CAI-NJ July 2021

WHAT’S IN A BOARD LEADERSHIP DEVELOPMENT WORKSHOP, FROM PAGE 18.

COMMUNITY ASSOCIATIONS: from Governing Documents to BOARD RESPONSIBILITIES By Jennifer L. Alexander, Esq., Griffin Alexander, P.C.

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I n 1970, there were approximately 10,000 commu- nity associations in the United States. Today, there are over 370,000. Approximately one out of every five Americans live in a home in such a community. The phrase “Community Association” creates a very apt description. These organizations are “associations”: they are corporate, they have boards of directors (or trustees), policies, by-Laws, and they are bound by corporate doc- uments. They are also “communities”: their members share responsibilities and should build a positive environment for their neighbors. Members’ money is collected through assessments, which is used to pay for maintenance and repairs that benefit the whole community. The directors on an association’s board are (usually) elected by and among members of the community. Boards have responsibilities to associations; likewise, directors

have fiduciary duties. While specific boards’ powers and duties may vary from association-to-association, they always have the power to exercise authority on the associ- ation’s behalf. It is nearly universal for boards to have the power to levy assessments against members and to use those assessments to upkeep commonly owned property (“common elements”). Boards should maintain insurance to protect their association and maintain operating accounts on the association’s behalf. Boards must be prepared to bring actions on behalf of (and defend actions brought against) associations. Importantly, boards must be capable of making rules and regulations to govern the community. Along with rules and regulations, governing documents are a key component of all associations. The master deed (or the declaration of covenants, conditions, and restric- tions) is the most authoritative of these documents. The mas- ter deed acts like the association’s constitution: it provides a blueprint for how the association should be run, outlines members’ property rights, describes the individually owned and common elements within the community, and so on. If the master deed is like a constitution, then the by-Laws are like statutes. They describe the associations’ corporate governance and outline the powers and duties of members and the board of directors. Below by-Laws in the hierarchy are resolutions: the rules and regulations established by the board of directors to better govern the community. In many states, associations are required to provide a fair and efficient alternative to litigation through which unit

“Boards have responsibilities to associations; likewise, directors have fiduciary duties.”

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