Roles and Players in an Estate’s Homeowner Association

It is generally a period of uncertainty for HOA role players which include the management team, staff, services providers, individual homeowners, committees, and the current directors. Actions taken during these uncertain times must be guided by the clearly defined roles and responsibilities laid out in in the HOA constitution. This will ensure that everyone knows their boundaries. The Memorandum of Incorporation or MOI and other HOA Governing Body documentation should be used to direct the various role players in the HOA team.

Individual Homeowners

The basic authority in a HOA lies with the individual homeowners. For an HOA to be governed effectively, the homeowners elect a Board of Directors or BOD to act on their behalf. The Governing Body delegate s most of the HOA’s decision-making powers to the Board of Directors.

This leaves the homeowners with very few direct powers. They are limited to the following:

• to election and remove directors
• to amend the MOI and other governing documents (excluding BOD resolutions)
• approve special levies or capital improvements
• occasionally, owners would vote to approve the HOA’s annual budget and the levies
• other daily operating and policy decisions are left to the BOD and the management team

Board of Directors

The powers and duties of the BOD are generally described in the MOI and the following could be added:

• must always act in the best interests of the HOA
• be responsive to the needs and desires of the homeowners
• be familiar with the MOI, the HOA governing documents and general laws that have an impact the HOA
• establish and enforce the governing documents fairly and uniformly
• make various decisions, but do not implement the decisions
• approve contracts with service providers to the HOA
• employ or appoint a manager
• set the policies, standards, procedures, programs, and budgets for the HOA

The BOD provides direction to the Management Team and the Service Providers. The BOD should not co-manage the HOA and get involved in day-to-day matters but should allow the Management Team to carry out the BOD’s directives and decisions.

Individual Directors

A single Director has no power except the power to cast a vote on BOD decisions, the power rests collectively with the Board. Well-intentioned Directors can usurp the BOD’s role by acting without BOD authority. A “renegade” Director usually justifies himself by claiming the urgency of actions he took individually such as instructing the management team, service providers or making contractual commitments on behalf of the HOA. 

Management Team and Staff

The Management Team take action by managing the HOA, carrying out the BOD directions. They provide important advice to assist the BOD to operate within the Business Judgment Rule. The Management Team do not make decisions, except those specifically assigned to them by the BOD.

The Management Team is further responsible for:

• providing information, training, and leadership of the HOA operations to the BOD, Committees, and the community at large
• fostering a sense of community awareness and maintaining a positive spirit among the individual homeowners
• develop a body of leadership through the Committee structure
• provide the necessary administrative tools to the BOD to enable it to make wise, well-informed decisions on both short-term and long-term actions and goals

Committees

The number and type of committees will depend on the size of the HOA, willingness of the homeowners and the complexity of its activities. The more activities a community participates in, the more a BOD may need additional groups to collect information, develop recommendations and carry out activities.

Committees are typically assigned on ongoing, important subjects and advise the BOD by issuing reports and suggesting on certain BOD actions. Committees do not make commitments to the HOA Service providers and their meetings are less formal. The BOD should avoid doing committee work in the BOD meetings, just as the committees avoid doing BOD work.

The role of Committees is to:

• assist the board in meeting its responsibilities
• broaden the community’s input on decisions
• means of gathering owners’ opinions and attitudes
• training ground for future leaders
• means of explaining BOD’s actions to the community
• perform research and prepare recommendations for the BOD

A committee of one is not a committee (meaning, there needs to be more than one person to constitute a committee).

Service Providers

Service Providers should perform their contracts and SLA’s and avoid HOA politics. Endorsing or opposing BOD candidates is outside of their role and is unethical – they must stay neutral.

Check YOUR boundaries and stay within your role. When everyone does THEIR job and allows others to do theirs, the HOA will be operated successfully.