More precisely, does an HOA’s Board of Directors have authority to make important decisions for the community without seeking input from their homeowners – either informal consultation, a survey or a formal vote?
The short answer to the question is “Yes.” The HOA board is established to oversee the governance of the association on behalf of the homeowners/members. While HOAs are quasi-governmental in nature, they are not pure democracies in which members vote on every issue. The long answer to the question is more complicated.
Unilateral Board Decisions
Homeowners associations are private entities homeowners join when they purchase a property. Home buyers sign agreements to be governed by the association and abide by the decisions of the duly appointed/elected HOA board of directors.
In California, the legal authority and responsibilities of an HOA, and its board of directors, are defined in three places:
- The state’s Davis-Stirling Act (see: www.Davis-Stirling.com/HOME).
- The California Corporations Code (see: https://www.davis-stirling.com/HOME/Statutes/-Corporations-Code).
- The founding/governing documents (CC&Rs, By-Laws, etc.) of the HOA itself.
These legal sources define three things - what the association and its board of directors must do, what they may do, and what they may not do.
An example of the first is scheduling, posting notice and holding annual meetings. The second includes any area where the board may exercise discretion, such as developing architectural standards. Finally, an example of the third is the maximum annual increase in dues the board can pass without obtaining the members’ approval.
"Your authority as a board member stems from your association's governing documents," explains Robert DeNichilo, an attorney who specializes in representing community associations. (see: https://www.hoaleader.com/public/406.cfm).
A fourth source of authority is in how the California courts typically defer to the decision of a board of directors. Say an HOA board sets a schedule of fines and authorizes the manager to assess those fines when homeowners are in violation of HOA rules. Some homeowners object and file suit to block either the fines or enforcement of the rules. The court typically will find for the HOA board where they can show they conducted a reasonable investigation into the issue and made their decision a) in good faith and b) with the best interests of the HOA in mind, even if the suing homeowners present evidence the board’s decision wasn’t the “best” available option.
Protect Your HOA Board from Homeowner Lawsuits
So, how does an HOA board protect itself from angry, litigious homeowners? First, acquaint yourself thoroughly with your HOA’s governing documents. Learn what you must do, may do, and cannot do. Then, if you have any questions or concerns, consult with your HOA’s manager or management company representative.
Next, to learn what the California Davis-Stirling Act and the California Corporation Code require of you, again, talk to your HOA management and/or your HOA’s attorney. You may want your HOA to host an annual training/refresher seminar for directors to explain the duties and responsibilities not only of the individual directors but the board officers and the board as a whole. You may find presentations by your manager or management company, and perhaps with presentations by an attorney, very helpful.
- Downloading and reading our booklet: “Are You Doing Your Job as an HOA Board Member? A Basic Guideline of Roles and Responsibilities”
- Downloading and reading another resource: “Beginner’s Guide to HOA Boards of Directors Duties and Responsibilities”
- Giving homeowners opportunities to be heard at designated times and demonstrating that you are listening (look and smile at the speaker). Your HOA’s regular board meeting should begin with 15 minutes of “Open Forum” as a way to allow homeowners to speak without inviting them to take over your meeting. The remainder of the meetings should be run efficiently, according to the published agenda.
- Making decisions (conducting votes) in open meetings, not executive sessions. This helps with the image of transparency that the board needs to convey. There are still times when the particulars of an issue, especially where the directors are consulting with the HOA’s attorney, that the discussions should be conducted in private.
- When there is no urgency, move cautiously before making big changes in the HOA’s policies and/or procedures. Example: if your HOA’s members have been accustomed to having onsite management available, the board shouldn’t eliminate that service to save money without first consulting with the homeowners and gaining their support.
For over 30 years, The Hignell Companies have been assisting HOA and condominium association boards manage their properties, especially with these issues of what HOA boards can and cannot do. We support clients throughout Northern California, including Chico, Redding, Yuba City, Marysville, and Sacramento, with from 25 to 2,300 units. Call us at 530-894-0404 and let's chat. We would love to help you and your colleagues keep your HOA in good standing. Or visit us at: http://www.hignell.com/homeowners-assoc.