Directors have a fiduciary duty to their respective associations. One aspect of this duty is to know the law as it applies to homeowner associations – ignorance of the law, even if it is unintentional, is not an excuse.
When it comes to investment decisions, a common sense approach may include the following:
- Adopt an investment policy that emphasizes preservation of capital.
- Have the Treasurer and/or Finance committee review the investment accounts at least once a year.
- Require that all association accounts, i.e. checking, savings, money market, investment, have at least two directors on the signature card.
- Limit investment maturity dates not to exceed 1 year. This is especially true in a rising interest rate environment.
Please feel free to contact us if you have any questions or comments concerning this article.
Prepared by Ronald A. Kawahara, CPA, CVA, CPM, PCAM
President, Destination Maui, Inc.
220 Imi Kala St., Suite 104
Wailuku, Maui, Hawaii 96761