The board of directors of a condo, co-op, or HOA are elected owners of the building that take responsibility for the healthy operations and governance of the building. They have fiduciary responsibility for the building corporation, including decision making on spending, HOA dues, and project prioritization. A building’s bylaws will determine how many members and the length of their term.
Laying the foundation: a board is the building’s executive team
Condos, co-ops, and HOAs are governed as businesses. They have a legal entity—typically a limited liability corporation or LLC—that collects revenue, has operating costs, files tax returns, and hosts shareholder meetings and votes.
Just like any other business, they have:
The executives—the building’s board of directors—are the group that makes critical decisions, ensures the building’s rules and bylaws are upheld, and takes responsibility for the building’s finances. Ultimately, a building’s property management company and staff report to the board, and the board has final responsibility for the health and performance of the building.
The primary difference: board directors are volunteers
With that foundational understanding in place, things start to differ between an ordinary corporation’s board and a building board for one primary reason. Board members are volunteers that don’t need to have any previous experience managing a building or a business. They are owners that raise their hand and are elected by other owners for a period of time (typically 1-2 years), and direct qualification for the role is often a bonus, not a requirement.
The board is expected to establish and uphold good governance practices to support the building’s best interests and provide other owners with transparency into building priorities and performance. This includes:
A major area of good governance is the oversight of the building’s finances, including setting revenue and expense targets. A well-functioning building should collect enough dues to cover its operating expenses (e.g. staff, supplies, regular maintenance) plus put about 15-40% of dues collected into its reserve depending on the building age, common elements, and amenities. It’s up to the board to ensure the building finances are analyzed and to project for future needs.
If the building needs to amp up its reserve or find funding for projects, it is also the responsibility of the board to define a fundraising plan. This can include rolling out new revenue streams (e.g. charging for amenities), increasing fees/dues (e.g. raising HOA dues or amenity charges), seeking financing, or leveraging a special assessment. The board should decide which approach makes the most sense based on the amount of funding required and timeline.
Projects & Prioritization
The board is ultimately accountable for projects and larger repairs—the decision-making, vendor selection, budgeting, and outcome. They may deputize aspects of this to a property manager, such as the day-to-day oversight of the project, however they should expect to stay involved to select a vendor, approve the expense, and ensure the project is completed to satisfaction. This includes the prioritization of projects if a building has several planned projects upcoming to ensure that the order of work is in the building’s best interest.
Because managers and staff report into the building board, the board is responsible for managing the performance of their employees and vendors. They should ensure that their teams get actionable feedback and direction on how to proceed. This requires strong, consistent communication and clear expectations. Not sure what you should expect of your property manager? Read more about the roles and responsibilities of a property manager here.
Does this look like a lot of responsibilities? That’s because it is. Each of these responsibilities is critical to the healthy operations of a building. As the operating system for buildings, Super’s software platform helps boards, property managers, and residents streamline tasks and enhance transparency and accountability.
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