Q. I have lived in my community association for a number of years. Unlike the horror stories we occasionally read about regarding bad Boards or illogical enforcement of covenants, our community seems to be working fine. We have a good board of directors and a competent manager. One of our long time board members plans to resign for personal reasons, and a number of residents have encouraged me to “throw my hat into the ring.” I am seriously considering this possibility, but seek your guidance.
A. You have lived in your community for a long time, and are pleased with the way it is working. Do you know why? Most likely it is because there is a conscientious, hard-working board of directors, who are concerned about the welfare — financial and otherwise — of your association.
A community association does not function — good, bad or otherwise — without leadership. Often, as we all have read and heard,some boards of directors are on ego trips. Even though they may care about the welfare of the association, they are more interested in preserving and fostering their own personal agendas. Indeed, I know of one association in which the outgoing Board President seriously considered putting his picture in the social room, as a reminder of his long-term service to the Association.
But the great majority of board members are hard-working and honest. Service on the Board is not fun; the hours are long and the pay is zero. Budgets have to be planned to meet the needs of the association while at the same time satisfying the pocketbooks of the owners. Rules have to be adopted — and then enforced. Delinquencies haveer to be addressed, and it is often difficult — if not embarrassing — to have to approach your neighbor or your friend to remind him/her that there is a delinquency.
I do not know how many owners are in your community. But regardless of size, boards must understand they are running a business — and some of these businesses have budgets which are as large (or larger)than corporations trading on the New York Stock exchange.
This is a serious responsibility, which cannot be taken lightly. Many years ago a Court ruled in the State of Maryland that Board members only have to exercise good business judgment in carrying out their board responsibilities. This means that unless someone can prove fraud, cheating or stealing, a court of law will not second guess the decisions of a board of directors — even if their decision turns out to be the wrong one.
Despite this “good business judgment” rule, I still maintain that a member of the board has a fiduciary duty to the owners who elected him/her to the board. This means that a board member must act fairly, honestly, openly and — of most importance — use common sense in making decisions which impact on the entire community.
Many years ago, the President of a large association gave his “state of the community” speech at the annual meeting. I take the liberty of quoting some of his remarks:
For the past two years, I have served as your President. You have called me at all hours of the day and night; you have pushed me into the swimming pool, and have poured molasses into my gas tank. The hours are long, and the pay is zilch.
But, if I would not have served, you [expletive deleted] would have screwed it all up.
I cannot add much more to this erudite speech. You have an investment in your association, and service on the Board of Directors is a way — perhaps the only way — of preserving that investment.