Homeowners associations are governed by directors and officers acting with the assistance of other people, such as property managers, who are delegated various responsibilities by the officers and directors. Frequently, members of a homeowner’s association mistake the association’s officers for directors and express confusion about the distinction between directors and officers, thinking that they are one and the same. While it is not unusual for the same person to serve as both an officer and a director, the positions and responsibilities are quite different and are independent of one another.
The board of directors is the governing body of a homeowner’s association, responsible for the ultimate direction of the management of the affairs of the organization. Decision making by the board of directors is done through collected action of the directors at regularly scheduled or special open and executive session meetings. Directors are natural persons who are required by both state statutes and an association’s bylaws. The actual number of directors that constitute an association’s board of directors is specified in the association’s articles and/or bylaws. To avoid dead-locks in voting, the number of directors is generally an odd number such as 3, 5, 7 or 9. Directors are elected by an association’s members and the members can also take action to remove directors. Directors may also be appointed by action of the board when it is necessary to fill a vacancy on the board caused by a failure of members to elect a sufficient number of directors, or the death, incapacity, or resignation of another director. The qualifications for serving as a director, and the length of their term as a director, are specified in the association’ s bylaws. The directors have voting rights that are exercised through board meetings at which a quorum of the directors is present. A quorum is a majority of the association’s required directors. Thus, if an association’s bylaws require a five-person board of directors, a quorum would be three directors.
Officers are also required by both state statutes and an association’s bylaws. The required officers are a president, secretary, and treasurer, but an association’s bylaws typically also provide for a vice-president. Officers are appointed by an association’s board of directors, and they serve at the pleasure of the board of directors. Thus, an officer may be removed from his or her position by action of the board of directors. The required number of officers along with their titles and responsibilities are specified in the association’s bylaws. The nominees for the various officers are made by board members and although the persons who are appointed as officers are typically directors, the officers play an entirely different role, and they are not required to be directors. The selection of officers is typically done each year at a newly elected boards’ first meeting following an annual election of directors. The typical duties of an association’s president, secretary, and treasurer, which are specified in the association’s bylaws, consist of the following:
Duties of President:
Preside over board and membership meetings.
Serve as liaison between management and the board of directors.
Interface with association’s attorney and the board of directors.
Serve as general manager and oversee day-to-day operations.
Solicit bids and meet with vendors and service providers.
Co-sign checks with secretary or treasurer.
Serve as ex officio member of committees.
Duties of Secretary:
Oversee providing notice of board and membership meetings.
Ensure that minutes of meetings are taken and approved.
Sign final approved minutes.
Oversee preparation of membership list.
File necessary documents with the Secretary of State.
Serve as custodian of records and ensure maintenance of records.
Co-sign checks with president or treasurer.
Duties of Treasurer:
Oversee the association’s bank accounts.
Maintain association’s financial documents.
Oversee deposits and investments.
Oversee bill payment.
Oversee preparation of budget.
Report on financial transactions to board.
Oversee preparation of reserve study.
Interface with association’s accountant / auditor.
Review and implement safeguards to protect association financial assets.
Oversee preparation of tax returns.
Sign bank cards and co-sign checks with president or secretary.
Many of the above-described responsibilities may be delegated to the association’s manager or an assistant, but the various officers are responsible for overseeing the work.
The following is a Sample Provisions contained relative to directors and officers that may be found in an association’s bylaws.