According to the Regency By-laws, the Unit Owner's Association (Association) operates and maintains the Property for the benefit of the Unit Owners. The Association is an unincorporated entity. It has all the powers conferred by the Condominium Act, the laws governing unincorporated associations, and the provisions of the condominium instruments. The powers of the Association is exercised through its Board of Directors (Board). The Association or its Board may delegate any of the powers to a managing agent.
The Board has seven members, one of whom appointed by the Club, one of whom appointed by the Commercial unit (from the original Convertible Unit), and five of whom shall be elected by the other Unit Owners. Each Director elected by Residential Unit Owners serve a term of two years. The principal officers of the Association are the President, the Vice President, the Secretary, and the Treasurer.
The Board has seven members, one of whom appointed by the Club, one of whom appointed by the Commercial unit (from the original Convertible Unit), and five of whom shall be elected by the other Unit Owners. Each Director elected by Residential Unit Owners serve a term of two years. The principal officers of the Association are the President, the Vice President, the Secretary, and the Treasurer.
The first condominium in the continental U.S. was built in Salt Lake City, Utah, in 1960. By 2020, 73.9 million Americans, or roughly 27% of the U.S. population, live in a homeowners association, condominium community, or housing cooperative, collectively referred to as community associations or planned communities.
These communities—more than 347,000 nationally—share a few essential goals—preserving the nature and character of the community, providing services and amenities to residents, protecting property values and meeting the established expectations of owners. In other words, association leaders—homeowner leaders and their professional business partners—strive to build and sustain communities people want to call home.
Experience and lessons learned from the past 60 years have contributed to various best practices regarding the governance of condomiums by condominium unit owner associations.
For its existence of 45 years, governance for the Regency has been primarily a person-based system, not a rule-based system. This has to change. Unit owners are in the best position and the best agents to make this change.
There are also guiding principles and best practices to help directors and boards avoid common pitfalls, such as:
1. Be Transparent and Accessible
The board should communicate frequently, openly, and honestly. Communicating effectively with other directors, owners, and professionals hired by the board to help manage the community is essential. Each board should develop a communication strategy containing, at a minimum, the following elements:
2. Be Ethical and Above Reproach
It's very seldom that a director will consciously act in an unethical manner. But being technically ethical is not enough, alone, to avoid unnecessary conflict and expense. Directors should strive to be above reproach and affirmatively avoid actions and comments that might create an appearance of unethical behavior. Each board member should strive to:
A director has a direct interest in a transaction with the association when the director, or a member of the director's immediate family, has either a material financial interest in the transaction or a relationship with other parties to the transaction that reasonably might be expected to affect the director's judgment in a manner adverse to the association and its members as a whole.
A director has an indirect interest in a transaction when an entity in which the director has a personal and material financial interest, or in which the director is a director, officer, or trustee, is a party to the transaction.
If a director is uncertain if a conflict exists, the director should present all of the relevant information and facts to the other directors, and be prepared to refrain from participating in the discussion of the issue being considered or voting on it.
Be thoroughly familiar with the laws, rules, regulations, and recorded documents that govern the association. The director should not advocate or support any action or activity that is inconsistent with the rules, regulations, or terms of the governing documents.
By exhibiting sound ethics and integrity, a director can help build the community's trust in the board.
3. Be Reasonable
A director should always take the director's responsibilities to the community seriously, exercise sound judgment, and not hesitate to rely on simple common sense. Discussions with owners and other directors should be respectful even if the individuals vigorously disagree with one another; and, importantly, but difficult, even when an owner or another director acts with disrespect.
Sound judgment is essential, and is perhaps one of the most crucial assets required of a director. Exercising sound judgment requires a director to think about things clearly, calmly, and in an orderly fashion so that a good decision can be made.
Most importantly, a director should consider all the facts and opinions so that each decision is fair and reasonable under the circumstances. A director should investigate and research issues, and approach problems with a common sense attitude, relying on personal experience and perceptions regarding the situation or facts. If a topic needs more investigation, research, or discussion, the director must recognize the need and advocate for it. Rash decisions must be avoided—but directors should never over complicate matters that have a clear and simple solution.
In other words, directors should apply their own experience and general knowledge to each situation in order to make the best decision under the circumstances.
4. Be Fiscally Responsible
Financial stability is essential to the success of an association. A director should always seek to establish sound fiscal policies, help develop a workable budget, and continually look for ways to carry out the purposes of the association in a responsible manner.
A director should seek the advice of professionals such as community association managers, accountants, and financial advisors. The right professionals can assist the board to develop accounting controls to protect the association's assets, realistic budgets which ensure that operating funds are sufficient to cover ordinary expenses of the association, and detailed reserve studies to provide sufficient capital for any future, or unexpected, expenses.
Owners typically do not like increased assessments and demand the board look for ways to cut costs and effectively budget. However, sometimes increased assessments are unavoidable, and if the board can increase assessments gradually and have robust reserves for when inevitable expenses and replacement costs arise, many of these issues can be solved.
Conclusion
Directors of an owners' association play a very important role in the successful operation of the association. A successful director will be open and honest, ethical, reasonable, and financially prudent.
Links and References
Read more at the Library on Condominium Governance: https://bit.ly/3OFGJRa
2018/04/04 Ward and Smith P.A. Best Practices For Homeowner Association Directors and Boards. https://bit.ly/3ylIAVS
Community Associations Institute: About Community Associations. http://bit.ly/3ITWhk6
These communities—more than 347,000 nationally—share a few essential goals—preserving the nature and character of the community, providing services and amenities to residents, protecting property values and meeting the established expectations of owners. In other words, association leaders—homeowner leaders and their professional business partners—strive to build and sustain communities people want to call home.
Experience and lessons learned from the past 60 years have contributed to various best practices regarding the governance of condomiums by condominium unit owner associations.
For its existence of 45 years, governance for the Regency has been primarily a person-based system, not a rule-based system. This has to change. Unit owners are in the best position and the best agents to make this change.
There are also guiding principles and best practices to help directors and boards avoid common pitfalls, such as:
1. Be Transparent and Accessible
The board should communicate frequently, openly, and honestly. Communicating effectively with other directors, owners, and professionals hired by the board to help manage the community is essential. Each board should develop a communication strategy containing, at a minimum, the following elements:
- Publicizing meeting agendas well in advance to all owners and encouraging owners to attend.
- Communicating with owners about current board projects and progress.
- Providing owners information addressing the issues important to them and how the board intends to address those issues.
- Consistent director attendance at all meetings, with full discussion of all matters on the agenda, and votes, whether in favor or against, on each decision that requires a vote of the directors.
- Posting of minutes of the meetings in a timely manner.
- Providing a method for owners to contact directors outside of meetings.
- Communication methods can include: personal contact, informational meetings, printed newsletters, email, social media sites like Nextdoor, or a website. The key goal is to be as transparent as possible and help owners develop a sense of trust in the board.
2. Be Ethical and Above Reproach
It's very seldom that a director will consciously act in an unethical manner. But being technically ethical is not enough, alone, to avoid unnecessary conflict and expense. Directors should strive to be above reproach and affirmatively avoid actions and comments that might create an appearance of unethical behavior. Each board member should strive to:
- Avoid personal agendas, and apply the provisions of the community's governing documents consistently and without prejudice.
- Make decisions that are in the best interests of the association and the community, even if contrary to the director's individual interests.
- Avoid conflicts of interests or even the appearance of a conflict. A conflict of interest occurs when a director has a direct or indirect personal interest, not shared by all members, in a transaction conducted with the association.
A director has a direct interest in a transaction with the association when the director, or a member of the director's immediate family, has either a material financial interest in the transaction or a relationship with other parties to the transaction that reasonably might be expected to affect the director's judgment in a manner adverse to the association and its members as a whole.
A director has an indirect interest in a transaction when an entity in which the director has a personal and material financial interest, or in which the director is a director, officer, or trustee, is a party to the transaction.
If a director is uncertain if a conflict exists, the director should present all of the relevant information and facts to the other directors, and be prepared to refrain from participating in the discussion of the issue being considered or voting on it.
Be thoroughly familiar with the laws, rules, regulations, and recorded documents that govern the association. The director should not advocate or support any action or activity that is inconsistent with the rules, regulations, or terms of the governing documents.
By exhibiting sound ethics and integrity, a director can help build the community's trust in the board.
3. Be Reasonable
A director should always take the director's responsibilities to the community seriously, exercise sound judgment, and not hesitate to rely on simple common sense. Discussions with owners and other directors should be respectful even if the individuals vigorously disagree with one another; and, importantly, but difficult, even when an owner or another director acts with disrespect.
Sound judgment is essential, and is perhaps one of the most crucial assets required of a director. Exercising sound judgment requires a director to think about things clearly, calmly, and in an orderly fashion so that a good decision can be made.
Most importantly, a director should consider all the facts and opinions so that each decision is fair and reasonable under the circumstances. A director should investigate and research issues, and approach problems with a common sense attitude, relying on personal experience and perceptions regarding the situation or facts. If a topic needs more investigation, research, or discussion, the director must recognize the need and advocate for it. Rash decisions must be avoided—but directors should never over complicate matters that have a clear and simple solution.
In other words, directors should apply their own experience and general knowledge to each situation in order to make the best decision under the circumstances.
4. Be Fiscally Responsible
Financial stability is essential to the success of an association. A director should always seek to establish sound fiscal policies, help develop a workable budget, and continually look for ways to carry out the purposes of the association in a responsible manner.
A director should seek the advice of professionals such as community association managers, accountants, and financial advisors. The right professionals can assist the board to develop accounting controls to protect the association's assets, realistic budgets which ensure that operating funds are sufficient to cover ordinary expenses of the association, and detailed reserve studies to provide sufficient capital for any future, or unexpected, expenses.
Owners typically do not like increased assessments and demand the board look for ways to cut costs and effectively budget. However, sometimes increased assessments are unavoidable, and if the board can increase assessments gradually and have robust reserves for when inevitable expenses and replacement costs arise, many of these issues can be solved.
Conclusion
Directors of an owners' association play a very important role in the successful operation of the association. A successful director will be open and honest, ethical, reasonable, and financially prudent.
Links and References
Read more at the Library on Condominium Governance: https://bit.ly/3OFGJRa
2018/04/04 Ward and Smith P.A. Best Practices For Homeowner Association Directors and Boards. https://bit.ly/3ylIAVS
Community Associations Institute: About Community Associations. http://bit.ly/3ITWhk6
Code of Virginia: § 54.1-2354.3. Common Interest Community Ombudsman; appointment; powers and duties. http://bit.ly/3xSBJSV
Tracking Virginia 2023 Legislation Related to Common Interest Community
Community Associations Institue: Virginia State Legislative Tracking Report. http://bit.ly/3xUT6Cu
2023 Virginia House Bill 2184: Judgment liens; release of specific property. https://bit.ly/3xUT6Cu
2023 Virginia Senate Bill 1312: Electric vehicle charging stations; requirement for certain developments. http://bit.ly/3SsD0cX
2023 Virginia Senate Bill 1042: Common Interest Community Board; enforcement power over continuing violations. http://bit.ly/3XZZzH6
2023 Virginia House Bill 2098: Common interest communities; authority of association to suspend right to use certain facilities. http://bit.ly/3m0hQ9H
2023 Virginia House Bill 1627: Common Interest Community Board; enforcement power over continuing violations. http://bit.ly/3Z0mdQF
2023 Virginia House Bill 1519: common interest community associations termination of automatic renewal of managing contract. http://bit.ly/3Sv9kfa
2023 Virginia House Bill 1558: Common interest communities; residents providing certain services presumed to be 'independent'. http://bit.ly/3IWcIfK
2023 Virginia Senate Bill 1428: Common interest communities; foreclosure remedy. http://bit.ly/3KCaJyA
2023 Virginia House Bill 1837: Common interest community associations; prohibition on use of nominating committees. http://bit.ly/41mpOdL
2023 Virginia House Bill 2184: Judgment liens; release of specific property. https://bit.ly/3xUT6Cu
2023 Virginia Senate Bill 1312: Electric vehicle charging stations; requirement for certain developments. http://bit.ly/3SsD0cX
2023 Virginia Senate Bill 1042: Common Interest Community Board; enforcement power over continuing violations. http://bit.ly/3XZZzH6
2023 Virginia House Bill 2098: Common interest communities; authority of association to suspend right to use certain facilities. http://bit.ly/3m0hQ9H
2023 Virginia House Bill 1627: Common Interest Community Board; enforcement power over continuing violations. http://bit.ly/3Z0mdQF
2023 Virginia House Bill 1519: common interest community associations termination of automatic renewal of managing contract. http://bit.ly/3Sv9kfa
2023 Virginia House Bill 1558: Common interest communities; residents providing certain services presumed to be 'independent'. http://bit.ly/3IWcIfK
2023 Virginia Senate Bill 1428: Common interest communities; foreclosure remedy. http://bit.ly/3KCaJyA
2023 Virginia House Bill 1837: Common interest community associations; prohibition on use of nominating committees. http://bit.ly/41mpOdL