Many Georgia community associations recently held their annual meeting and elected a new board of directors. One of the common questions facing community association volunteer leaders after election to the HOA board of directors is, “What are my duties and responsibilities?”
To understand the HOA board of directors’ role, it is important to first recognize that members of the board of directors serve as the governance body of the association as a nonprofit corporation. Just as the decisions of for-profit corporations are made by a board of directors, the affairs of community associations are also directed by a board. While the boards of for-profit corporations make decisions to maximize shareholder value, the board of a community association makes decisions in the best interest of its members – the owners of the homes within the community.
What are the Responsibilities of a HOA Board of Directors?
The board of directors of a community association is charged with management of the association. The board considers the business affairs of the association at its meetings and votes on how the association will proceed. In addition to overseeing the operation of the association, the board ensures that the obligations imposed on the association in its governing documents are carried out.
These obligations and activities typically include:
- Hiring and overseeing a manager or management company and any necessary administrative or maintenance personnel;
- Establishing budgets, a collection policy, and the amount of assessments;
- Adopting and enforcing rules, including carrying out any penalties; and
- Employing professional services such as attorneys or accountants.
If the association is professionally managed by a community manager, the board directs the manager by setting policy to be implemented by management and by voting on contracts, budgets, agreements, and other business affairs of the association.
If the association is not served by community management, the board will be responsible for hiring and supervising vendors or contractors to ensure that common areas are physically maintained, collecting assessments, ensuring the association’s bills and financial obligations are timely paid, insuring the property as required by the governing documents, and for writing and sending notices and communications to the owners.
What HOA Director Duties are Required by Community Association Law?
The board of a community association must conduct itself in accordance with Georgia’s Nonprofit Corporation Code, O.C.G.A. §14-3-101, et seq. The Code’s corporate obligations include annual corporate registration with the Secretary of State, conducting the association’s annual meeting, holding board meetings, maintaining the association’s books and records, and responding to requests for inspection of the books and records made by members.
In addition, the Nonprofit Corporation Code requires a director to discharge his or her duties in a manner the director believes in good faith to be in the best interest of the association and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. Good business judgment requires that each director make decisions in the best interest of the association. To exercise good business judgment, members of the board must be informed, attend meetings, express opinion including dissent, know the governing documents, and act when required.
Before acting on behalf of the association, the board should confirm it is authorized to act under the community’s governing documents, including the declaration, bylaws, rules and regulations, or articles of incorporation.
Members of the board of directors should not assume that the board’s acts are authorized. The directors are obligated to exercise good judgment, including an obligation to make informed decisions. If good business judgment is followed, courts generally will not second-guess the actions of a board. Also, directors generally will not be held liable for honest mistakes of judgment when the directors are acting in good faith.
Consult with an HOA attorney in Georgia for more guidance on a directors’ additional duties of good faith and loyalty to their community associations.
Who Serves as HOA Officers?
A common misconception held by members of a community association, and even some boards, is that the officers of an association are elected by the membership. Officer positions typically include the roles of president, vice-president, treasurer, and secretary, though many HOA bylaws allow for the board’s appointment of additional officers as necessary to carry out the business of the association.
Commonly, governing documents will require at least some of the association’s officers to be members of the board of directors, but the roles of the members of the board of directors and the officers are separate and distinct. The association’s board of directors is elected by the membership at the annual meeting or as otherwise provided by the association’s bylaws. However, the officers are appointed by the board as determined by vote of the board, not by a membership vote. Officers do not need to be members of the board of directors unless required by the association’s bylaws.
The board adopts association policy and defines objectives, and the officers are given the authority by the board to carry out these decisions. While each of the officer positions are often responsible for certain duties pursuant to the association’s bylaws, the board directs the officers in the performance of their duties and can establish additional officer duties. Notably, officers cannot vote on corporate actions based on their status as an officer of the association. If an officer is also a director, he or she votes by virtue of his or her status as a member of the board of directors, not in his or her capacity as an officer.
Contact NowackHoward for More on Community Association Law in Georgia
At NowackHoward, we focus on condominium and HOA law throughout Georgia. To learn more about our practices and how we can help guide your community, contact one of our attorneys today at (770) 863-8900 or by email at email@example.com.