The Role of the Director The Role of the Director and the Manager During and the Manager During

a Financial Crisisa Financial Crisis

Steven W. Weil, Esq.Steven W. Weil, Esq.

Fiduciary DutyFiduciary Duty

The Board: Monitor, Delegate, The Board: Monitor, Delegate, Decide, DocumentDecide, Document

The Treasurer’s RoleThe Treasurer’s Role

The Manager’s RoleThe Manager’s Role

Indemnification and InsuranceIndemnification and Insurance

Investment GoalsInvestment Goals

Safety, Liquidity and YieldSafety, Liquidity and Yield

Safety – protecting principal from Safety – protecting principal from excessive riskexcessive risk

Liquidity – ease/cost of accessing fundsLiquidity – ease/cost of accessing funds

Yield – returnYield – return

Correspond maturities to repair needsCorrespond maturities to repair needs

Preserving FundsPreserving Funds

Maintain funds: FDIC Insured/CDRS Maintain funds: FDIC Insured/CDRS AccountsAccounts

Statutory requirement for Managers: Statutory requirement for Managers: ((§§1363.2)1363.2)

Full Faith and Credit (T-Bills, Bonds)Full Faith and Credit (T-Bills, Bonds)

FDIC Insurance up to $250,000FDIC Insurance up to $250,000

Certificate of Deposit Account Registry Certificate of Deposit Account Registry Services (CDRS)Services (CDRS)

Board ProceduresBoard Procedures

Adopt investment policy / proceduresAdopt investment policy / procedures

Follow and documentFollow and document

Quarterly reconciliations requiredQuarterly reconciliations required

Quarterly investment review Quarterly investment review recommendedrecommended

Standing agenda noticeStanding agenda notice

Role of TreasurerRole of Treasurer(aka Chief Financial Officer per Corp (aka Chief Financial Officer per Corp §§7213)7213)

Financial oversightFinancial oversight

Regular conduit between board / Regular conduit between board / financial consultantfinancial consultant

More regular dialogue with CPA / More regular dialogue with CPA / ManagerManager

Reports discussed at open meetings / Reports discussed at open meetings / member inputmember input

Manager’s RoleManager’s Role Manager’s contract requirementsManager’s contract requirements

CACM Standards of PracticeCACM Standards of Practice

Timely reporting and gathering / draft Timely reporting and gathering / draft budgetsbudgets

Does not have final word on anythingDoes not have final word on anything

Manage expectationsManage expectations

Fidelity insuranceFidelity insurance

Protecting the Board, Treasurer Protecting the Board, Treasurer and Managerand Manager

Indemnification (what is “good faith”?)Indemnification (what is “good faith”?)

Insurance implements indemnity dutyInsurance implements indemnity duty

Coverage issues: betterment / Coverage issues: betterment / statutory violationsstatutory violations

Timely notification (especially Timely notification (especially enforcement)enforcement)

Prioritization: CC&R EnforcementPrioritization: CC&R Enforcement

PrecedentPrecedent

Meet and ConferMeet and Confer

Self HelpSelf Help

Prioritization: ExpensesPrioritization: Expenses

Making the hard decisionsMaking the hard decisions

Deferred funding and repairDeferred funding and repair

Deferring reserve contributionsDeferring reserve contributions

Deferring payment of special Deferring payment of special assessmentsassessments

Collecting AssessmentsCollecting Assessments

Review (Amp Up) Collection PolicyReview (Amp Up) Collection Policy

Handling assessment disputes Handling assessment disputes ((§§1367.6)1367.6)

SettlementsSettlements

Lenders: Finding and fining themLenders: Finding and fining them

Avoiding Expenses: Bankruptcy Avoiding Expenses: Bankruptcy and Receivershipand Receivership

Homeowner bankruptciesHomeowner bankruptcies

Post petition debt (2005 Post petition debt (2005 amendments)amendments)

CID bankruptcies?CID bankruptcies?

ReceivershipsReceiverships