Incorporated Associations Must Have a Properly Functioning Board of Directors to Conduct Business

State laws and the governing documents for homeowners Incorporated associations mandate that the business operations of the association be conducted through a board of directors. This means that all corporate powers that are exercised by the association must be exercised by or under the direction of the association’s board of directors. Without a properly functioning board of directors, the association cannot properly conduct business. The prolonged existence of a homeowners association that does not have a properly functioning board of directors will ultimately result in the loss of corporate status, the lapsing of insurance coverage, loss of the ability to commence and defend litigation, and the collapse of the association. Such a situation could expose association owners to potential liability.

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