Boards of directors and officers explained
What’s the difference between a board of directors and the officers of an Indiana Homeowners Association?
We frequently are asked about the difference between a Board of Directors and the Officers of an Indiana homeowners association or condominium association. Some people use those terms interchangeably, but that is incorrect. Generally speaking, the Board of Directors is the governing body of the association and is the entity responsible for the management and oversight of the association, while the Officers have additional duties that are specific to their position. For most Indiana community associations, these responsibilities are set forth in the association’s By-Laws. For others, they are described in the Declaration of Covenants, Conditions & Restrictions (or a similarly titled document).
The Officers, on the other hand, have specific duties. For example, the President presides over all Board meetings and homeowner meetings, while the Secretary is responsible for taking minutes of the meetings and being the official custodian of records. Although the Indiana Nonprofit Corporations Act only mandates that the President and Vice-President also be Directors, in the majority of Indiana homeowners associations, all of the Officers must be Directors. Thus, the Officers wear “two hats”. One is in their capacity as being a Board member, while the other is for them fulfilling their duties as an Officer.
Do you remember Sam Drucker? He was a character on the old TV sitcoms “Green Acres” and “Petticoat Junction”. I was born in 1961, so I remember those shows! (Okay, I remember the reruns more than the originally aired shows.) Sam was the owner of the town’s general store. Sam wore many hats. In addition to being the shop keeper, he was also the town’s postmaster, the editor and publisher of the local newspaper, a town constable, a justice of the peace, superintendent of the school, and oversaw the train station. He had different hats, depending upon which role he was playing. When he stepped behind the post office counter next to his general store’s cash register, he would put on his official postal worker hat. When he was done selling stamps, he’d take that hat off and become the shop keeper once again.
When you’re an Officer of a homeowners association, you also wear different “hats”, depending upon what you’re doing. If you’re at a Board of Directors meeting and deciding which lawn mowing contractor to hire for your association, your “hat” is that of a Director. However, if you also happen to be the Secretary of your association, when you’re taking minutes on that discussion and the result of the Board’s vote on which contractor was hired, your “hat” at that moment is that of an Officer. I’ll bet you never thought of yourself as being just like that nice Mr. Drucker!
WHO ELECTS THE OFFICERS OF AN INDIANA HOMEOWNERS ASSOCIATION?
There is often confusion at Indiana HOA annual meetings on whether the homeowners elect the Officers, or just the members of the Board of Directors. The same is true for Indiana condominiums. The Officers usually consist of a President, Vice-President, Secretary and Treasurer. For a few homeowner associations that we’ve heard of, they ask their homeowners at the annual meeting to specifically elect the Officers such as the president.
In the overwhelming majority of Indiana homeowners associations, this is incorrect. Most By-Laws state that the homeowners elect the members of the Board of Directors only at the association’s annual meeting of the members. Once the election is completed, the Board members vote upon which of the Directors will serve as president for upcoming year. They make similar decisions for the other offices like Vice-President, Secretary and Treasurer. Thus, the homeowners do not have the power to vote for a particular person to serve as the homeowners association’s President or any other Officer’s position.
Under the Indiana Nonprofit Corporations Act of 1991, a non-for-profit corporation must have at least three (3) Directors. Other than that, there is no set number of Directors under Indiana law. However, in practice, many Indiana homeowners associations have five (5) Directors per the association’s By-Laws. That is the most common number we have seen. Thus, for many Indiana HOAs, there are five Directors and four Officers’ positions (President, Vice-President, Secretary and Treasurer). That means that one of the Directors is “only” a Director, not an Officer. Often that person is referred to as the “Board Member at Large”, although that technically does not have any significance.
Remember that all of the above issues are very “association specific”, meaning that you should review your own community’s governing documents. What may be true for one association may not be true for the community right across the street! For further information on any of these issues, consult your Indiana community association’s attorney.
