Sunday, April 5, 2015

How important is it to have a title on your Association's Board of Directors?



In the for-profit corporate world, titles are important but they do not make someone a leader simply by virtue of having one.  However, in the not-for-profit community association world, a title can endow its holder with an inordinate amount of power to make decisions on behalf of a lot of people if the rest of the board becomes cowed, lazy or indifferent.


There are usually two types of directors serving on condominium, cooperative and HOA boards: those who strive to become a board officer and, specifically the President, and those who refuse to accept such responsibility. 

For the former group, just what is the appeal of becoming the board president?

  • The governing documents typically outline each officer's duties and for Board President, that can include creating the agenda for meetings and chairing those meetings.
  • Any director even those who are not officers can sign a contract if given actual authority to do so via Board Resolution. However, most vendors insist on getting their contracts signed by an officer of the Board and specifically the President. The President has what is called apparent authority to sign contracts meaning that to the outside world, he or she is presumed to have such authority.
  • The myth persists that a Board president can break ties. This is only true if the President of your Board also serves as the Vice President of the U.S. and is voting to break a tie in the U.S. Senate.
  • There is just something about the title President which puts a little spring in some people's step.

When I meet initially with boards who are experiencing some level of dysfunction, the complaint I hear most often is that the board president is making unilateral decisions that are not in the community's best interests. While a rogue president cannot be removed from the board entirely (only the members can vote to recall a director), any Board officer can be removed by the vote (which can be cast by secret ballot) of the board members alone. Removing the president's title does two things: it removes his or her apparent authority as well as relinquishes him or her of the duties of the office set forth in the governing documents. Such decisive action also sends a strong message that the board insists on operating as a cohesive entity.

In highly functioning communities, the title of president should not present any particular worries or concerns because those boards are voting on items and taking action as a fully-informed group. If you are asked to serve as a president in one of these communities, accepting the position should not be a cause for sleepless nights.

Lastly, just remember, you can run but you can't hide. If you serve on your Board and you have abdicated all responsibility and decision-making to your fellow director or directors, you can still be sued if he, she or they make the wrong choices.

5 comments:

  1. Great article! A question on the last paragraph; how can a board member go on record as calling out a violation of the By-laws or General Declarations, when approved by a majority of the board? Especially when under the guise of a privileged meeting with the attorney and the resolution is against the attorneys advice. In Florida there is no authority to turn to for flagrant and illegal violations. Again in Florida there are serious problems with annual meeting turnout and rollover boards!

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  2. "Going on the record" won't do much except set the record straight should a director's actions are questioned down the road. When a director finds himself or herself on the losing end of a vote and feels that the majority decision places the community in peril, there is not much that director can do. Of course, he or she can resign but that doesn't solve the problem. He or she can also pursue a recall in the same vein as any other member but that won't make for amicable board relations moving forward. The best hope is to stay on the board and continue to try to educate his or her fellow directors about the potential risks and liability involved when uninformed decisions are made.

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  3. To add to Robert's question, why do we have Statutes if there is no accountability for a board that run wild with power.

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  4. To add to Robert's question, why do we have Statutes if there is no accountability for a board that run wild with power.

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  5. Can Board of Directors file for Chapter 11 without the consent of the unit owners?

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