responsible for the decisions of the board.  

Failure of board members to understand your specific duties and obligations may do a disservice to the association.

Avoid priority conflicts on the board. Each board member must have a basic understanding of their particular role and how it fits into the organization.

Assignment gaps or overlap can create conflicts or confusion, so if possible, members should consider methods to resolve and avoid these types of problems.

III.                                          Be Prepared:

Study the finances including budgets and the reserve study. Ask questions if you don’t understand something. Keep notes, so you don’t ask the same questions time and time again.

Before each meeting, read the materials contained in the information packet provided by management. Read the reports prepared by other members of the board. Read the agenda for the month. Become familiar with these materials before the meeting so you are prepared to discuss the issues and make sound decisions. Make a list of questions. Each member votes; with that power comes responsibility. It is necessary to make informed decisions, using common sense and sound judgment.

If you decide to cast a “no” vote, you can request that your name be attached to it in the official association meeting notes. This is sometimes prudent, but is usually not required.

It is your ultimate goal to become expert on many aspects of the operations of the association, including the buildings and the grounds. That means you must learn the physical characteristics of the buildings; the roofs, masonry, patios and decks. Learn about what is necessary to maintain these buildings, the grounds, streams and landscaping. Become familiar with the various contracts, including snow plowing, etc. and drainage issues, the streets and driveways. The association will only be run as well as the board is capable of running it.

IV.                                          Be a fiduciary:

All members of the board are fiduciaries, or stewards, for the entire association. What does that mean? Board members must act in “good faith” at all times, and avoid favoritism, and must treat all owners identically. The Illinois Condominium Act prohibits the creation of “subgroups” of owners in the association.

Being a fiduciary means that a board member wears two “hats.” One as owner and one as a board member. Don’t confuse them. Your role on the board takes precedent, for the betterment of the association. It requires that you use your best business judgment. This judgment best applies to the facts before the board, protecting the fiscal (monetary) and structural integrity and security of the buildings, the grounds, and the association, and the well-being of the residents. As a fiduciary, the collective interests of the association comes first, and are most important. The interests of individuals come second.

To be a fiduciary also means using common sense, and good business judgment.

All board members when operating in a fiduciary capacity are entrusted with the operation of the association. They are to do what's in the association's best interest, which means making decisions on the merits. It’s not appropriate to make decisions because you have something to gain, a personal agenda, or animosity toward another, or have a concern for another.

As a fiduciary, it’s necessary to respect the confidentiality of the association, and various owners. Being on the board means that you will be privy to certain private matters. Certain facts and discussions are not to be disclosed to others. Discussions between the board and the attorney may be confidential. Discussions in executive session are confidential. Certain matters, those that the board decides are “confidential” are not to be discussed with others, including owners, contractors and vendors.

Attorneys talk about exercising “good faith” as a fiduciary. That means using good judgment, listening to qualified professionals, avoiding conflicts of interest, and always putting the interests of the association before your own, or your “personal beliefs.”

V.                                          Avoid conflicts of interest:

All members of the board must avoid conflicts of interest. If there is a possibility that such conflict might exist, the member must discuss this with the board. Conflicts might include business dealings and relationships, and financial encumbrances which could compromise the directors ability to make impartial decisions. In such situations, the member should recuse themselves from discussion and voting, or if extreme, may be requested to resign.

Never accept gifts or favors or any form of gratuity. Never accept any gift from a vendor or contractor.

Avoid situations with contractors, vendors or owners who are intent upon influencing the direction or the decision of the board.

VI.                                          Be a working member of the board:

Learn your duties and responsibilities. Do your work, your duties and assignments. Avoid unilateral action. Discuss the business of the board only at board meetings and avoid “ad hoc” meetings. The board is to speak with one voice, as a consensus. It is okay to debate the merits of any issue. However, once that issue is decided, it is the duty of board members to support it, even if an individual member disagrees with the decision. The only possible exception is in matters as a fiduciary. In such conflicts, this can be discussed with the professional manager or the attorney. If the professionals consider the board has avoided its fiduciary duty, that is an acceptable time to “take a stand.”

Attend workshops provided by the association where there are special issues to consider, such as budgeting. Consider attending seminars and gaining knowledge and skills.

VII.                                          Be professional:

Being on the board is “leading by example.” Others should be treated respectfully. Treat the professionals as knowledgeable partners. Treat the other members of the board as co-workers. Avoid making inflammatory statements, and defaming anyone, be they others on the board, owners or professionals including contractors and vendors.

If there are problems to be dealt with, plan and prepare to provide solutions.

VIII.                                          Be Realistic:

It’s true, this association is run by volunteers. That means, each member of the board has time conflicts and is dealing with the duality of being an owner and being a fiduciary. The best you can do is realize that this exists, and operate within these boundaries. By being aware “what is so” for yourself and for others, it is possible to do the best possible job on the board. If we choose to pretend there are no limitations, or that we are professionals, and bow to that arrogance, we are prone to less than optimal achievement.

IX.                                          Maintain the purpose and confidentiality of executive sessions and board meetings:

Only certain, confidential matters are to be discussed in executive session. The association board meetings are required to be open to all homeowners.  (A meeting is an assembly of a “quorum” of the board; “workshops” are a possible exception).

The Illinois Condominium Act Sec. 18 (a) 9 specifies that certain portions of the board meetings be closed to the ownership. This is called “executive” session.  This session requires that the board meet behind closed doors and out of view or hearing of the owners, unless a specific owner is involved and invited to attend. The purpose is to discuss specific topics that must be kept private and confidential.  Any “vote on these matters shall be taken at a meeting or portion thereof open to any unit owner.” These sessions must not be used by the board to meet in private and avoid the presence of homeowners.  

During “executive session” typical authentic topics include litigation involving the association, information involving hiring or firing of an “employee, ” discussions of violations of the governing documents (such as Rules and Regulations) or “a unit owner’s unit owner's unpaid share of common expenses,” and related consultation with the attorney or management.

To enter “executive session” a motion is made stating the purpose of the session. This is to be documented in the notes of the open meeting. However, whatever occurs in the closed session is to be kept in separate notes, which are not available for inspection by the owners.

Once in “executive session” the board, with management, are not supposed to discuss any topics other than those clearly stated in the purpose of the motion.

Once “executive session” is over, the doors are opened and owners are admitted. At that time, the open meeting is reconvened and the board votes publicly on all decisions made during the “executive session.” Only with an open vote are the closed session decisions made effective.

1.             Examples of Fiduciary Duties

Example 1:

The board is conducting budget workshops and is discussing fee increases or special assessments. These discussions are decided to be confidential. Members of the board may not discuss these matters with other owners, tenants, former board members, etc.

Example 2:

There is a rules violation, and the board has two points of view on how to deal with this. Some owners side with the violator. However, the board decides to uphold the rules and cites the owner as a violation. As a fiduciary, your first duty is to the association, and after the decision to uphold, you should do so. 

Example 3:

The association is looking for a unit to purchase. You are aware of one, for a very good price. So you purchase it for yourself. You have breached your fiduciary duty to the association.  What should you have done? You should have told the board and management of the availability, so the board could decide. Only after the board voted not to purchase, would you be free of your fiduciary duty so you could purchase it for yourself.

Example 4:

Failing to pass proper budgets, treating some owners differently (for example, providing leniency on fees and assessments to some owners, while failing to do so for others),.

Example 5:

Failing to uniformly uphold the rules.

2.             Examples of conflicts of interest:

Example 1:

A vendor agrees to attend a “meet the board” coffee for the association. That vendor agrees to provide coffee and cake for the meeting. This cannot be accepted.

Example 2:

You have a relative in the contracting business, and that relative wants to be a bidder for some of the business in the association, and approaches the management company. You must announce that this is a relative who will be bidding. You should also not take part in any discussion of this project, bids and the award of contract, to the extent of leaving the room during any of these proceedings. Avoid any possibility or suspicion of unethical bid practices, including viewing competitor’s bids. Any meeting notes should include a statement that you have recused yourself from these discussions and these portions of the meetings.

Example 3:

The association is considering a special assessment. You however, have been cut back in your hours of employment and are concerned that you might not be able to financially handle such an assessment. You should announce to the board that you have personal issues, and cannot participate in this discussion. You should recuse yourself from the discussions, and abstain from any vote.

Notes:

1. 1. The above was prepared by me in June 2011. The board of BLMH has been reticent to use the above. Now, I ask the reader, is that a good thing or a bad thing for a HOA?  Why would a board or a variety of boards decide that the above isn't something to promote? I can guess why. For one thing, if candidates realized that it was a job and they were fiduciaries, could not run their personal agenda or that of their friends, or to be on the board for the sole purpose of reporting back to the "club" and voting that agenda, well, that would reduce the field of candidates, wouldn't it?  I have learned from hard and practical experience that boards are eager and willing to put anyone in a seat. Boards are at times desperate for help. If a bad apple shows up, and things get ugly, well we can then delegate to management or to someone like me to clean up the messes created by dysfunctional or incapable board members. It's not that easy. Getting someone off the board who is dysfunctional, even someone who is going through a "deed in lieu" (which is a form of foreclosure) can be very difficult if management has been gagged, and the rest of the board wants to take care of the individual. I know, I've been there and seen the "good people" in action (gag). In some situations, the board simply refuses to deal with the mess. That's the way it has been from 2009-2013. What a terrible way to run a business! But then, it's your money we're spending isn't it? As a board stated back in 2009 when things got ugly "I guess we don't look very good." But nevermind. One can always run for the board and ignore their fiduciary duties. Integrity? What the heck is that? If things really get difficult, simply resign and spread malicious gossip aka "libel and slander." I know, because in 2011 I hired an attorney to deal with this, at my personal expense.
2. 2. For anyone on the HOA board, the issue is how to get through the next year or two with delinquents who revel at shooting at you, or retirees who want their fees reduced, or anyone who purchased at the top of the real estate bubble and now feels trapped. Ditto for those who thought they would sell and move on to somewhere else with a nice retirement nest egg. Now we have more than a few who feel our fees are "too high", broken fireplaces, failing infrastructure and upset neighbors on the other side of lake #4. So what is a board member to do? Let me see, should we be honest about the problems, or downplay them in an attempt to lure some unsuspecting individual to join our ranks?
3. 3. Most of the owners at BLMH apparently think they live in an apartment complex, and so this post is completely irrelevant.
4. 4. Oh, and I just sat at my computer and wrote this document, just like the tens of thousands of words I've written, or the many spread sheets I've created for this HOA. What a hobby!