HOW A BOARD OF DIRECTORS VETTING PROCESS MAY HELP HOMEOWNER ASSOCIATIONS
Does your HOA have a board member vetting process? In many homeowner associations, finding suitable, competent members of the association willing to serve on the board of directors often presents a challenge. However, there is an additional challenge that ought to be considered too. How does your HOA go about vetting potential nominees for the board of directors? Most communities do not have a provision in their bylaws or Declaration of Covenants, Conditions, and Restrictions to require background checks for elected or appointed board members prior to them being able to serve. So, until the your association's governing documents require such a process or state law implements a required vetting process requiring national background checks the association is left to other means.
Look for Any Warning Signs
Some information may be known without requiring background checks. Asking the following questions can help your organization identify warning signs in potential directors:
1. Will the candidate have the ability to exert undue influence over other board members? For example, does the homeowner own a majority of lots or units or a sizeable number of them inside the community? You don’t want a board member who can manipulate the board and other members by making demands that are not in the best interests of all homeowners and then out vote them at membership meetings at will. This issue may impact the association's insurance too.
2. Does the prospective director work for a company that manages other homeowner associations or does the director work in property management? While it is good to have people with relevant experience, this type of director may cause trouble for an existing management company by straining the partnership. You will want to avoid potential motives to damage a management company or to glean proprietary ideas from them to be used for the benefit of another competitor.
3. Does the potential candidate stand to gain any private economic or other benefit from the organization? For example, are they a potential vendor of the community association seeking to win business? This could be a sign of self-interest.
4. Has the prospective candidate served on other nonprofit boards or the HOA's board in the past for relatively shorter periods of time? This may reveal that the prospective director encountered conflict or wore out his or her welcome on those previous boards. This may seem obvious, but are there any indications that the prospective director may have problems getting along with others?
5. Does the potential candidate have a recent or recurring history of known drug, alcohol, or gambling problems? Such circumstances may be inviting someone to serve who may be seeking self-interests with the funds of the association. This can be particularly difficult to know as newer folks move into your community.
6. Does the prospective candidate have a background of crime or civil lawsuits that illustrate a problem in judgement? Performing local public information and social media searches online may disclose public records and information concerning these individuals.
7. Has a candidate served on any past board of directors that caused trouble for the association? The association may want to avoid candidates who have gotten the association into legal troubles, who cause undue friction between board of directors, or who refuse to listen to the majority of members of the association, and to the reasonable advice of the agents of the association.
These are only sample questions and situations. Many more scenarios may be fleshed out once your association has a vetting process in place.
The Nominating Committee and the Vetting Process
Generally speaking, the board of directors or the Nominating Committee is normally responsible for overseeing the vetting and recruiting process for your homeowner association. In many cases, board members often compose the members of the Nominating Committee. However, the committee may include non-board members who have skill sets that will help with the process, such as Human Resource and legal experts. Generally speaking, the President of the board of directors cannot serve on the Nominating committee as a condition of Roberts Rules of Order. However, the other board members may serve.
If no formal vetting process exists, consider conducting a "test drive" of the prospective director by placing them on a committee or asking them to serve on a task force for a few years prior to asking them to serve as a director. This will give you time to consider how they effectively embrace tasks and work with others under authority. Plus, committe members serve at the will of the board. Plus, it will be easier to remove a committee member than to remove a board member.
Some Final Considerations
For many nonprofits the make-up of the board of directors can have a significant effect on the health and success of the organization. If you have concerns regarding the effectiveness of your current policies or you know that your policies are in need of updating, you may wish to consult with an attorney specializing in homeowner associations and nonprofit issues. Before implementing any kind of vetting policy or process, always consult an attorney specializing in homeowner association law in the State that your community is located. This will be a reasonable step and may save your association a great deal of trouble and heartache.
DISCLAIMER: This information is not offered as legal advice but is educational in nature. For legal advice please consult an attorney specializing in homeowner associations and non-profit corporations. For more information about Cambridge Management Group, LLC, contact us at 844-612-1515 0r 704-874-1820 or at www.CambridgeHOAPropertyManagement.com.
