BOARD OF DIRECTORS
Your VOLUNTEER Leaders
Your volunteer Board of Directors, elected by homeowners, are entrusted to provide three core services to their residents (owners and renters).
- Community Services, such as securing maintenance vendors, orienting new owners, and publishing newsletters.
- Governance Services, which is fulfilling obligations required by statutes and governing documents.
- Business Services, such as investing reserve funds, developing long-range plans, and efficiently collecting assessments.
By fairly and effectivelydelivering these three core services, community associations protect and enhance value: the value of the asset — the common areas and individual homes (and the lenders’ interests in those homes).
Duties of a Fiduciary Board Member
Act in good faith, trust, confidence and candor with the highest degree of honesty and loyalty; and, in the best interests of the members of the association.
Term of Office & Election
The term of office is two years.
Terms are staggered to prevent having an entirely new Board in the same year.
An election is held annually.
A Candidate Information Form is mailed to all homeowners approximately 60 days before the election,
so you can fill out the required disclosures and run to be on the Board.
If a Board Member resigns or sells his/her property and a position becomes vacant, the Board can appoint a replacement Board Member to complete the unfulfilled term period.
Roles & Responsibilities of Board of Directors
The Board of Directors bears the ultimate responsibility of operating the Community Association on behalf of its owners.
It is the role of a Board to set the policies, standards, procedures, programs, and budget of its Community Association.
The Board may delegate implementation to a Community Manager or Committees.
A Board has a fiduciary responsibility to the Community Association. Its fiduciary responsibility requires directors to act for the benefit of the community as a whole. They must avoid conflicts of interest and acting out of self-interest. Nor can the Board delegate to anyone else its legal obligation to protect the asset which is the total community.
Areas of responsibility includes:
- Care, maintenance, and enhancement of the physical property, common areas, and facilities
- Management of community finances
- Risk management, including obtaining insurance and developing reserve funds
- Establishment, enforcement, and interpretation of rules and regulations
- Preservation and promotion of community harmony
The Board’s legal authority to act on the owners’ behalf, typically is found in:
- Specific state statutes for common interest communities
- General state statutes which provide for the general authority and responsibilities of all corporate Boards of Directors
- Community Association documents which give the Board authority to act on the owners’ behalf.
- Typically, this authority is found in the declaration, articles of incorporation, or bylaws.
Business Judgment Rule
Through judicial decisions, a substantial body of law has developed concerning the standards to which directors must conform while conducting a Community Association’s affairs. Many courts apply the “business judgment rule” to a Board’s actions. That is, if the Board has exercised reasonable business judgment in making a decision, the court will not consider the Board negligent in its fiduciary duty. Nor will the court substitute its judgment for that of the Board. However, the Board must demonstrate how it has taken care in reaching a decision. It is up to the court to decide if the Board has exercised reasonable business judgment.
Source: Community Associations Institute
NAC 116.405 Members of executive board: Prohibited acts. (NRS 116.3103, 116.615)
1. In performing the duties set forth in NRS 116.3103, a member of the executive board shall not:
2. Act outside the scope of the authority granted in the governing documents;
3. Act for reasons of self-interest, gain, prejudice or revenge;
4. Commit an act or omission which amounts to incompetence, negligence or gross negligence;
5. Except as otherwise required by law or court order, disclose confidential information relatingto a unit’s owner, a member of the executive board or an office, employee or authorized agent of the association unless the disclosure is consented to by the person to whom the information relates; or
6. Impede or otherwise interfere with an investigation of the Division by:
(a) Failing to comply with a request by the Division to provide documents;
(b) Supplying false or misleading information to an investigator, auditor or any other officer or agent of the Division; or
(c) Concealing any facts or documents relating to the business of the association.
NAC 116.400 Members of executive board: Responsibilities
1. Comply with all applicable federal, state and local laws and the governing documents of the association;
2. Uniformly enforce the provisions of the governing documents of the association;
3. Ensure that meetings of the executive board are held with such frequency as to properly and efficiently address the affairs of the association;
4. Keep informed of new developments in the management of a common-interest community through educational courses;
5. Ensure that the executive board obtains, when practicable, at least three bids from reputable service providers who possess the proper licensing for any service used by the association;
6. Ensure that the executive board consults with the appropriate professionals as necessary before making major decisions affecting the association;
7. Deposit all money of an association in a federally insured financial institution authorized to do business in this State;