BOARD DISCIPLINE

BOARD DISCIPLINE: Has your board been naughty or nice this year?!

December 25, 2020 by Steve Horvath

Ho ho ho, what a year 2020 has been! Like all of the world, multi-family residential communities have been tested in a number of ways. For many communities, that means less access to amenities, but hopefully greater access to the inner-workings of your association as meetings and documents have transitioned from in-person and hard-copies to online and readily available from the convenience of your phone, tablet or computer. All those changes aside, has your board of directors been naughty or nice this year?!

Serving on a nonprofit board of directors at condominium and homeowner associations isn't easy. Let's be clear: serving means to perform duties or services for (another person or an organization). While we could discuss the endless differences between statutory minimums vs. serving to surprise and delight, many volunteers do not have the ambition, energy, skill sets and/or time available to plan, execute and oversee the operations of communities with annual budgets ranging from hundreds of thousands to millions of dollars. For that reason, associations often hire a phalanx of third-party companies to assist with daily operations and special projects; however, a true, robust accountability system rests with the board of directors regardless of the resources invested in outside assistance. That accountability system can come under stain from a lack of volunteer compliance.

What does a 'nice' Board look like? While most associations are subject to earlier laws (see this graphic), the relatively fresh Washington Uniform Common Interest Ownership Act (officially RCW 64.90; abbreviated WUCIOA) provides many clues. Lawmakers incorporated common-sense updates based on association practice over the past four decades into the WUCIOA. Here's a short list.

Major updates in the WUCIOA all have a common theme: accountability and transparency. For example, regardless of your exact association procedures, do you ensure that all your business meetings have adequate notice including a detailed, intuitive agenda? Do you disseminate meeting materials prior to every meeting and ensure your owners can speak up about important topics? Do you make it easy for owners to vote? On the flip side, has your board adjusted rules "on the fly" without providing adequate notice to your owners? Does your board meet in secret to make decisions simply out of concern about what your owners might think if you discussed the same topic publicly? Has 2020 brought about any "fringe" decisions of dubious ethical and/or legal origin that your board simply hopes nobody will challenge? Does your board make decisions based on the needs of your owners and consistently follow all of the (somewhat complex) legally-binding requirements contained in your governing documents instead of decision-making based assumptions and/or expedience? Many of the aforementioned scenarios are a fast-track spiral southward on the Cheer-O-Meter scale!

Most of what you just read seems straightforward, right? It takes a lot of work to be accountable and transparent about what's happening, but there are more subtle signs that your association's stocking might be full of coal. By law, every non-profit corporation organized in Washington State is subject to group decision-making by a board of directors. Check out great resources like the CAI Board Member Toolkit and the WA State Nonprofit Handbook to understand more. Board members owe their organizations and even members of the public a duty of care. While it's not always easy to communicate effectively and obtain everyone's feedback, your board is required by law to make decisions as a team. Your association's bylaws might reference specific duties incumbent on board officers, but those duties do not obviate the legal requirements around group decision-making. A liaison is not an executive decision-maker. The only executives you have are your board members working as a team. Even committees charged with the authority of the Board require at least two Directors to agree. So, are the decisions being made and executed at your association a result of what your board decides as a group, or has something gone awry? Do you have a rogue board member who engages in unilateral decision-making to delay, undermine and/or re-interpret your board's decisions? Has your board of directors simply failed to make certain decisions that seem to get dealt with "under the radar" by your registered agent? If so, your board isn't scoring any 'nice' points this year!

Being a volunteer leader at a condominium or homeowner association is just as challenging now as ever. Accountable, ethical, transparent teamwork to make decisions will almost guarantee volunteer compliance and provide simple keys to success:

  • Acknowledge and correct errors, no matter how small, as they are identified

  • Communicate clearly and consistently to keep everyone on your board in lock-step and ensure your owners remain well-informed

  • Read and understand your governing documents and the laws applicable to your association

  • Stay proactive instead of reactive

Don't try to measure success by hoping nobody will notice. Fill your association's stocking with JOY, not COAL!