Part of a board member’s fiduciary obligation is to protect the assets of the association. In addition to money in the bank, these community assets may include tennis courts, golf courses, pools, tot lots, utility rooms or other recreational areas within the association. Often these assets are valued in the millions of dollars.
In attempting to manage, maintain and protect these community assets, it is important that volunteer board members recognize their limitations and seek input from experts when necessary. This may include seeking advice from maintenance experts, the management company or the association’s attorney. With this advice, board members will be better able to make decisions and take actions which they believe will be the most beneficial to the association.
Protecting the assets of the association does not necessarily mean ensuring that every asset of the association remains within the association. Because the assets are viewed as a whole, protecting the assets of the association may entail removing certain facilities that are no longer beneficial for the residents. For example, removal of a tot lot if the makeup of the community residents changes to include less families with children.
Management and protection of assets may also include sale of certain real property or other property of the association under certain circumstances. While this does not come up too often, it does arise occasionally. In these situations, the board will want to work closely with its experts as association governing documents often include additional protections against sale of community property. For example, association governing documents often contain a provision requiring approval by a majority of members prior to sale of association property which exceeds 5% in value of the association’s gross budgeted expenses for that fiscal year. In these circumstances, selling property without following these procedures could end up creating liability for the community.
Protecting the assets of a community is a tough job. As a board member, you are elected to fill this role and must carry out this important function. Know that you aren’t in it alone. Experts are there to help and you are entitled to rely on them!