NAR Insurance Program Quarterly Risk Report

IN THE SPOTLIGHT: Governance and Board Leadership

As many associations welcome new board members at the turn of the year, now is a good time to review and remind the association directors about their fiduciary duties, association policies (e.g., antitrust compliance, anti-harassment, and conflict of interest), board procedures, and the basics of good sense governance. An excellent way to prepare board members for their role is providing annual orientation which covers matters such as a director’s role in overseeing the association’s operations, the business judgment rule, and their fiduciary duties to the organization. 

As a reminder, coverage under the NAR Insurance Program is dependent on the association or MLS adopting all mandatory NAR policies, as well as adhering to the association’s bylaws and policies. This means the association and its board must act in accordance with the association’s governing documents and applicable state and local laws. Examples of such actions include: 

• Providing adequate notice. Taking action at an improperly called board meeting, such as failing to provide proper notice or acting without a quorum, can be invalidated by a court if the action is challenged.
• Acting in the best interests of the association and its members. The board of directors are required to avoid and disclose any conflicts of interest. 
• Acting with a duty of care. The board is required to act with reasonable diligence and prudence which means staying engaged, being informed and relying on professionals.

Take steps now to empower and enable the board to protect the interests of your association and its members, make good and informed decisions, and avoid liability claims. Check out NAR’s Board of Directors Orientation Toolkit for customizable presentations. 

Best Practices For Productive Board Meetings

• Follow the procedures set forth in your bylaws and policies and comply with all legal requirements when conducting board meetings.
• At the beginning of each board meeting review and remind the board about policies such as antitrust compliance and conflicts of interest.
• Set and follow an agenda for all meetings, take accurate, concise minutes and consider asking counsel to review the minutes before finalizing.
• Engage a parliamentarian to ensure association board meetings are conducted properly and efficiently, especially when significant business will be decided.
• Provide annual anti-harassment and diversity, equity and inclusion training for board members.
• Establish roles and expectations of association leaders and professional staff to ensure efficient and effective management of the organization.
• Know your state’s weapon laws, and consider adding a weapon policy to association policies. Post signs at all building entrances that weapons are not allowed in the building.
• If any individual threatens violence against an employee, a director or officer, or another member, contact local law enforcement and local legal counsel for guidance.
• Consider disciplining or terminating members or employees who threaten violence, in accordance with the association’s bylaws and policies.