1. Understanding Board Basics Presented by Jeremy R. Moss, Esquire MercerTrigiani Deborah A. Carter, CMCA, AMS, General Manager, Westridge Swim and Racquet Club, Inc.

2. P RINCE W ILLIAM C OUNTY N EIGHBORHOOD S ERVICES 2013 Homeowner & Condominium Leadership Seminar October 25, 2013

3. Community Association Basics Mandatory membership Power to regulate Power to assess Protect the assets Provide services

4. Community Association Basics Varying Roles: –Owners –Board –Management –Legal Counsel –Vendors/Contractors

5. Role of the Owners Empowered to elect members to the Board of Directors/Trustees; Empowered to amend declaration; Empowered to amend provisions of the bylaws; Obligated to adhere to the governing documents; Obligated to share the financial responsibility of the association by paying assessments timely; and Should be encouraged to actively participate in the association.

6. Role of the Board Manage the affairs of the Association; Establish Association policy; Carry out duties at regular meetings; Derive authority from governing documents and applicable law.

7. Role of Management Acts as an agent of the Board; Implements decisions made by the Board; Provides fiscal services: –Billing and collecting assessments; –Paying bills; –Preparing payroll for on-site personnel; –Preparing and maintaining records, financial reports, budgets and reserve analyses.

8. Role of Management Provides administrative services: Arranging and attending annual meetings, board meetings and committee meetings Maintaining the member roster, records and files Preparing and processing transfer information on resale Preparing resale disclosure packets Distributing the newsletter Preparing special mailings Preparing a monthly report to the board Reviewing standard operating procedures

9. Role of Management Provides administrative services (Cont.): Conducting an inventory of association property; Providing after-hours answering and emergency service; Recording and processing work orders; Supervising on-site personnel and contractors; and Responsible for or assisting with hiring and firing of on-site personnel.

10. Role of Mana gement Provides maintenance services: Cause the property to be maintained and repaired in accordance with the approved budget; Review and instruct association personnel or contractors concerning preventive maintenance and record keeping; Inspect the buildings and grounds for maintenance and housekeeping; and Provide periodic inspections and reports.

11. Role of Management Provide for the maintenance of grounds, facilities, snow removal, trash collection and repairs and maintenance of common area facilities through : On-site personnel; or Independent Contractors.

12. Role of Management Conduct covenants inspections, if required by the management contract or job description; Comply with laws: advise the board and take such actions as may be required by law; Assist and advise the board in securing/selecting professional services, i.e., legal, audit, engineering.

13. Board Actions - Two Standards of Review Business Judgment Rule – The court will not review or replace its judgment for that of the Board – if the Board acts in good faith. Reasonableness – An officer or director must exercise the care and skill of an ordinary and prud ent director in a similar business.

14. Fiduciary Duty The highest standard of care under the law Personal interests set aside Act in the best interest of the Association Elements  Take no advantage  Disclose interests  Confidentiality  Support for Board decisions

15. Source of Authority Federal Statutes  Fair Housing Act  Telecommunications Act of 1996  Flag Act of 2006 State Statutes  Property Owners’ Association Act  Non-stock Corporation Act  Fair Housing Law  Common Interest Community Board Local Ordinances Governing Documents

16. Recorded Map, Plan or Plat Declaration of Covenants, Conditions and Restrictions – Including Rules Articles of Incorporation By-Laws Architectural Guidelines Board Resolutions & Policy

17. Declaration Authority Property Rights The affairs of the association shall be conducted by a Board of Directors. Rule Making Architectural Control

18. Articles of Incorporation (Generally) To enforce all covenants and to perform all duties as set forth in the documents To enforce easements, charges, liens To assess, collect and disburse charges To acquire, own, hold, maintain, sell, lease transfer, mortgage, dedicate for public use, or otherwise dispose of real or personal property.

19. By-Laws (Generally ) The affairs of the association shall be managed by a Board. The Board shall have the power to adopt and publish rules and regulations governing the use of common area and facilities and the personal conduct of members thereon.

20. By-Laws Board shall have the power to exercise for the Association all powers delegated to this Association and not reserved to the membership by other provisions.

21. An Effective Board Active discharge of Board Member duties  Know the business of the Association  Prepare for and attend meetings  General understanding of documents and Board policy  Act in accordance with good business practices Act evaluate and act after  Reviewing all the facts  Seeking advice, as needed

22. An Effective Board Team approach Be a positive force; tone Avoid and stop negative mentality quickly Seek advice; give feedback Accept and act on criticism Communicate Work the issue, not the person Avoid getting personal

23. As a Board Member When you speak, you are heard as a Board member. Act only with Board authority. Maintain confidentiality. Support Board decisions once action is taken, even though you may not agree.

24. As a Board Member Do not assume rights or privileges other owners do not have. Recuse yourself from matters in which you have an interest. Do not become involved in day-to-day management.

25. Board Meetings - Defined The formal gathering of the board of directors (committee) where the business of the association is discussed or transacted.

26. Board Meetings - The General Rule All meetings of the board of directors (committees) shall be open to all owners (members) of record.

27. Board Meetings - Work Sessions The board of directors shall not use work sessions or other informal gatherings of the board of directors to circumvent open meeting requirements.

28. Board Meetings - Quorum A majority must be present – in person or by permissible electronic or telephonic means.

29. Board Meetings - Notice To Board Members To Association Members  Published - Reasonably calculated to be available to a majority of the owners.  Written request, at least once annually  Name, address and zip code and e-mail Date, Time and Place Special Meetings - Special Requirements

30. Board Meetings - Open Forum Required Subject to reasonable rules Designated time period Comments on ANY matter affecting association Limited agenda topics - limited comments

31. Board Meetings - Voting No Secret Ballot EXCEPT - Officer Elections Board Members only In Open Session NOT By Proxy

32. Board Meetings - Electronic Telephone or Video Conference Other Electronic Means Two Board Members Present - Required At Place Noted in Notice Sufficient Audio Equipment

33. Board Meetings - Executive Session Proper Motion Limited Purposes  stated in Motion  only those purposes Affirmative vote in Open Session Motion and Purpose in Minutes No Action - Reconvene in Open Session

34. Board Meetings - Executive Session Personnel Matters Consult with Legal Counsel Discuss and consider  Contracts  Probable or pending litig ation Document and Rule Violations Personal liability of owners

35. Use of E-Mail Not a permissible substitute for a meeting Cannot constitute Board action Limit use to transmission of information Avoid discussion May be subject to inspection by members Email is subject to release in litigation Assume that email will be made public

36. Committees  Board appoints Chair and Members  Board should state Purpose and Charter  Only Board Members vote on Motions  Association members invited to attend  Meetings are open to the public

37. Committees Types of Committees  Mandatory  Standing  Ad-Hoc

38. Member Authorization Required by DOCS Right to dedicate or transfer common area requires instrument signed by 2/3 of each class of members agreeing; must be recorded. The maximum annual assessment may be increased above 5% by a vote of 2/3 of each class of members.

39. Discussion