A Succession Plan for Transitioning Boards
By Christine L. Khano, Esq.
Community Associations Institute – Georgia Chapter
Fourth Quarter Magazine 2021
Congratulations! Three new neighbors have been elected to join the new board of directors for the association. Now what? What is the existing board supposed to do to help engage the recruits in their new roles? Change is never easy, but a comprehensive succession plan can make the transition in leadership smoother.
What is a Succession Plan?
A succession plan is a guide to help seamlessly transition the association’s vision and output from the existing board to the new board. A comprehensive succession plan can minimize redundancies, delays, and knowledge gaps. Most of the suggestions below are not specific to collections but can be particularly helpful for the responsibility of collecting assessments.
Why Should an Association Have a Succession Plan?
For success, of course! The purpose is to encourage the new board to maintain a consistent workflow and information exchange from the existing board.
Just like any private corporation, the association is a corporation—albeit a non-profit one—that is spearheaded by a board of directors, who is tasked with a set of responsibilities and obligations. A succession plan is useful whether the association has an entirely new board or a staggered board with three new members and two existing members.
A succession plan is relevant to all aspects of board duties but is particularly important for an association’s collections practice. After all, collecting assessments is the foundation for funding maintenance, repairs, and new projects.
Who Should be Involved?
The Existing Board:
The existing board should help prepare the succession plan, preferably with the property manager, before the annual election. It may discuss any of the visions and goals it had set out during the prior term(s), the ongoing projects, the steps it has taken towards reaching its goals, and suggestions for the new board to consider.
This is a good time for the existing board to review its contracts with its existing vendors. Is the board satisfied with the services provided? Are there any suggestions or insights the existing board wishes to share with the new board? Should the association change service plans or change vendors altogether at the end of the contract’s term? All good questions that require board review.
The New Board:
The new board will be executing the succession plan preferably with the assistance of the property manager.
How Should the Association Prepare and Execute a Succession Plan?
Alignment of Vision & Knowledge Exchange:
This is the time to share the existing board’s visions with the new board and align the two with the same goals. This promotes a seamless transition and an opportunity to learn from the existing board. Listen to the existing board’s suggestions and insights on the vendors, existing projects, collection procedures, and next steps. This does not need to occur in a cross-over meeting but can be documented through memos and meeting minutes.
Orientation & On boarding:
This is the time to educate new board members on the board composition, individual roles of each officer position, and the process and procedures of meetings and board voting. Many law firms offer free or discounted board meetings for just the occasion.
Understand the Current Landscape:
Have the new board review the association’s declaration, bylaws, and existing policies. These tools will help the board navigate its responsibilities, powers, and limitations. For example, what are the association’s collection powers? Insert the favorite phrase of all attorneys, “It depends.” In this case, it depends on the specific language found in the association’s governing documents and whether the association is submitted to the Georgia Condominium Act, the Georgia Property Owners’ Association Act, or neither. Consult the association’s attorney for specifics.
Have the new board review the association’s budget and understand how much is allocated for each category. With regard to collections, review the amount allocated for, “Legal.” Have the association’s property manager or existing board indicate how much of that was used towards collections during the prior year(s). It will help the new board gauge whether a certain collection action is reasonable given the estimated cost and current budget.
Have the new board review existing vendor contracts to reduce surprises.
- • What services are included? What are the costs the association should expect to pay out of pocket?
- • When does the contract term end or automatically renew?
- • Was the association/existing board satisfied with the work performed? If not, what notice is required to terminate a contract?
In addition to the above, specific to collections, contact the association’s attorneys to understand its collections program.
- • Ask for a collection status report. The report will bring the new board up to speed with which properties are already in collections and where each account is in the collection process—pre-suit with demand and lien, active lawsuit, or post-judgment collections.
- • How are offers and next steps communicated? Some associations prefer to communicate through the property manager while others request the entire board be copied on emails. The new board should establish its communication preferences with its collection attorney (and with its other vendors).
- • Does the attorney already have standing settlement authority from the existing board? If the new board wants to establish a new set of criteria, it is important to express that now rather than afterwards when an agreement has already been reached between the delinquent homeowner and the attorney on behalf of the association.
Now that the new board has familiarized itself with the tools and current landscape, this is the time for the new board to take the reins! Does action need to be taken?
Where collections are concerned, the board should review the association’s aging report to determine which accounts are overdue for payment.
- • Determine if there is an established dollar amount or days delinquent before the board turns over those accounts to collections. If there is not an established threshold, the new board may wish to discuss the matter with its property manager and collection firm.
- • After establishing the threshold, those accounts that meet the threshold should be turned over to collections if not already.
Congratulate the New Board!
Sitting on the board of directors is not easy and is often a thankless job, so thank the existing/exiting board for serving and congratulate the new board for a successful transition.