COMMON INTEREST COMMUNITY STANDARDS COUNCIL Quick Reference QR-S1 — What Every New Director Should Know in the First 30 Days Series: Board Member Essentials ================================================================ ---------------------------------------------------------------- THE THREE LEGAL FACTS OF YOUR COMMUNITY ASSOCIATION ---------------------------------------------------------------- 1. MEMBERSHIP IS MANDATORY -- owners cannot opt out 2. COVENANTS RUN WITH THE LAND -- the rules follow the property, not the person 3. ASSESSMENTS ARE LIEN-BACKED -- unpaid dues can be collected through foreclosure ---------------------------------------------------------------- YOUR FIDUCIARY DUTY -- THREE ELEMENTS ---------------------------------------------------------------- DUTY OF CARE What it means: Act as a prudent person would How to apply: Prepare for meetings; investigate before voting DUTY OF LOYALTY What it means: Association's interest first, not yours How to apply: Disclose conflicts; recuse when required DUTY OF OBEDIENCE What it means: Stay within your authority How to apply: Follow governing documents and state statute ---------------------------------------------------------------- CONFLICT OF INTEREST -- THREE MANDATORY STEPS ---------------------------------------------------------------- Every time. No exceptions. 1. DISCLOSE in writing to the full board 2. RECUSE from all discussion and the vote 3. DOCUMENT the disclosure and recusal in the minutes ---------------------------------------------------------------- D&O INSURANCE -- WHAT TO CONFIRM THIS WEEK ---------------------------------------------------------------- [ ] Policy is current -- not lapsed [ ] You are listed as an insured [ ] Retroactive date predates your service start [ ] Per-claim and aggregate limits confirmed (typical: $1M-$5M) [ ] Carrier rating is A.M. Best A- or better [ ] Policy is claims-made -- confirm continuity at each renewal ---------------------------------------------------------------- THE BUSINESS JUDGMENT RULE -- YOUR PROTECTION ---------------------------------------------------------------- Courts defer to board decisions when: - You acted in good faith - You conducted reasonable investigation - You acted within your authority - You had no undisclosed conflict Protect yourself by documenting your preparation and reasoning in the minutes. ---------------------------------------------------------------- YOUR FIRST 30-DAY CHECKLIST ---------------------------------------------------------------- [ ] Locate your association's recorded Declaration (county clerk / association website) [ ] Locate and read the Bylaws [ ] Confirm you are listed as D&O insured [ ] Meet with the board chair, treasurer, and manager [ ] Ask: what are the three issues most likely in the next 90 days? [ ] Review the most recent set of meeting minutes [ ] Identify any potential conflicts of interest and disclose in writing ---------------------------------------------------------------- WHEN TO CALL ASSOCIATION COUNSEL -- IMMEDIATELY ---------------------------------------------------------------- - Document or statute interpretation where language is ambiguous - Enforcement actions (fines, hearing, lien, foreclosure) - Any statutory or regulatory compliance question - Any situation where a director feels personal liability exposure Do not handle legal questions internally. The cost of interpretation is small; the cost of misapplication is multiplied. ================================================================ This card is an educational summary. It does not constitute legal advice. © 2026 Common Interest Community Standards Council. All rights reserved. cic-sc.org