Condo Media - May 2014 - (Page 26)

HOMEOWNER'S CORNER Community Association Fundamentals Basic Principles and Fiduciary Responsibility I n 2012, CAI research indicated there were an estimated 323,600 association-governed communities in the U.S., and 24 percent of U.S. homes are in community associations. Even with so many people living in community associations, many - owners and renters alike - don't really understand the fundamental nature of common interest communities. In addition, many others, including the media and government officials, lack a true understanding of the community association (or condominium) concept. CAI developed the following 10 basic principles that answer three essential questions: What's the basic function of a community association? What are the essential obligations and expectations of homeowners? What are the core principles that should guide association leaders? 1 2 3 STATEWIDE RM 4 Top quality in masonry restoration, brickwork and waterproofing since 1996 Inch by inch and brick by brick... 5 6 7 We work to ensure the durability and attractiveness of the masonry and other related surfaces of your community association property. 617-686-3302 Kieran Fitzgibbon - President 26 CONDO MEDIA * MAY 2014 8 9 Associations ensure that the collective rights and interests of homeowners are respected and preserved. Associations are the most local form of representative democracy, with leaders elected by their neighbors to govern in the best interest of all residents. Associations provide services and amenities to residents, protect property values, and meet the established expectations of homeowners. Associations succeed when they cultivate a true sense of community, active homeowner involvement, and a culture of building consensus. Association homeowners have the right to elect their community leaders and to use the democratic process to determine the policies that will protect their investments. Association homeowners choose where to live and accept a contractual responsibility to abide by established policies and meet their financial obligations to the association. Association leaders protect the community's financial health by using established management practices and sound business principles. Association leaders have a legal and ethical obligation to adhere to the association's governing documents and abide by all applicable laws. Association leaders seek an effective balance between the preferences of individual residents and the collective rights of homeowners. 10 Association leaders and residents should be reasonable, flexible, and open to the possibility - and benefits - of compromise. Fiduciary Responsibility From time to time, you may hear that the board of the association operates in a fiduciary capacity for the homeowners. Or you may read about the board's fiduciary responsibility in the governing documents. Fiduciary duty simply means the board has an ethical and legal obligation to make decisions in the best interests of the entire association. Fiduciary duty includes a duty of loyalty to the association, which means that board members should never use their position to take advantage of the association. They should never make decisions for the association that benefit themselves at the expense of the association and its members. Fiduciary duty also includes the duty to exercise ordinary care. This means board members must perform their duties in good faith and in a manner they believe to be in the best interest of the association, with such care as an ordinary prudent person in a similar position under similar circumstances would use. Board members fulfill their fiduciary duty by: * Developing and using a formal budgeting process, and establishing and adhering to budgetary guidelines * Making sure the budgeting process reflects the wishes of the association members * Collecting sufficient fees to adequately operate the association * Soliciting bids and negotiating appropriate contracts * Authorizing expenditures. CM

Table of Contents for the Digital Edition of Condo Media - May 2014

Condo Media - May 2014
From the CED’s Desk
Editorial Board
CAI News
CAI Regional News
Asked & Answered
Homeowner’s Corner
And the Winners Are ...
Vendor Spotlight
Industry Perspective
Volunteer Spotlight
CAI-NE Legal Directory
Classifi ed Service Directory
Advertisers Index

Condo Media - May 2014