Homeowners’ associations (HOAs) are invaluable in maintaining property values and helping to ensure smooth community operations. At the center of every HOA is its board of directors—volunteer homeowners tasked with making decisions for the welfare of the community.
However, being on an HOA board is more than just attending meetings or choosing paint colors for the clubhouse. Board members have fiduciary duties to safeguard the welfare of the association and its members. Falling short of these duties can lead to lawsuits or personal liability.
Duty of care
The duty of care means board members must make informed decisions using reasonable diligence and prudence. This includes:
- Reading materials before meetings
- Asking thoughtful questions
- Enlisting legal guidance when necessary
Board members should avoid making snap decisions or ignoring available information. Suppose the HOA is considering a major roof replacement project; board members should gather bids from multiple contractors and review their qualifications before approving the expense.
Duty of loyalty
It requires board members to center the HOA’s welfare and not their own personal gain. They have a duty to avoid conflicts of interest by resisting any temptations to use their position for self-dealing or special favors. For instance, if a board member owns a landscaping business, they shouldn’t push the board to hire their company without disclosing their connection and recusing themselves from the vote.
Duty of obedience
The duty of obedience means that board members must comply with the governing documents of the association—such as the bylaws, CC&Rs (Covenants, Conditions & Restrictions) and state laws. Decisions that ignore or contradict these documents can be challenged or reversed. For example, suppose the HOA bylaws limit special assessments to $1,000 per unit without a vote. In that case, the board can’t impose a higher amount unless the members approve it through proper procedures.