While not mandatory, every homeowner association board of directors should consider the implementation of a code of ethics. This code serves a number of advantageous purposes, which helps both the community and the HOA’s management.
To start, it’s important to understand what a HOA board code of ethics really is. It is a document, usually an extension of the association’s Rules & Regulations, that contains guiding principles for proper behavior of board members. It is not meant to replace a board’s clear judgment – it’s meant only to codify the goals and behaviors an effective director should embrace.
Drafting a code of ethics for an HOA’s board of directors is also important when viewed from a legal perspective. There have been plenty of cases where individual directors may make decisions and carry out actions without consulting with the entire board. There have been plenty more cases where board members just act irresponsibly. When these types of situations arise, there must be an approved and agreed upon set of policies that determine next steps.
One such example, which has occurred on more than one occasion, is the hiring of an outside contractor based on personal knowledge – without consulting the board. The board member who hired the contractor may have personal expertise in a specific area, but such actions could have serious legal and financial consequences which may not be equally accepted by all. This is where a code of ethics becomes extremely important.
Given its importance, there are a number of principals a Code of Ethics must encompass. Richard Thompson, a nationally recognized expert on HOA management issues, has outlined some of the main principles an HOA must keep in mind when drafting this document. The main points he recommends include a statement saying that every director is committed to serving the community, and understands their responsibility and will engage in lawful acts.
An HOA code of ethics is designed to help board director’s leverage their good judgment in the best possible way. This document should be applied in such a way that it will benefit the community as a whole, as well as individual homeowners, as much as possible.
This article is provided by The Management Trust.