What if HOA Members want to Sue to the Board?
Has your board instituted an ethics policy for all directors and committees? Typically, the first requirement is that all nominees for directors sign a confidentiality promise never to sue the board. So, if a board member does something wrong, illegal or unethical, how can the HOA get relief?
Board Ethics & Policies
Board ethics and conduct policies are an excellent idea for associations and can apply to directors, committee chairs, and committee members. Such policies can make a strong statement about the association’s values and build members’ confidence in their volunteer leadership.
State Eligibility Standards
State eligibility standards for board candidacy or board service in the bylaws or election rules. The board should adopt a code of ethics or conduct as an operating rule to make it harder for a future council to tinker with it without first informing them.
Policy on Conduct
A policy on conduct should address behavior in board meetings, ethics, conflicts of interest, preservation of confidential information, the generous benefits to (or receiving from) vendors, and the Business Judgment Rule, among other essential topics necessary for your community.
Confidential Information
Concerning the protection of confidential information, many associations require their directors to annually sign confidentiality promises to remind them of the entrustment of sensitive data during their board service. Such agreements are pretty proper and a good idea.
Board Boundries
Another topic is board boundaries. Is it all right for an individual to be instructing vendors or the manager without a board vote so authorizing? If not, is including one in the policy a good strategy? While board eligibility standards could require that a candidate or board member not be actively in a lawsuit against the association, it is hard to envision how a homeowner could validly be required to release their rights during their board service.
For example, if a homeowner—after being elected to the board—had a bad roof leak that the association refused to repair, would that director have released the association from that responsibility in advance? Further, what does such a policy say about that association? Remember, this policy says much about what is vital to the community.
Contact Us
Hopefully, the association’s legal counsel has substantial experience in drafting solid board conduct policies and should be involved in reviewing them before the association adopts them. Need assistance? We can help you handle issues surrounding your HOA community. Contact us today!