HOA BOARD OF DIRECTORS

[Guest Brenda]

Is it true that only an officer of the board ie the President, VP or Secretary can sign a contract for work to be done in the association? as an example we have a board member who is head of the Maintenance committee who always takes it upon himself to hire and signs the contracts for say road work and so on. He is a board member not an officer, shouldn't it be an officer signing the contract? He does things without formal aproval of the contract.

[Kim Goldsworthy]

Is it true that only an officer of the board, i.e., the President, VP or Secretary, can sign a contract for work to be done in the association?

No.

No one can sign.

Not even a president.

AUTHORITY must be granted.

No individual officer has "carte blanche" to commit the organization to anything.

As an example we have a board member who is head of the Maintenance committee who always takes it upon himself

to hire and signs the contracts for say road work and so on.

He is a board member, not an officer, shouldn't it be an officer signing the contract?

He does things without formal approval of the contract.

A single individual signing a contract, and obligating the entire organization?

With PERMISSION, yes.

Without PERMISSION, no.

Your "head of the Maintenance Committee" might have been given authority to do such a thing.

Or, your "head of the Maintenance Committee" might be a loose-cannon wild man, who went off half-cocked.

[David A Foulkes]

Is it true that only an officer of the board ie the President, VP or Secretary can sign a contract for work to be done in the association? as an example we have a board member who is head of the Maintenance committee who always takes it upon himself to hire and signs the contracts for say road work and so on. He is a board member not an officer, shouldn't it be an officer signing the contract? He does things without formal aproval of the contract.

Well, clearly the answer is yes, since he's been doing it. What's behind your question is this: does this board member, in signing contracts with outside agencies, businesses, whatever it might be, act on behalf of the organization and obligate it in such a way as to make it liable for expenses, and so on? And the answer is almost certainly no. Without having read your bylaws (and please don't post them) or knowing anything more about your organization, I'd say what's really happening (unbeknownst even to this member) is he is contracting with the road crews etc in his own name, and is fully liable for any cost, damages, or whatever may come out of it on his end. You (the organization) may want to have some legal counsel just to see where you all stand in this. If he is out there acting without authority or approval of the board or membership, it could get messy.

[Rev Ed]

Normally I have seen an officer or director of an HOA sign off with a statement that he/she has permission/authorization to bind the association into the contract.

[Gary Novosielski]

Normally I have seen an officer or director of an HOA sign off with a statement that he/she has permission/authorization to bind the association into the contract.

Yes, in fact that's often included in the document as boilerplate language for any loan or other agreement where the "customer" is an organization. This director-of-interest may well have signed such a statement without even knowing it.

[hmtcastle]

Normally I have seen an officer or director of an HOA sign off with a statement that he/she has permission/authorization to bind the association into the contract.

Yes, in fact that's often included in the document as boilerplate language for any loan or other agreement where the "customer" is an organization. This director-of-interest may well have signed such a statement without even knowing it.

Personally, I'd rather have a document from the organization stating that Joe is authorized to sign contracts rather than a document from Joe stating that he's authorized to sign contracts.

[Gary Novosielski]

Personally, I'd rather have a document from the organization stating that Joe is authorized to sign contracts rather than a document from Joe stating that he's authorized to sign contracts.

In some cases the signer will have to certify that the agreement being entered into was adopted by resolution, and for "major" transactions, may have to provide a certified copy of the resolution. Of course if the president is signing the contract, and the president himself signs the certification, it's turtles all the way down, yet again. But in that case it would be much more difficult for him to claim that it was an unintentional oversight.

Ideally, a document authorizing one officer to do something ought to be signed by another officer. In my organization the rules provide that as president I can sign other people's expense vouchers, but I can't sign my own, and the treasurer can't sign his own. In either case the VP would be one of the two required signatures. But that's the sort of thing that goes into the society's custom rules, because RONR simply does not get that detailed about financial matters.

I suspect if it did it would be two to three times as long.

A blanket document authorizing Joe to sign any contracts he likes would actually increase the danger, I think. When finally arrested, Joe (not his real name) could simply take out and wave the authorization.

[Bruce Lages]

And, Brenda, be aware that while your board has officers (of the board) and other members, RONR says that all board members should usually be considered as officers of the society (p.465, l.12-19)

[David A Foulkes]

And, Brenda, be aware that while your board has officers (of the board) and other members, RONR says that all board members should usually be considered as officers of the society (p.465, l.12-19)

Yes, although the references that follow (p. 19-20) would suggest that bylaws (particularly Article IV Section 1, p. 566) should explicitly indicate this to remove any doubt, confusion, or ambiguity.

[Rev Ed]

Another option I just thought of - in many organizations I belong to, all cheques must be signed by two members of the Board. A By-law could be passed to require two Board members to sign all contracts on behalf of the organization.