HOA Leadership 102

BY THOMAS CONNELLY

As a general rule, most newly elected board members receive training on homeowner association leadership and board member responsibilities via formal training, on-the-job training, mentoring and self-study. This is “HOA Leadership 101”. Newly elected board members quickly learn about the statutory requirements governing HOA leadership and procedure. In California, these are primarily outlined in the Civil Code (The Davis-Stirling Act). They quickly learn how important gaining an understanding of the association’s governing documents and rules are. They also learn how HOA meetings work, how to work with a management company and how to read the association’s financial documents. Missing, however, from most board member training is instruction on the actions that boards, and individual board members, should avoid.

This article, “HOA Leadership 102”, examines nine common behaviors and pitfalls that HOA boards and board members should avoid.

PERSONAL AGENDAS DRIVING THE BUS: Sometimes, individuals are motivated to join the HOA board to pursue a personal agenda, or to address a single issue to benefit their personal desires. Effective HOA governance requires that board members prioritize the needs and best interests of the entire community over their own personal desires, thus serving the best interests of the entire community, rather than championing personal agendas or issues unique to them.

THE BOARD LACKS VISION OR BEHAVIORAL

EXPECTATIONS: Too often, homeowner association board members attend meetings, make decisions, and handle the day-to-day business of the association without any clear vision, direction, or relational expectations. Effective HOA boards collaborate to develop a clear vision of their purpose, and to develop a set of standards and expectations for conduct, behavior, and interpersonal engagement then communicate that to the entire community.

The board’s vision and behavioral expectations should be memorialized in writing as vision and mission statements, rules of conduct, codes of ethics, behavioral expectations, or board policies. Done in a constructive and professional manner, accountability to the well-developed vision and standards of conduct ensures that the board will be more effective and productive and the community will have a clear understanding of the board’s intentions.

FAILURE TO FOLLOW PROCEDURAL MANDATES:

Although this may seem to be effective in many circumstances, it is never okay to operate a homeowner’s board without complying with the laws and regulations that dictate how the board should function and operate, especially related to the conduct of board related business. It only takes one homeowner to notice this and call the board on their failure to comply with proper procedure, which could lead to criticism, ridicule, community upheaval and avoidable litigation. Boards should not put themselves in this position.

RULE ENFORCEMENT: Oftentimes, board members perceive that their election to the governing body empowers them to unilaterally act as an enforcer of the rules of the association. While this is very commonplace, in most cases it is not acceptable or effective. If the governing documents don’t specifically dictate this, then the Board’s vision statement should outline how rules enforcement and member discipline will occur and clearly define the board’s role in that process.

MAKING DECISIONS OUTSIDE OF BOARD MEETINGS:

Although this may be an efficient way to get things done, in most cases it is not legal. Absent an emergency, board decisions should never be made unilaterally, without involving the entire board and giving the community the opportunity to, at least, observe the decision making process. Community governance is meant to occur during formal board meetings with a maximum level of transparency. While it is tempting for board members to deviate from the proper processes, it is neither legal nor a good leadership practice.

DIRECTING THE WORK OF CONTRACTORS AND

SERVICE WORKERS: Some board members feel that it is their role to ensure that work being done in the community is done correctly. Generally, board members should avoid the inclination to meddle in project supervision and other routine operational activities without the knowledge and authorization from the entire board. In general, the supervision of contractors and projects should be the job of the association manager, a project manager, or some other individual formally identified by the board to perform that function!

When individual board members meddle in the work of a contractor or other service provider, even with the best of intentions, they’re wading into dangerous waters. This can lead to a variety of predictable and avoidable outcomes, including confusing the scope of work, unauthorized changes to the project, increased frustration and angst for managers and contractors, and unanticipated costs to the association for work that may not have been properly approved.

LOBBYING AND BULLYING: One of the most divisive and harmful things that a board can experience is when an individual, or a sub-group of the board, attempts to impose their wills, wants and personal agendas on other board members. This is not how homeowner boards are intended to operate! Every board member has the right to their opinion on any issue, whether or not it’s the popular or majority opinion, without the fear of being pressured to make a certain decision or ridiculed for not doing so.

FAILURE TO SUPPORT BOARD DECISIONS: Board members will invariably find themselves in the minority on a decision made by the group. After those decisions are made, they are however, always expected to support those decisions, without maligning other board members for their dissenting opinions, especially in a public forum. This tends to undermine board cohesiveness and effectiveness, and leads to the appearance that the board lacks effective leadership.

Failure to fulfill fiduciary responsibilities: Board members are required to carry out their tasks responsibly as a fiduciary to the association. Learning their role as a board member, being prepared for board meetings, monitoring the association’s finances, complying with HOA laws, following to the association’s governing documents, acting in the best interest of the entire association, seeing that the association is adequately funded, and ensuring that association assets are effectively maintained

HOA Leadership 102 Continued from page 15 are the main responsibilities of any HOA board. Unless the association is self-managed, the board also supervises the work of a community manager or general manager. Failure to perform these basic fiduciary functions can lead to financial hardship, costly (and possibly avoidable) repairs, expensive litigation, allegations of

malfeasance, and other negative outcomes.

As community leaders, each member of the board has a duty to ensure that they fulfill these fiduciary responsibilities to the best of their ability.

What Happens When Things Go Wrong?

The five most predictable outcomes when any of these nine

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pitfalls manifest are: 1. Ineffective board decision making; 2. The boards’ actions reflect negatively on the community, both internally and externally; 3. Community relationships become strained, fractured, conflict ridden and unproductive; 4. Conflict, lawsuits, and expensive litigation; 5. Increased operating costs, legal costs, judicial intervention and sanctions, punitive damages, large special assessments, and loss of insurance coverage (just to name the most common).

In conclusion, effective homeowner boards must not only follow the laws, rules, processes, and standards that apply to their leadership roles, but they must also avoid the pitfalls that tend to afflict less effective HOA boards. Remember, serving a board is a privilege that requires hard work, commitment, energy, and restraint. When a board works effectively and collaboratively, avoiding the pitfalls, everyone in the community is better off!

Thomas Connelly has been a board member and board president for two community associations in California. He is an active member of ECHO and is the President of Connelly Consulting, providing safety, crime prevention, disaster planning and other consulting services to community associations.

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