How to Manage Personal Liability as an HOA Board Member

Posted on Thursday March 15, 2018

If you’ve agreed to serve as a board member for your homeowners association (HOA), you may be thinking this is just like any other simple volunteer opportunity.  However, this is where you may be missing the mark.  The HOA board is governed through federal and state law, as well as your community’s covenants and bylaws.  There are also certain fiduciary responsibilities and protocols that board members should be aware of to help protect the association and their own personal liability.  

Here we’ve compiled a few fundamental principles that every board member should apply:

Uphold fiduciary responsibility
Always be sure to uphold your responsibility as a board member to act in trust to protect property values and the financial health of the association. For example, if you are aware the amenity building is in disrepair and could present a safety hazard to residents, then you have an obligation to address it.  You can be held liable if you choose to ignore issues or you are not acting on the best interests of the association. 

Abide by governing documents and meeting protocols
Every HOA has a set of policies and procedures outlined in its covenants and bylaws.  Make sure you are familiar with these documents and understand how your specific guidelines apply to your association.  All decisions made by the board should comply with the governing documents and meetings should follow the proper protocols. Remember that confidential and sensitive matters should be handled within an executive session.

Keep communications separate and professional
Most board members don’t realize that use of a personal or work email address to communicate about board business can open you to significant risk.  If you are ever sued, you may be forced to provide access to all personal or work email accounts used to conduct board business.  This could not only expose your personal information, but also affect your employment.  A best practice is to create an email account specifically for your service as a board member.  Remember that all email communication should be kept objective and professional.  If you have sensitive issues to discuss regarding a resident or board concern, then it’s best to have the discussion offline.

Secure the right insurance
All boards should carry Directors and Officers (D&O) insurance, which provides protection for the board members from any allegations or lawsuits that are the result of decisions they make while in service to the HOA. However, be aware that actions such as drinking alcohol during meetings can negate the coverage.

While serving on an HOA board may carry some potential risk, the benefits of giving back to your community can easily be greater.  Partnering with a reputable residential management company will provide your board with access to industry experts who can offer guidance and expertise to help your board stay legally compliant, and ensure you as a board member stay educated on how to deliver on your commitment to serve your community.

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