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A quick overview of “fiduciary duty” for condo HOA board members

On Behalf of | Jul 23, 2020 | Real Estate Law |

When condominium or co-op members elect individuals to the association’s board of directors, they do so trusting that those individuals will put the interests of the association first and will act with impartiality and fairness.

From enforcing community rules and standards to handling important financial decisions, board members often have a great deal of power over individual homeowners as well as the organization as a whole. For this reason, Florida law holds that HOA boards and board members have certain legal and ethical responsibilities toward property owners and shareholders, known collectively as “fiduciary duty”.

There are three basic components of a board member’s fiduciary responsibility: the duty of making informed decisions, the duty of acting in good faith and the duty of respecting the limits of his or her authority.

Duty to make informed decisions

Within 90 days of election or appointment to an HOA board, a new member must certify in writing that he or she has read, understood and will abide by the association’s governing documents. This includes both the articles of incorporation and declaration of covenants as well as current bylaws, rules and policies. Having a thorough knowledge of association regulations is essential for ensuring fair, consistent enforcement.

Duty to act in good faith

Board directors also have an obligation to act solely in the interest and for the benefit of the association and association members when performing their duties. It is especially important that directors avoid any potential conflict of interest when they may personally profit from a decision. Examples of this kind of “self-dealing” include accepting personal gifts and promoting vendors with personal financial ties.

Duty to respect limits of authority

Thorough knowledge of Florida condominium laws and an individual HOA’s established articles is also essential when determining the scope of a director’s authority. While a board member may feel personally compelled to make a decision one way or another, he or she cannot force restrictions or make allowances for infractions unless enforceable under state law and the HOA’s governing documents.