The Basics of the Board

When you buy into an Association, the first thing to understand is you are now living in what is commonly referred to as a planned community. A big part of understanding this concept is realizing there needs to be governance of said community, as well as business orchestration of the community as a registered non-profit organization in the eyes of the State of Minnesota. How does that happen?  Through your elected Board of Directors. The purpose of this article is to give you a brief overview of the function of the Board and their responsibilities to your community. Who are they?Board members are typically individuals elected by the homeowners from within your Association at the Annual Meeting. Depending on your Governing Documents, the board may consist of somewhere between three and nine people.  Five member Boards seem to be the norm. They are typically elected to serve a two or three year term. Following the Annual Meeting, most Boards will have a brief meeting to elect the Officer positions. President, Vice President, Treasurer, Secretary and Member at Large. Homeowners/members elect who will be on the Board. The Board members then elect their positions.  The most important thing to note is that there is no one Board member that is more powerful than another. The Officer titles help define roles and responsibilities; however, they are all elected in the same way and therefore carry the same weight as any Board member. What do they do?  In short, the Board is the governing and decision making body on behalf of your Association. To name a few of their responsibilities: They manage and engage in contracts and contractors – such as lawn/snow providers, insurance carriers, management companies, repair services, etc. The Board also handles and resolves homeowner issues. A primary function of the Board is to create and enforce rules and policies that govern the Association. This includes following the Governing Documents and state statutes. Finally and perhaps most importantly, the Board is responsible for the fiscal management of the Association. Examples of these responsibilities include: setting and collecting dues, creating Operating Budgets, managing the Reserve Fund and capital projects, and paying bills. How do they do it?Associations are organized as a nonprofit corporation and are governed by the Minnesota Nonprofit Corporation Act. This gives the Board a legal framework for how to operate. Most Boards will meet (Board Meetings) on a regular schedule to discuss and make decisions; and often times they will hire a professional Management Company, such as us at Sharper Management, to facilitate, take over and/or provide guidance to the items listed above. However, ultimately these responsibilities fall on the Board of Directors as the elected representative of the community. Why should you care?  Having listed everything above, you should be enlightened to care because the breadth and depth of the responsibilities of the Board of Directors are great. Decisions made and policies created by the Board can have both immediate and long-term impacts on the Association, and therefore your home and daily life in your home.  It is important to remember these homeowners have generously volunteered their time and talents to serve and do what they feel is best for the Association and community.