Board Duties and Authority

The activities and affairs of an incorporated association shall be conducted, and all corporate powers exercise by, or under the direction of, the board. (Corp. Code §7210) The specific duties and powers of the board of directors, as well as limitations thereon (such as the specific corporate actions which may require prior member consent) are generally set forth in the bylaws, and occasionally in the CC&Rs.

Bonds

A bond is a contract between an obligor (e.g., a developer), obligee (e.g., an association) and a surety (i.e., a bonding company). A bond provides security to the obligee that the obligor will deliver on a promise to perform. A bond will, typically, be in an amount sufficient to compensate the obligee for the obligor’s failure to deliver on its promise. If the obligor fails to perform, then the obligee has the right to request that the surety pay the obligee an amount up to the value of the bond.

Books and Records

The association is responsible for keeping, maintaining and updating the books and records of the association. These include, but are not limited to, financial reports, bank statements, membership lists, and ledgers. The association must be ready to produce these books and records upon demand by a member, pursuant to Civil Code section 5200 et seq.

Borrowing Money

California Corporations Code §7210 provides that a corporation shall have a board of directors who shall manage and exercise all corporate powers on behalf of the corporate entity. Additionally, Corporations Code §7140 provides that, subject to any limitations contained in its articles or bylaws, a corporation shall have the power to:

“(i) Assume obligations, enter into contracts, including contracts of guarantee or suretyship, incur liabilities, borrow or lend money or otherwise use its credit, and secure any of its obligations, contracts or liabilities by mortgage, pledge or other encumbrance of all or any part of its property and income.” [Emphasis added.]

However, many association governing documents impose limitations upon a board of director’s ability to borrow money or incur indebtedness without the approval of the membership. Accordingly, an association should review its governing documents prior to executing any loan documents.

Balconies

Every analysis of maintenance and repairs responsibilities for balconies should begin with consideration of Civil Code section 4775(a). Pursuant to Section 4775(a), an association must maintain and repair the common areas and the individual owner must maintain and repair their separate interest and exclusive use areas. In a condominium association, everything in the community is either common area or part of a unit. Therefore, it is important to know the dividing line between the two. This question is generally answered in the CC&Rs and the condominium plan for your community. In general, the structural elements of a balcony are almost always the responsibility of the association to maintain.

Borrowing from Reserves

Reserves are intended to fund the maintenance, repair, restoration and replacement of the major components an association is responsible for under its governing documents. Civil Code section 5515 authorizes an association to borrow money from a reserve account for up to one year to cover a short-term cash-flow deficit provided certain requirements are met.

Ballots

Ballots must contain the quorum requirement and (except for the election of directors), the percentage of approvals necessary to pass an action item. Ballots must be distributed to the members by the association. Owners cannot create and submit their own ballot. Depending on the type of election, ballots may be secret or not secret. Secret ballots cannot be revoked once received by the inspector of election.