Tag Archives: duties

Association answers

Michael HunterQ: Our HOA has no Articles of Incorporation on file with the state, and no bylaws. It only has a Declaration of Covenants that has nothing in it about electing board members. Does that mean that, under the Planned Community Act, the current board is operating illegally since there is nothing in the Declaration saying how they are to be elected? Would that also mean that any decision they made is invalid? I have minutes from 2008 to March 2011, but nothing about the current four board members’ election.

While the majority of HOAs are established as nonprofit corporations with the filing of Articles of Incorporation with the Secretary of State, it is permissible for an HOA to operate as an unincorporated nonprofit association under Chapter 59B of the N.C. General Statutes.

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What is Fiduciary Duty?

We often hear that a board must act within its Fiduciary duty, but what does that really mean? 

Fiduciary duty means that your board members are bound under state law – usually a general nonprofit corporation or specific condominium/community association statute – to act within their authority, to excercise due care and to act in good faith, taking into account the association’s best interest.  Under the fiduciary model, board members do not have individual power or authority.  Rather, decision-making ability rests with the full board. (see our article Developing a communications policy for more information)

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