Tuesday Topic 2019-23 July 2, 2019
Board’s Fiduciary Relationship and Responsibility
The members of the board of directors have a fiduciary relationship with the members of the association. This fiduciary relationship imposes obligations of trust and confidence in favor of the association and its members. It requires the members of the board to act in good faith and in the best interests of all the members of the association. It means that board members must exercise due care and diligence when acting for the community, and it requires them to act within the scope of their authority.
The fact that the association is a not-for-profit corporation, or that the members of the board are volunteers and unpaid, does not relieve them from the high standards of trust and responsibility that the fiduciary relationship requires. When a member accepts a position on the board of directors, he or she is presumed to have knowledge of the duties and responsibilities of a board member. Board members cannot be excused from improper action on the grounds of ignorance or inexperience and liability of board members for negligence and mismanagement exists in favor of the association and the property owners.
Do you have the time? You will need to devote several hours of your time each month to condo business. You must read and understand all the governing documents; Declaration of Condominium, Articles of Incorporation, Bylaws, Amendments and applicable Florida Statutes; The Condominium Act FS 718 and FS 721 Vacation and Timeshare Plans. In addition to regular monthly meetings, you will need to be active in email discussions related to agenda items and occasional special meetings.
Can you make tough decisions when it is required? Board members are required to step outside their immediate circle of family and neighbors and make decisions based on the greater good of the community. They must disclose personal and financial conflicts of interest. They must communicate with the owners, whether good or bad news, treating all the same whether friend or foe. Condo board responsibilities include the strategy and management of the community. Those responsibilities include making the business decisions that affect the association. Other duties include developing and overseeing risk management procedures, creating procedures to maintain the appearance and conformity of the condo property, and preserving and promoting community harmony.
Boards of directors run condo corporations on behalf of owners: They represent owners. As an entity, they are responsible for making all major decisions regarding the maintenance of buildings and grounds, condos’ finances, and must uphold and enforce the Condo Act, the declaration, by-laws, and rules.
It is a prime board duty to ensure that rules and the declaration are applied uniformly and not just from time to time as suits directors or management. Boards cannot refuse to enforce rules just because only one owner complains that a particular rule is not followed. Failure to enforce rules fairly and consistently, and follow them generally leads to problems down the road.