Important People/Positions

In a typical timeshare plan, each purchaser automatically becomes a member of the resort home owners association (HOA). Many plan legal documents (CC&Rs) require that the developer/declarant (D/D) turn over control of the resort (after a specific percentage of sell-out has been achieved). Additionally, most of those CC&Rs require that the members, other than the D/D, begin to elect a board of director (BOD) member in order to achieve a smooth transition from D/D control to HOA control at the appropriate time. In order for the HOA to function in the manner intended by the CC&Rs, these are several important positions.

Member of the HOA Board of Directors

The first of those positions is the HOA member-elected BOD. The CC&Rs (usually the Articles) will dictate whether these individuals must be members of the HOA. The period between the election of the first Board by the members (other than the D/D) and when the HOA gains control from that D/D is the most important period for any timeshare plan related HOA.

Typically, the D/D will state in the Declaration the intent to provide a mutually equitable servitude upon the property and improvements (the resort) and upon each of the fractional interest. This means that neither the developer nor the owners have an upper hand. That initial owner-elected member of the BOD must be diligent to insure that the “mutually equitable” intent is indeed fulfilled in both how the resort and its HOA are operated and how the financial affairs are maintained.

Some time ago in “With Regard to Owner Associations,” I described these important people/positions (members of the BOD) as such:

“A good and effective Board Member will understand the purpose of the Homeowners Association, perceive the interest and needs of the members, individually and collectively and be able to respond to them appropriately. They will be, when necessary, able to submerge their own desires and see all issues in regard to the total community. The demands on the time and energy of those who volunteer to serve as Directors of Owners Associations can be both immediate and continuous. They must be prepared to devote, for the time they serve, a distinctive part of their lives to the Associations purpose, interest and objectives.” 

The power of the Board of Directors is vested in the collective body. Those powers are usually exercised at a duly called and noticed meeting, where a quorum is present and due diligence has been performed with respect to any business of the HOA. An individual board member, acting outside of such a meeting, has no more power than any other individual member of the HOA unless such power has been granted to that individual by action of the full BOD (in its majority) and where that individual recuses him or her self. Any board member (in any other circumstance other than that indicated in the prior sentence) that has led others to believe he/she has the power(s) vested in the collective BOD, has placed themselves is legal jeopardy.

 

Officers of the HOA

The by-laws of a timeshare plan HOA will spell out the general type, powers, duties and responsibilities of the HOA officers. Each of those by-laws will differ slightly.

The following are taken from an existing set of by-laws:

OFFICERS: The officers of the Association shall be a President, a Vice President, a Secretary and a Treasurer. The Association may also have, at the discretion of the Board of Directors, one or more additional Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section C of this Article. Officers other than the President need not be Directors. One person may hold two or more offices except the President shall not also be the Secretary.

ELECTION: The officers of the Association, except such officers as may be appointed in accordance with the provisions of Section C and E of this Article, shall be chosen annually by the Board of Directors and each shall hold his/her office until he/she resigns or is removed or otherwise disqualified to serve, or his/her successor shall be elected and qualified.

SUBORDINATE OFFICERS,ETC: The Board of Directors may appoint such other officers as the business of the Association may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the By-Laws or as the Board of Directors may from time to time determine.

REMOVALANDRESIGNATION: Any officer may be removed, either with or without cause, by a majority of the Directors then in office, at any regular or special meeting of the Board of Directors.

 

Specific Duties of the HOA Officers

PRESIDENT: The President shall be the Chief Executive Officer of the HOA and shall, subject to the control of the BOD, have general supervision, direction and control of the business and officers of the HOA. He shall preside at all meetings of the members at which votes on HOA business are to be taken, and at all meetings of the BOD. He shall be ex-officio a member of all standing committees, including the Executive Committee, if any, and shall have the general powers and duties of management usually vested in the office of President of an HOA, and shall have such other powers and duties as may be prescribed by the BOD.

VICE PRESIDENT: In the absence or disability of the President, the Vice Presidents, in order of their rank as fixed by the BOD, or if not ranked, the Vice President designated by the BOD, shall perform all the duties of the President and when so acting shall have all the powers of, and be subject to, all the restrictions upon the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the BOD.

SECRETARY: The Secretary shall keep, or cause to be kept, a book of minutes at the principal office or such other place as the BOD may order, of all meetings of the directors and HOA members, with the time and place of holding, whether regular or special and if special, how authorized, the notice thereof given, the names of those present at Directors’ meetings, the number of memberships present or represented at HOA members meetings and the proceedings thereof.

The Secretary shall keep, or cause to be kept, at the principal office a HOA membership register, or a duplicate HOA membership register, showing the names of the HOA members and their addresses, the number of HOA memberships held by each, the number and date of certificates issued for the existing HOA memberships, and the number and date of cancellation of every certificate surrendered for cancellation.

The Secretary shall give, or cause to be given, notice of all the meetings of the HOA members and of the BOD required by the By-Laws, or by law to be given, and he/she shall keep the seal of the HOA in safe custody, and shall have such powers and perform such other duties as may be prescribed by the BOD.

TREASURER: The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the HOA including accounts of its assets, liabilities, receipts, disbursements, gains and losses. The books of account shall at reasonable times be open to inspection by any Director or HOA member.

The Treasurer shall deposit all monies and other valuables in the name and to the credit of the HOA with such depositories as may be designated by the BOD. He shall disburse the funds of the HOA as may be ordered by the BOD, shall render to the President and directors, whenever they request it, an account of all of his transactions as Treasurer and of the financial condition of the HOA, and shall have such other powers and perform such other duties as may be prescribed by the BOD.

 

Subordinate Officers

Typically, such officers would fill positions for the HOA that were/are required by governmental agencies. The following are examples of one such HOA:

VP & Rental Program Broker: This individual holds a real estate brokers and performs the real estate functions of the HOA operated rental program. These duties include the keeping of the legally required brokers trust account.

VP & Re-sale Broker: This individual holds a real estate brokers license and performs the real estate functions of legal processes (with attorney) to recover and resell non-performing timeshare plan interests.

VP & Assistant Treasurer: This individual is the timeshare plan controller and is the individual that actually records HOA financial activity and handles all deposits and disbursements of HOA funds.

VP & Liquor Agent: This individual is the actual holder of the HOA liquor license and is responsible for the training of bartenders (or others that dispense liquor to the public) on the laws or statutes which apply.

Recording Secretary: This individual is charged with the responsibility of actual taking the minutes of meetings and preparing a draft copy for the approval of the HOA secretary prior to their approval by the BOA at the next meeting or the HOA members at the annual meeting.

 

Committee Members

The BOD has the power to appoint any committees that they deem appropriate and/or desirable. Typically such committees act in an advisory manner and have no power to make decisions in lieu of the BOD. The BOD can convey some of its power to a committee if it is necessary for the committee to carry out its duties. Example: The BOD may establish an Investment Committee and empower that committee to act independent of the BOD as long as they do so inside the BOD Investment Policy.

The number of individuals serving on a committee should be an odd number and should never contain as members a number of directors that would constitute a majority of the BOD. Example: If the BOD contains five (5) members, no more that two (2) board members should be appointed to any committee. Example: If a committee is acting in an advisory manner and three (3) of its members are BOD members, and the committee votes unanimously to recommend something to the BOD, a majority of a five-person BOD would have already made a decision without full due dalliance being performed at a BOD meeting.

Each committee should have a chairman and a vice chairman or co-chairmen. Its members may be members of the BOD, subordinate officers of the HOA, appropriate management staff member, or HOA members who volunteer to perform such duties. These individuals are very important to the HOA because the committee function is outside and above their regular duties.

STATUTORY AGENT: All business entities (including timeshare plan HOAs) are required to appoint and maintain a statutory agent (in some states the title is resident agent). The purpose of a statutory agent is to give notice to the public of a person or entity authorized by the company that can be served with legal documents as the agent of the company. The statutory agent may be a natural person who is a resident of the state or may be a domestic corporation or a foreign corporation holding a license, as such, under the laws of the state, that is authorized by its articles of incorporation to act as such agent and that has a business address in the state. The statutory agent must have a street address rather than a P.O. box and must sign consent to be the statutory agent for the business entity and file it with the appropriate state agency.

MANAGEMENT AGENT: Many timeshare plan HOAs will have language in its CC&Rs similar to those taken from one such HOA as indicated below:

Declaration Section 507 - Maintenance and Operations: The HOA shall have the sole authority, power, responsibility and duty for the operation and management of XXXXXXX Resort, for the maintenance of all the Residence Units, Common Areas and Furnishings, for the enforcement of the provisions of this Declaration and the Rules, and for the collection of assessments provided for herein. Maintenance, as used in this paragraph, shall include: (a) reconstruction, restoration, remodeling, refurnishing, repair, maintenance and upkeep of Residence Units and Common Areas including landscaping; (b) repair and replacement of Furnishings; and (c) payment of all operation expenses including but not limited to insurance, real estate and personal property taxes, utilities, cost of equipment, supplies, personnel, and management fees.

Declaration Section 5.08 Management Firm: The HOA shall enter into a written agreement with a management firm by which it delegates all the authority, powers and duties set forth in the preceding section. The provisions of the agreement may not conflict with the following: (a) Term: (b) Termination: (c) Authority: The powers and duties delegated to the management firm to operate and maintain the “Resort” shall be set forth. Any delegation of authority to carry out disciplinary actions on behalf of the HOA to employ subagents, and to enter Residence Units, shall be expressly set forth. Authority with respect to administration of an exchange in which the “Resort” may participate shall be expressly set forth or negated.

If such an agreement exists, then a senior agent of that Management Firm should be designated as Management Agent with respect to dealings between the HOA, its BOD, and said Management Firm. This Management Agent may act on behalf of the HOA so long as those actions are within the scope of the authority granted. Example: The Management Agent may execute a contract on behalf of the HOA for staff uniforms for a period of one (1) year.

CERTIFIED PUBLIC ACCOUNTANT: Many timeshare plan HOA CC&Rs will contain language similar to those indicated below:

Declaration - Section 5.10. Annual Report: Within 120 days after the end of each fiscal year, the HOA shall provide to each member an audited financial statement for the previous year, and such information as required to be reported annually to any governmental agency. The annual audit must be prepared by an independent Certificated Public Accounting Firm.

It is vital that no conflict of interest exist between the CPA firm and any BOD member or senior staff member of the management firm, or any resort staff member including but not limited to the resort general manager and the comptroller.

EXCHANGE AFFILIATION REPRESENTATIVES: Most timeshare plan HOAs have an affiliation with one or more exchange firms. In order to maintain a mutually beneficial relationship with such firms the BOD, management firm, the management agent, and the resort’s senior management staff need to be familiar with (at a minimum) the regional representative for each such firm.

 

ARDA State and Regional Committees

ARDA maintains a committee in each of the following locations: Arizona, California, Caribbean, N&S Carolina, Florida, Hawaii, Missouri, Nevada, New England, Rocky Mountain, Tennessee, and Wisconsin. Specific contact information can be found at ARDA's State and Regional Committee Listing.

Most of these state and regional committees maintain a relationship with at least one registered lobbyist within their state or region. Additionally, ARDA maintains a State Affairs Office in Orlando, Florida, which actively monitors and lobbies issues important to the timeshare industry and HOA members.