Valid HOA Action Requires a Properly Functioning Board of Directors

Given the fact that nearly all homeowners associations are structured as corporate entities (corporations) that are created under the laws of the state in which the homeowners association is domiciled, it is mandatory that the association have a valid board of directors. The state corporation laws require all corporations to have a board of directors to exercise all corporate powers and conduct the activities and affairs of the corporation. While many corporate responsibilities and activities may be delegated to management personnel, managers are mere agents of the corporation and have no independent authority to conduct business on behalf of the corporation. Thus, even if the corporation employs management personnel, the corporation’s board of directors remains responsible and must oversee and prudently direct those people.

Without a properly functioning board of directors, a corporation cannot legally conduct its business. When an association’s business activities cease, there are resulting consequences including, but not limited to, such things as: homeowners stop paying their dues; the lapsing of insurance and necessary services; cessation of maintenance of common areas; no enforcement of governing documents; and loss of legal status and the ability to prosecute and defend lawsuits. Such consequences can ultimately lead to a collapse of the homeowners association and potential personal liability on the part of the last directors and individual owners.

Valid Director Actions Require a Quorum