The Role of the Director and the Manager During a Financial Crisis Steven W. Weil, Esq.

Fiduciary Duty The Board: Monitor, Delegate, Decide, Document The Board: Monitor, Delegate, Decide, Document The Treasurer’s Role The Treasurer’s Role The Manager’s Role The Manager’s Role Indemnification and Insurance Indemnification and Insurance

Investment Goals Safety, Liquidity and Yield Safety, Liquidity and Yield Safety – protecting principal from excessive risk Safety – protecting principal from excessive risk Liquidity – ease/cost of accessing funds Liquidity – ease/cost of accessing funds Yield – return Yield – return Correspond maturities to repair needs Correspond maturities to repair needs

Preserving Funds Maintain funds: FDIC Insured/CDRS Accounts Maintain funds: FDIC Insured/CDRS Accounts Statutory requirement for Managers: ( § ) Statutory requirement for Managers: ( § ) Full Faith and Credit (T-Bills, Bonds) Full Faith and Credit (T-Bills, Bonds) FDIC Insurance up to $250,000 FDIC Insurance up to $250,000 Certificate of Deposit Account Registry Services (CDRS) Certificate of Deposit Account Registry Services (CDRS)

Board Procedures Adopt investment policy / procedures Adopt investment policy / procedures Follow and document Follow and document Quarterly reconciliations required Quarterly reconciliations required Quarterly investment review recommended Quarterly investment review recommended Standing agenda notice Standing agenda notice

Role of Treasurer (aka Chief Financial Officer per Corp § 7213) Financial oversight Financial oversight Regular conduit between board / financial consultant Regular conduit between board / financial consultant More regular dialogue with CPA / Manager More regular dialogue with CPA / Manager Reports discussed at open meetings / member input Reports discussed at open meetings / member input

Manager’s Role Manager’s contract requirements Manager’s contract requirements CACM Standards of Practice CACM Standards of Practice Timely reporting and gathering / draft budgets Timely reporting and gathering / draft budgets Does not have final word on anything Does not have final word on anything Manage expectations Manage expectations Fidelity insurance Fidelity insurance

Protecting the Board, Treasurer and Manager Indemnification (what is “good faith”?) Indemnification (what is “good faith”?) Insurance implements indemnity duty Insurance implements indemnity duty Coverage issues: betterment / statutory violations Coverage issues: betterment / statutory violations Timely notification (especially enforcement) Timely notification (especially enforcement)

Prioritization: CC&R Enforcement Precedent Precedent Meet and Confer Meet and Confer Self Help Self Help

Prioritization: Expenses Making the hard decisions Making the hard decisions Deferred funding and repair Deferred funding and repair Deferring reserve contributions Deferring reserve contributions Deferring payment of special assessments Deferring payment of special assessments

Collecting Assessments Review (Amp Up) Collection Policy Review (Amp Up) Collection Policy Handling assessment disputes ( § ) Handling assessment disputes ( § ) Settlements Settlements Lenders: Finding and fining them Lenders: Finding and fining them

Avoiding Expenses: Bankruptcy and Receivership Homeowner bankruptcies Homeowner bankruptcies Post petition debt (2005 amendments) Post petition debt (2005 amendments) CID bankruptcies? CID bankruptcies? Receiverships Receiverships