At a recent California community association forum, a friendly professional disagreement arose over a manager’s contention that individual board members can’t act on anything because individually they have no standing to act. He insists individual board members can act only when they comprise a board, which requires a quorum. A lawyer who represents associations and owners pushed back, arguing that’s not reasonable. Here we explain the disagreement and weigh both sides.
What He Meant
The manager who triggered the debate is Doug Christison, an industry veteran and president of the Christison Co., a community association management company in Pleasanton, Calif.
He starts by explaining the difference between administration and management of an association. “Those two words get mixed up often,” claims Christison, who says the board is the association’s administrator, and it hires a manager to handle the day-to-day management of the association. “The primary role of the board isn’t the management of the association per se. It’s not the day-to-day actions. It’s for the oversight of people who are assigned or accountable by either some sort of a contract or agreement to do those actions.”
With that in mind, can an individual director act outside of the board? “The answer is yes, if the board says so,” contends Christison. “The board can do pretty much what it sets up its rules to do. It’s a written exercise, and that language becomes the guidance for the management to take and run with.
“That often becomes where the problems arise because without an individual charter or authority somewhere written down, individuals tend to expand their scope of authority beyond what the other members intended,” says Christison. “So for the board members to step in and start taking executive authority, like directing a landscaper, that’s where, at least under California law, they’ve entered into dicey area. That’s because, as directors, they then end up overseeing themselves.
“Board members shouldn’t even on an individual basis be delegated things the group is supposed to be in charge of,” argues Christison. “That would mean they’re sitting on the board and judging the outcomes on activities they instituted. They could say, ‘I intended to do this. Sorry it didn’t work out well, but I’m going to give myself a pass for it.’ Under California law board members are supposed to recuse themselves in those situations. So you shouldn’t be delegating executive authority because then you’ve created a conflict. Going back to the example of giving direction to the landscaper, no board member should be doing that because it ends up where that board member will have to oversee himself.”
It’s also a bad idea for board members to act individually for a few other reasons. “That’s really offensive to the directors who aren’t there,” says Christison. “In addition, often boards don’t know their own policies.” In those cases, they may be directing others to violate association policy.”
This Has Real Consequences
Christison offers what he calls an extreme example of how this misuse of authority can play out. “A couple of years ago, after serving on the board for some time, a gentleman was elevated to be president,” he recalls. “Through his individual aggression, he instructed the managing agent—me—not to communicate with any other board members. He would do things like direct the landscaper or contact a homeowner and say, ‘I’m going to fine you.’ Note the big ‘I’ in that situation.
“He had read the governing documents in a way that was rather peculiar to empower himself in that way,” explains Christison. “Can any one member of the board set the rules? No. When the rest of the board figured out what was going on, they removed him as president, and he created a petition to recall entire board. That was extreme executive authority exercised on his part. It caused a great legal battle and recall elections, and the association spent about $50,000 in unnecessary expenses to the association’s attorney to handle the recall election because of his actions. And that happens to lesser degrees often.”
True, With Caveats
Other experts generally agree with Christison’s stance.
“From time to time I’ll see situations where the president basically directs the action,” explains Christopher J. Shields, a partner at Pavese Law Firm in Ft. Myers, Fla., who’s represented associations for decades. “I try to counsel my boards that the president has maybe 1 percent more responsibility than a typical board member, but that it’s the board that generally has the duty to act. The board can assign responsibility to a managing agent, but no individual board member can direct the managing agent.
“From time to time—and we see this all too often—board presidents think they’re back in the for-profit world, whether they were president of Ford or a small business,” adds Shields. “They think, ‘Really, I make all the decisions and report back to the board every 90 days.’ That’s not true. Boards need to be meeting at least on a monthly basis. Those may not be large or lengthy meetings, but they’re important so board members are kept apprised of the changing landscape. Overall, individual board members can communicate with the managing agent, but only to repeat the direction the board conveyed.”
Matthew Zifrony, who advises homeowners and condo associations at Tripp Scott, a Ft. Lauderdale law firm, and who’s also served as the president of a 3,000—home association, also generally agrees with some caveats. “That’s technically correct but incorrect from a practical standpoint,” he contends. “There are board decisions and decisions officers make. Officers have certain power, and the board collectively has power. So if the governing documents say the president oversees the association’s day-to-day affairs, even though the president is also a board member, when he’s reaching out to the property manager, he’s doing that in his role as board member.
“Some board members may not be officers,” adds Zifrony. “So technically when they call over to a manager, they may be exceeding their capacity. But then again, the board can vote to allow one member, any member, or all members, to oversee operations with the manager.
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“Where I live, we have a seven-member board,” explains Zifrony. “If every one of those board members called over with issues, the property manager wouldn’t be able to get everything done. Generally, individual board members can talk to the property manager when they need to, but they shouldn’t go too far. When I read about debates like this, my gut says there was a board member who was fighting with the president and attempting to act as president by ordering around a property manager. So the manager said, ‘You can’t call me all the time. You’re just a board member, and the board has to make those decisions.'”
Don’t Forget Standing Orders and Emergencies
Another manager says there’s also usually a little flexibility in handling issues that can come up from time to time. “What this manager is arguing isn’t so much a written rule,” says Corbin Seti, senior vice president of community and lifestyle services at FirstService Residential in Las Vegas. “But it makes sense from oversight capacity.
“Usually, yes, we’d say no one board member could do something,” says Seti. “But the board should have a resolution or procedure that gives management or the board to act if something comes up. For example, the board usually passes a resolution that management can replace any landscaping up to $500. Then let’s say a bush has died, and a board member calls the manager to have that bush replaced. Or if there’s emergency, a specific board member has the right to talk to an attorney for no more than one hour. That’s the oversight that’s there so the management can manage the association but things can also get done.”
Emergencies can also become exceptions to the rule. “It’s common sense with emergencies, or as we say in the industry, fire, flood, or blood,” says Seti. “If it’s an unauthorized board member who’s called about something that could end up being life threatening to an owner or guest, I’d make the decision to take the call and then notify everybody else on the board of what just happened. That’s a commonsense issue.”