Board Member Basics

Sources of Authority

Statutes

• Planned Community Act (ORS 94)
• Condominium Act (ORS 65)
• Nonprofit Corporation Act (ORS 65)
• Federal Laws (FHA, Flag Act, OTARD)

Governing Documents

• Declaration / CC&Rs
• Plat
• Bylaws
• Articles of Incorporation
• Rules, Regulations & Resolutions

Powers & Authority

• Adopt & Amend Budgets
• Create Rules
• Hire Third-Parties
• Make Contracts
• Own Property
• Collect Assessments
• Enforce the Governing Documents
• Initiate or Defend Litigation

Fiduciary Duties

Business Judgement Rule

• You are well informed
• Participate in meetings
• General knowledge of laws and governing documents
• Seek outside help when needed

Because they are given this wide latitude, the law will not hold directors liable for honest errors, for mistakes of judgment, when they act without corrupt motive and in good faith, that is, for mistakes which may properly be classified under the head of honest mistakes. And that is true even though the errors may be so gross that they may demonstrate the unfitness of the directors to manage the corporate affairs. This rule is commonly referred to as the “business judgment rule.”

Conflicts of Interest

• Self-interest
• Financial Benefit
• Actual vs. Potential
• Disclose!

Communication

• Communicate Often
• Use Different Forms of Communication
• Allow Two-Way Communication
• Create Committees to Help

Forms of Communication

• Newsletter
• Surveys
• Websites
• Email
• Message Boards

Website Caveats

Areas of Liability

• Failure to Maintain
• Fair Housing Violations
• Unequal Enforcement
• Collection of Assessments

Protecting the Board

• Insurance
• Incorporation
• Professional Management
• Qualified Legal Counsel

Insurance

• Liability
• Property
• Directors & Officers Liability
• Fidelity

Common Insurance Exclusions

• Violations of Federal or State Law
• Intentional Acts
• Non-monetary Claims