DCCA & other publications

Rights Duties of Directors - DCCA 2019.pdf (474.42 KB)
Info From Condorama 2019 - our current law firm's general guide to a Board of Directors.

Rights & Duties Of Directors and Owners

Carol A.L. Rosenberg, Esq. - Motooka & Rosenberg, LLLC

At the root of many of the disputes between owners and Boards of Directors is a fundamental misunderstanding of the rights and responsibilities owners and directors are entitled to. The following is not meant to be an all-inclusive list of the rights and responsibilities of owners and directors, but should provide a general guide for condominium Boards and owners. The provisions may vary for co-ops and planned community associations.

Owners' Rights
1. Owners have the right to be treated fairly and with respect by the Board and the Association management.

2. Owners may attend and participate in Board meetings, but the participation may be limited by meeting rules and/or if a majority of a quorum of the Board votes otherwise. Owners may not attend or participate in executive sessions.

3. Owners are entitled to review the following records:
 a. Audit - If requested, the Board must send an owner a copy of the audit.
 b. Budget - the Board must adopt and distribute an annual budget to the owners.
 c. Contracts - must be available for review by owners.
 d. Financial Records, ledgers, invoices and delinquencies of 90 days or more must be available for review. The association's most current financial statement must be provided to any unit owner at no cost or on 24-hour loan at a convenient location designated by the Board.
 e. Insurance Policies - must be available for examination by owners.
 f. Association Minutes - shall be approved at the next regular meeting or by the board, within sixty (60) days after the meeting, if authorized by the owners at the annual meeting. If the minutes are approved by the Board, owners shall be given a copy of the approved minutes or notified of their availability within thirty (30) days after approval. Minutes of all meetings shall be available within seven (7) calendar days after approval, and unapproved final drafts of the minutes shall be available within sixty (60) days after the meeting. Owners shall be allowed to offer corrections to the minutes at an association meeting.
 g. Board Minutes - shall be approved no later than the second succeeding regular meeting, shall be available within seven (7) calendar days after approval, and unapproved final drafts of the minutes shall be available within thirty (30) days after the meeting. Minutes of any executive session may be withheld if their publication would defeat the lawful purpose of the executive session. The minutes of previous and current years, once approved, must be made available to an owner at no cost or on 24-hour loan at a convenient location at the project determined by the Board or transmitted to an owner within 15 days of receipt of the request and a reasonable fee for administrative costs associated with handling the request may be charged to the owner making the request.
 h. Owners list - the Board, managing agent or resident manager is charged with keeping an accurate and current list of members of the Association and their current addresses, and the names and addresses of vendors under an agreement of sale. The list shall be made available, at cost, to any owner requesting it who furnishes an affidavit which states that:
    i. The list will only be used personally and only for the purpose of soliciting votes or proxies or for providing information to other owners with respect to association matters; and
    ii. Shall not be used by the owner or furnished to anyone else for any other purpose.
 I. Proxies - after an Association meeting (not earlier) owners may examine proxies, tally sheets, owners' check-in lists and the certificate of election, if the request to examine the documents is made within thirty (30) days after the Association meeting. The Board may require the owner to furnish an affidavit stating that information is requested in good faith for the protection of the interest of the Association or its members or both, and Owners shall pay for administrative costs in excess of 8 hours per year.
 j. Declaration, bylaws, house rules, sample original conveyance document, all public reports and any amendments to the foregoing documents must be kept at the managing agent's office and provided to owners and others at a reasonable charge.
 k. Records in chronological order of the receipts and expenditures affecting the common elements, specifying and itemizing the maintenance and repair expenses of the common elements and any other expenses incurred and monthly statements indicating the total current delinquent dollar amount of any unpaid assessments for common expenses.
 L. Financial and other records needed to comply with requests for information and disclosures related to the resale of units.
 m. All executed management agreements.
 n. Copy of any contract, written job description and compensation between the association and any person or entity retained by the association to manage the operation of the property on-site, provided that certain information may be redacted.

4. Owners may elect new directors or recall directors who are not fulfilling their obligations.


Owners' Responsibilities

1. Owners should treat the Directors, Association management, Association employees and vendors fairly and with respect.

2. Owners should read and comply with the governing documents.

3. Owners should pay Association common expenses and special assessments.

4. Owners should attend and vote in Association meetings.

5. Owners should insure that their tenants are provided with copies of the governing documents so they can comply with the requirements.

Board's Rights

1. Directors have the right to expect owners and residents to know and comply with the Association's governing documents.

2. Directors have the right to expect owners to meet their financial obligations.

3. Directors have the right to be treated fairly and with respect.

4. Directors have the right to expect support and constructive input from the owners and residents.

5. Directors have the right to their privacy at home.

6. Directors have the right to take advantage of educational opportunities to better serve the Association. The Association budget should contain the educational expenses as a separate line item.

Board's Duties

1. Directors are tasked with running the Association. They are often vested with the combined powers of the executive, legislative and judiciary branches of government. It is important that these powers are exercised wisely.

2. Directors owe a fiduciary duty to the Association. Although this is a statutory requirement, the statute does not define what a fiduciary duty is. Essentially, the Directors must act in good faith and put the interest of the owners ahead of their own. The fiduciary duty includes the duty of diligence, duty of good faith, duty of loyalty and the duty of obedience.

3. Directors are often judged using the Business Judgment Rule, which is based on how an ordinarily careful or reasonable person would act in a like situation. In order for anyone to challenge the actions of the Board, they are required to demonstrate that the director:

a. Failed to act in good faith

b. Failed to act in the manner he reasonably believed to be in the best interests of the Association

c. Failed to exercise the care which an ordinarily careful person in a similar position would use in a similar situation

4. Directors should conduct open meetings and encourage owners' input.

5. Directors should provide the records owners are entitled to review.

6. Directors should adopt reasonable financial controls. They are tasked with collecting all assessments from owners and when necessary proceed with collection actions.

7. Directors should, whenever possible, solicit multiple bids and check into the record of the contractors to make sure they are properly licensed and to determine whether they have complaints filed against them by previous clients. Be sure to hire only licensed contractors.

8. Directors of associations with 20 or more units must have an annual audit and an unannounced cash balance verification done. Copies of the audit should be made available to all owners.

9. Directors through the Board must collect adequate reserves. They must annually collect a minimum of 50% of the amount the association reserve study shows is required or 100% of the amount if the Board is using the "cash flow" method of calculating reserves.

10. Directors should invest Association funds pursuant to the requirements set forth in the statute. As directors, your primary objective should be the security of the funds as opposed to the yield.

11. Directors should check on the insurance companies submitting bids to make sure that they are highly rated - again, saving on premiums with a company unable to pay off on claims is unacceptable.

12. Directors should disclose any conflicts of interest and not vote on issues in which they have a conflict of interest.



This free educational presentation was brought to you by the Hawaii Real Estate Commission (Commission) and the Community Associations Institute Hawaii Chapter (CAI Hawaii).



The Condominium Education Trust Fund subsidizes a select number of CAI Hawaii condominium educational events procured by the Commission.



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