What Is a Condo Board of Directors? Roles, Election Process, and How to Decline Service

When you purchase a condominium, you increasingly encounter the terms "management association" and "board of directors." In some cases, you may be appointed as an officer, so it is important to understand the workings of the board of directors in advance.

In this article, we explain the board of directors of a condominium, covering activity content, election methods, and how to decline officer positions. We also introduce what to do when selected for the board of directors and the recently noted third-party management system, so please use this as a reference.

What Kind of Organization Is a Condominium Management Association?

The management association is a body composed of all owners (residents who have purchased units) of a condominium. Upon purchasing a condominium unit, you automatically become a member of the management association.

Some people think "since I pay management fees, I can leave everything to the management company," but the management company is merely entrusted with operations. The discussions for actually maintaining and managing the condominium are conducted by the management association and board of directors.

Regarding condominium management, while the Building Unit Ownership Act (the law on sectional ownership of buildings) provides regulations, detailed rules and specific management content differ by condominium and are specified in the management regulations.

Establishment of the Management Association Is Required by Law

The Building Unit Ownership Act stipulates that all unit owners form a body to manage the building, land, and ancillary facilities, hold meetings, and establish regulations. Therefore, the establishment of a management association is mandated by law.

Specific Roles of the Management Association

According to the "Standard Condominium Management Regulations" published by the Ministry of Land, Infrastructure, Transport and Tourism, the management association aims to have unit owners jointly promote benefits and secure a comfortable living environment.

Jointly promoting benefits means increasing the asset value of the condominium and properly and effectively using management fees. Securing a comfortable living environment means creating an environment where residents can live with peace of mind.

Condominiums have exclusive areas owned by individual unit owners and common areas shared by everyone, such as entrances and elevators. If common areas are not properly managed, it not only causes inconvenience for residents but also leads to a decline in the building's asset value. The management association plays the role of preventing such situations and managing mainly common areas so that everyone can live safely and comfortably.

What Does the Condominium Board of Directors Do?

The board of directors is an organization that coordinates the management association and carries out the maintenance and management of the condominium. Directors and supervisors are selected from among management association members to organize management operations.

Overview of the Board of Directors

While the management association is basically composed of all unit owners, it tends to be unclear who is responsible for what, so the board of directors fulfills its role. The board of directors determines officers from among management association members and coordinates management operations.

While the Building Unit Ownership Act stipulates that directors and supervisors need to be established in the case of an incorporated management association, even unincorporated management associations almost always determine officers and establish a board of directors.

Legal Standing of Officers

The management association and board of directors officers are in a relationship of a delegation contract. The management association side is the delegator and the officers are the delegatees.

Board of directors officers bear a duty of care during their term of office, and violation may result in claims for damages as breach of contract. For example, if an officer embezzles management fees, or if they knew of this and ignored it, they are likely to be considered in violation of their duty.

What Is the Difference Between the Board of Directors and the General Meeting?

The board of directors is the organization that executes what was decided at the general meeting, while the general meeting is where the management association makes decisions. Using a company analogy, the general meeting is like a shareholders' meeting, and the board of directors is like a board of directors.

What Is the "General Meeting"?

The management association's general meeting is a meeting held at least once a year where management association members deliberate and vote — the place for decision-making. In principle, all unit owners are expected to attend. Under the Standard Condominium Management Regulations, it is stipulated that it be held within two months of the start of the new fiscal year.

Regular General Meetings and Extraordinary General Meetings

General meetings are divided into two types: "regular general meetings" and "extraordinary general meetings." Regular general meetings are convened by the board chairperson once a year to gather management association members, while extraordinary general meetings are held on an ad hoc basis when the board chairperson deems it necessary.

For a general meeting to be valid, attendance of at least half of the total voting rights is required.

What Is Decided at General Meeting Resolutions

The general meeting primarily votes on "ordinary resolutions" and "special resolutions."

[Items decided by ordinary resolution]

Income and expenditure settlement of the management association
Deliberation on income/expenditure settlement and business plans
Determination and changes of management fees and other amounts
Appointment and removal of board of directors officers
Establishment, amendment, and abolition of bylaws based on management association regulations
Minor changes to common areas
Decisions and changes regarding consignment of management association operations

[Items decided by special resolution]

Establishment, amendment, and abolition of management regulations
Changes to common areas
Resolutions regarding acquisition or dissolution of the association corporation
Recovery from major destruction of half or more of the building

Special resolutions require approval by at least three-quarters of the total number of members and three-quarters of the total voting rights. Resolutions on rebuilding require approval by at least four-fifths.

What Roles Does the Condominium Board of Directors Have?

The board of directors has four basic roles: chairperson, vice chairperson, treasurer, and supervisor. Some condominiums may also have positions such as disaster prevention officer and repair officer.

Chairperson

The chairperson represents the board of directors or management association, and handles convening and chairing general meetings, and serves as the point of contact with external contractors such as management companies. However, they do not hold all authority — deliberation at the board of directors and approval at the general meeting are required.

Vice Chairperson

The vice chairperson supports the chairperson. When the chairperson cannot attend the board of directors or general meeting, the vice chairperson serves in their place.

Treasurer

The treasurer handles accounting operations such as collection, management, utilization, and expenditure of management fees. Main duties include managing cash and bank accounts, managing income and expenditure, sending reminders to those in arrears on management fees, and creating accounting materials. Because specialized knowledge is required, many condominiums entrust these duties to the management company.

Supervisor

The supervisor audits whether board of directors activities are being conducted appropriately. They confirm the flow of funds and investigate suspicious points. When problems arise, they can even convene an extraordinary general meeting in place of the chairperson.

Other Roles

Some condominiums may also have the following positions:

Disaster prevention officer: Conducting disaster prevention drills
Repair officer: Dealing with construction companies
Landscaping officer: Managing landscaping around the condominium
Neighborhood association officer: Building relationships with the community
Public relations officer: Disseminating information to residents

How Are Board of Directors Officers Elected?

The three most common methods for electing board of directors officers are: voluntary application, recommendation, and rotation.

Voluntary application and recommendation result in officers being determined by vote at the general meeting. Rotation is a method in which an order is determined for each residence and board of directors officers are determined on a rotating basis.

The advantage of voluntary application and recommendation is that people who are trusted by residents tend to be selected. Consensus can be built more easily even in important discussions such as major repairs.

The advantage of rotation is that many residents can experience being an officer. Members are always changing, which also has the effect of preventing opaque operations.

How Often Does the Board of Directors Meet?

The frequency of board of directors meetings is generally around once a month to once every few months. This is stipulated in each condominium's management regulations.

Since management companies handle some of the work in many condominiums, even if you are appointed as an officer, you will not be occupied with management work every day. While management companies can provide advice and proposals to the board of directors, the final judgment is made by the management association.

In the case of self-management without entrusting to a management company, the frequency of board of directors meetings and management operations increases. Since condominium management often requires specialized knowledge, it is generally advisable to enter into a consignment contract with a management company.

What Should You Do First When Selected for the Board of Directors?

When appointed as a board of directors officer, first grasp the current state of the condominium and confirm the management regulations.

Check Every Corner of Your Condominium

Confirm common areas and condominium facilities. If deterioration or defects are found, action is necessary. Also check the condition of exterior painting and tiles, and landscaping management, and if there are problems, discuss and propose them at the board of directors.

Review the Management Regulations Again

Since the board of directors handles management operations based on management regulations, confirming the content of management regulations is essential. Management regulations can be viewed by anyone, and in the case of existing condominiums, they can be confirmed even at the stage of considering purchase. Management offices also keep general meeting agenda documents and minutes, so be sure to also confirm past general meeting content.

Confirm the Content of the Management Consignment Contract

Since management consignment contracts are difficult to check unless you become a board of directors officer, take the opportunity of becoming an officer to confirm whether the contract content is appropriate.

The main laws related to condominium management are as follows:

Building Unit Ownership Act: A law that specifies in detail matters related to sectional ownership of condominiums
Proper Condominium Management Promotion Act: A law related to management guidelines, management association obligations, the condominium management consultant system, etc.
Standard Condominium Management Regulations: Model regulations established by the Ministry of Land, Infrastructure, Transport and Tourism

Is It Acceptable to Decline Board of Directors Officer Service?

In conclusion, declining to serve as a board of directors officer is possible. The Building Unit Ownership Act does not include wording saying "one must not refuse" regarding officer selection.

However, in the case of rotation, since all residents bear officer duties fairly on a rotating basis, if you decline, another resident must fill the gap. Attention is needed because not being considerate in how you decline may lead to deterioration of relationships with neighbors.

How to Decline Without Causing Problems

When declining, indicate your willingness by saying something like "it's difficult now, but I could serve as an officer from next year onwards." It is also effective to find someone who will take your place as an officer.

Reasons for declining include things such as frequent business trips, overseas assignment, having work on the dates and times of board of directors meetings, or needing to visit medical appointments or provide care. In any of these cases, explaining specifically makes it easier to gain understanding.

What Is the "Third-Party Management System" That Has Been Attracting Attention Recently?

The third-party management system is a method in which an external specialist serves as board chairperson and management association operations are entrusted. It has been attracting attention as a means of resolving the shortage of people willing to serve as board of directors officers.

Why the Third-Party Management System Has Been Attracting Attention

Amendment of Standard Condominium Management Regulations: Provisions for third-party management system were added in the 2016 amendment
Building aging and resident aging: Decrease in those with interest in managing operations
Shortage of officer candidates: Few people willing to take on the burden of management duties

Types of Third-Party Management Systems

The third-party management systems envisioned by the Ministry of Land, Infrastructure, Transport and Tourism are mainly three types:

External specialist chairperson type: External specialists serve as officers and operate the management association together with unit owners
External manager type with board of directors oversight: An external specialist is appointed as chairperson, with the board of directors monitoring
External manager type with general meeting oversight: The board of directors is abolished and a specialist takes on the role of manager

Merits and Demerits

The greatest merit is reduction of the burden on the management association side and rationalization of management content by specialists. Planning for major repairs is also carried out from a specialized perspective.

On the other hand, demerits include the possibility of management fees becoming high due to required compensation for external specialists, and the risk of conflicts of interest. Sufficient understanding from unit owners is needed when introducing this system.

Summary

The condominium board of directors is an important organization that handles management operations to create a comfortable living environment. Officers are determined by voluntary application, recommendation, or rotation, but declining itself is possible. However, it is important not to forget consideration for other residents and to maintain a cooperative attitude as much as possible. Since the third-party management system is also an option in recent years, condominiums struggling with a shortage of officer candidates might consider it.

Frequently Asked Questions (FAQ)

How long are terms of service for condominium board of directors officers?

Generally, terms for board of directors officers are one to two years. The Standard Condominium Management Regulations recommend two years, and condominiums adopting a system of rotating half at a time to facilitate smooth handovers are also increasing.

What should I do if I cannot attend a board of directors meeting?

If you cannot attend a board of directors meeting, you can submit a proxy to delegate voting rights to another officer, or exercise voting rights in writing. Respond in accordance with the method stipulated in the management regulations.

Is there compensation for the chairperson?

It varies by condominium, but in some cases monthly compensation of a few thousand yen is paid to the chairperson and officers. The presence or absence and amount of compensation is determined by management regulations and the general meeting.

What is the difference between the management association and the management company?

The management association is a body composed of all condominium unit owners and is the main entity of condominium management. The management company is an external company entrusted by the management association to carry out practical operations, and ultimate decision-making authority lies with the management association.

How do you introduce the third-party management system?

Since introducing the third-party management system requires changing the management regulations, a special resolution (approval of at least three-quarters of unit owners) is necessary. Consult with specialists such as condominium management consultants and attorneys, then introduce through a general meeting resolution.