President
President of the Association. Unless an association's governing documents state otherwise, the president is elected by fellow directors, not by the membership, and serves at the pleasure of the board. (Corp. Code § 7213.) More often than not, the president is referred to as the "Board President" or "President of the Board." There is no harm in using the term although technically most governing documents define the office as "President of the Association."Unless otherwise provided in the bylaws, a president's duties generally include:
- presiding over board and membership meetings,
- serving as liaison between management and the board,
- serving as liaison between the association's attorney and the board,
- serving as general manager and overseeing day-to-day matters, such as meeting with vendors, soliciting bids, etc. (unless a manager has been hired to handle those duties),
- co-signing checks with the treasurer or secretary,
- serving as an ex officio member of committees. (“Ex officio” is a Latin term meaning “by virtue of office or position.” An ex officio member of a committee refers to a person serving on a committee due to his or her position rather than through appointment. An association's bylaws may sometimes state that the president is an ex officio member of all committees. If that is the case, the president "has the right, but not the obligation, to participate in the proceedings of the committees." RONR (12th ed.) 47:20.)
Small Associations. In small associations, it is not unusual for the president to oversee day-to-day operations. That means handling calls, meeting vendors and authorizing small expenditures. Boards can pre-authorize the president to spend up to $100, $200, $500, etc. on HOA matters at the president's discretion. The amount authorized varies from board to board and depends on the association's budget. Once a limit has been established, expenditures by the president must be reported to fellow directors. Reporting can be done as costs are incurred and then noted in the board's monthly financial report.
Board's Duty to Monitor the President. Boards have a duty to monitor the president's actions. If the president fails to abide by spending limits set by the board, fails to timely report matters affecting the association or exceeds other limitations set by the board, fellow directors can immediately appoint a new president.
Voting Rights. Under Robert's Rules of Order, the president is not required to abstain from making motions or voting on motions. Unless an association's governing documents prohibit voting by the president, he/she may actively participate in board meetings and vote on all matters brought before the board, whether in open or executive session meetings.
PROCEDURE IN SMALL BOARDS. In a board meeting where there are not more than about a dozen members present, some of the formality that is necessary in a large assembly would hinder business. The rules governing such meetings are different from the rules that hold in other assemblies, in the the following respects: . . . the chairman [may] . . . vote on all questions. RONR (12th ed.) 49:21.
The exception to voting is when the president has a conflict of interest and needs to recuse him/herself from the vote.
No Veto Power by President. The president cannot veto board decisions. If the president refuses to implement a lawful decision of the board, he/she can be removed as president and a new one appointed by the board.
Vice-President
Unless required by an association's bylaws, the office of vice president is optional. Even so, most association boards appoint a vice president to perform the president's duties in the president's absence or when, for any reason, the president vacates the chair. RONR (12th ed.) 47:23.
Secretary
Unless the governing documents provide otherwise, a secretary's duties are as follows:
- oversee giving notice of board and membership meetings,
- ensure that minutes of meetings are taken and approved,
- sign a copy of the final, approved minutes,
- oversee the preparation of the membership list,
- file appropriate documents with the Secretary of State,
- as custodian of records, ensure that the association's records are maintained, and
- frequently co-signs checks with the president or treasurer.
Secretary Absent. If the secretary is absent from a meeting, the president should appoint someone to take the minutes so there is a record of the board's actions. RONR (12th ed.) 47:34.
Assistant Secretary. If minutes are taken by someone other than the secretary, that person may be designated in the minutes as the "assistant secretary" or "recording secretary" so the person is covered by the association's Directors and Officers ("D&O") liability insurance. Boards should verify coverage with their association's insurance broker.
Signing Minutes. Corporate minutes are the official records of the association. Once approved by the board, the minutes are signed by the secretary. Minutes become prima facie evidence of the matters contained in the minutes. (Corp. Code § 7215.) By signing the minutes, the secretary is indicating the minutes have been approved by the board of directors. It does not mean the secretary personally agrees with the decisions made by the board contained in the minutes. The secretary cannot refuse to sign the minutes because he/she disagrees with a particular decision made by the board. The secretary is simply affirming that the minutes were approved by the board of directors. See sample minutes. If a secretary refuses to carry out his/her duties, the president can sign the minutes RONR (12th ed.) 48:7. In addition, the board may replace the secretary and have the minutes signed by the new secretary.
Approved by the Board May 2, 2024
____________________________________________
Jane Smith, Secretary
Minutes. See "Board Meeting Minutes."
Treasurer
Treasurer Must Be a Director. There was a time when boards could appoint non-board members to be the treasurer. That changed when the Governor signed into law Civil Code § 5500 and § 5501. Beginning January 1, 2019, boards of directors must review their association's financial records on a monthly basis (Civ. Code § 5500.) Boards can delegate the task to the treasurer and other board member but the state is clear that the treasurer must be a member of the board:
The review requirements of Section 5500 may be met when every individual member of the board, or a subcommittee of the board consisting of the treasurer and at least one other board member, reviews the documents and statements described in Section 5500 independent of a board meeting, so long as the review is ratified at the board meeting subsequent to the review and that ratification is reflected in the minutes of that meeting. (Civ. Code § 5501.)
It means that despite anything to the contrary in an association's governing documents, treasurers must now be board members.
Authority of the Treasurer. Treasurers do not have unlimited authority over the association's monies. Unless the governing documents provide otherwise, a treasurer's duties are as follows:
- oversee the association's operating and reserve accounts,
- keep and maintain the association's financial documents,
- oversee the deposits,
- oversee investments,
- ensure that bills are paid,
- oversee the preparation of the budget,
- ensure that a report of financial transactions is made to the board,
- ensure that a reserve study is prepared,
- serve as the board's liaison with the association's auditor,
- review monthly financial statements,
- implement safeguards to protect the association's financial assets,
- ensure that tax returns are filed on time, and
- sign bank cards and co-sign checks with the president or secretary.
Treasurer's Report. It is industry practice to have the treasurer give a report at regular meetings of the board. The "Treasurer's Report" may be written or may consist "simply of a verbal statement of the cash balance on hand--or of this balance less outstanding obligations. "The report does not require any action by the board, unless it is of sufficient importance, as an annual report, to be referred to auditors. RONR (12th ed. ) 48:20, 24. The general practice is to have minutes reflect that "A monthly financial report was submitted to the Board." or "The Treasurer's report was given." or "An interim financial statement was received by the Board along with the Treasurer's report."
Assistant Treasurer. If the treasurer needs assistance with his/her duties, the board can appoint someone, such as a homeowner with experience with budgets and accounting, to be "Assistant Treasurer." This should be done be a motion in the minutes.
Delegating Authority. When it comes to paying bills, the board can empower the treasurer to pay routine, recurring expenses such as utility bills and insurance premiums. As a safeguard, the board can set a dollar limit on the treasurer's payment authority. However, the board is still responsible for overseeing the treasurer's actions. Accordingly, the board should establish internal controls and regularly review the treasurer's activities and the association's finances. Otherwise, the association will be vulnerable to the improper handling of association finances up to and including embezzlement and the board could be held in breach of its fiduciary duties.
Bank Signature Cards. See bank signature cards and two signature requirement.
Managing Agent. When documents are silent about check signing, many associations allow their managing agent to pay routine operational expenses such as utility bills, insurance premiums, contracted services (pool cleaning, elevator maintenance, cable TV, etc.) without director signatures. To limit their agent's check signing authority, boards require that any unusual expenses or expenses above a certain dollar amount first receive board president authorization or full board authorization or the signature of at least one director. The procedures vary from association to association.
Recommendation: The authority to transfer funds, whether given to managing agents or limited to directors, creates potential for unauthorized transfers. To protect the association's funds against embezzlement, boards must (i) be diligent in reviewing bank statements and reconciliations, (ii) establish internal controls, (iii) carry a fidelity bond, and (iv) conduct annual independent reviews.
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