Navigating Leadership: Building a Strong Vacation Ownership Resort Association Board

Volunteering as a vacation owners association board member comes with significant responsibilities, occasional complications, and potential conflicts. Despite being viewed as a thankless job, it is an excellent way to serve the resort’s member-owners and actively participate in decision-making and strategic planning. Board members play a critical role in a resort’s health and sustainability. This role is not to be taken lightly, as board members must be engaged in and committed to the association’s oversight and improvement.

Responsibilities of the Board and Fiduciary Duty

The board is responsible for setting the direction of the association, enforcing rules, and protecting the interests of the association and its members. To effectively accomplish this, boards have specific responsibilities which include, but are not limited to, the following:

• Attending meetings and conducting association business, including developing and implementing a strategic vision for the association with goals, objectives, and action plans.
• Caring for and maintaining common property, securing adequate resources for the association to operate successfully, and keeping members and owners informed of matters that concern them.
• Ensuring responsible financial management through proposing and/or approving budgets, levying special assessments, and monitoring financial results through the review of financial statements.
• Overseeing the association’s governance through oversight of legal compliance with laws and regulations, enforcement of rules of operation and covenants for common areas and facilities, and ensuring operations are in accordance with governing documents.
• Selecting professionals to serve the association and collaborating to accomplish the association’s mission and purpose.

The responsibilities also require a strong understanding of the fiduciary duties of board members. Fiduciary duty essentially means acting in the best interests of the association and its members, including acting with care, loyalty, good faith, and obedience:

• Duty of Care: Proposing and making decisions in the best interests of the association and its owners, giving the same care and concern to their board responsibilities as any prudent and ordinary person, and actively participating in board meetings.
• Duty of Loyalty: Putting the interests of the association ahead of their own interests, making decisions without bias or preference towards their own agendas.
• Duty of Good Faith: Making decisions and acting with integrity, impartiality, and prioritizing the interests of the association over those of others.
• Duty of Obedience: Ensuring the association complies with laws and regulations, such as state statutes, governing documents, and best practices.

Board members are also responsible for protecting owners’ confidentiality if information is provided in confidence regarding personal matters, regardless of whether they affect the association.

Related: Boosting Financial Clarity: Budgeting & Reporting for Vacation Ownership Resorts

Education of New Board Members and Effective Meetings

The orientation and onboarding of new board members is critical to the process. Those with history and institutional knowledge of the association can provide valuable insight, while new board members can offer fresh ideas. Remembering that both parties can learn from each other and share information is essential.

To have active engagement from new members, information must be shared. A new board member orientation should include the following at a minimum:

• A review of key governance documents
• A discussion of the roles and responsibilities of the board as a whole and of the board members individually
• An introduction to all board members and key members of management
• A review of the current financial statements, operating budget in effect, legal disputes and status, and other relevant financial information
• A board handbook as a comprehensive resource that includes board policies and procedures, governance documents, state or other governing statutes, rules, or regulations, and other relevant information

This process will familiarize new board members (and remind existing ones) of their larger responsibility. Some states require new board member education, but even in those that do not, outside consultants such as attorneys and accountants can conduct training, providing invaluable information to all board members.

Related: Resources for the Newly Elected Board Members

For a board to have productive and successful meetings where voices are heard and business gets done, meetings need to be organized and monitored to accomplish tasks. Ineffective meetings can decrease board member engagement and efficacy. Here are a few tips for conducting board business effectively and efficiently:

• Prepare and circulate a draft agenda inviting comments and business matters from other board members before the meeting, providing enough time for adequate review and response.
• Adequately notice the meeting so that business can be legally conducted.
• Send a final agenda to board members prior to the meeting with any necessary documents for discussion, such as internal financial statements, reports, and legal matters.
• Give ample notice to professionals who may need to attend the meeting, such as consultants, accountants, or attorneys, to ensure all necessary parties are present.
• Observe strict time limits for discussion and leave ample time for owners and other participants to ask questions. Adopt a parliamentary procedure to assist with this.
• Start and end on time.

Ultimately, serving as a board member is a rewarding experience offering a unique learning and community engagement forum. For those considering this role, it is important to understand the expectations and requirements involved. With the right approach, board members can significantly impact their resort community, contributing to its long-term success and sustainability.

Withum is a forward-thinking, technology-driven advisory and accounting firm, committed to helping clients in the hospitality industry be more profitable, efficient, and productive in the modern business landscape. For further information about Withum and their hospitality, cybersecurity, and digital advisory services teams, contact Lena Combs (LCombs@Withum.com) at (407) 849-1569, or visit www.withum.com/hospitality.