Fid-doo-she-air-ee. What the heck is a fiduciary, let alone a fiduciary duty? “Fiduciary” means trust. A fiduciary duty is the legal responsibility to act solely in the best interest of another party. A person with a fiduciary duty has a legal obligation to maintain that trust. For example, lawyers have a fiduciary duty to act […]
Enhancing Governance: Lessons from a Recent Condo Board and Property Management Company Lawsuit (NY)
Condo Boards and their Property Management Companies play a crucial role in maintaining harmony within residential communities. A recent legal battle involving the Sky House Condominium sheds light on the importance of meticulous governance to avoid potential pitfalls. Read the article…………………………….
Mum’s the Word When Disclosure Leads to Breach of Fiduciary Duty
It is common knowledge that a director has a fiduciary duty to his or her association and its members. To be a fiduciary means that the director has accepted the highest duty imposed by the law…….This duty also obligates the director to place the interests of the association and its members as a whole over […]
Understanding Director Conflicts of Interest in Florida Condominium Associations
In the realm of condominium associations in Florida, directors play a crucial role in decision-making processes. However, their actions must adhere to certain legal standards to ensure transparency and fairness. This article explores key legal cases and statutes that shape the landscape of director conflicts of interest in Florida condominium associations. Read the article…………………………….
Fiduciary Relationship and the Business Judgment Rule (FL)
Community association officers and directors have a fiduciary relationship to the owners of homes or units in their community. Typically, this relationship is understood as officers and directors having the obligation to act in the best interests of the association and to refrain from obtaining or accepting personal benefits at the expense of the association. […]
Fiduciary Duty: What it Means to Your Community Association (FL)
What duty does a community association board member owe to their association? What happens if that duty is breached? During the 2023 legislative session, legislation was proposed that would have made directors criminally liable for failure to timely respond to official record requests, among other provisions. Read the article………………………..
Hammocks receiver sues former HOA leaders over allowing alleged $3M fraud (FL)
Less than a year after four ex-board members of the Hammocks homeowners association were charged with massive fraud, a new lawsuit takes aim at other former HOA leaders who allegedly did nothing to stop the scheme that siphoned millions of dollars from residents. Read the article………………………..
A Practical Approach to Board Member ‘Fiduciary Duties’ (CO)
The words “fiduciary duty” are ones that many of us in the community association industry come across frequently. It is especially common to hear these words thrown around loosely when one or more members of a community association board of directors are “misbehaving”. In legal terms, it can be simply defined as owing a duty […]
Board Fiduciary Duty in the Community Association (PA)
Read the article………………………..
Condo Column: The crypto mistake (NH)
There have been rumblings in Condo World about cryptocurrency, i.e. digital money with no physical presence like coins or bills. A lot of people have made a lot of money by investing in it and seeing it double, triple or more in worth in a very short period of time. Good for them. Read the […]
Board Member 101: Best Practices (IL)
Board members who are elected to represent their condominium, homeowner (HOA), and townhome community association carry a weight on their shoulders to ensure they are acting in the best interest of their fellow neighbors. Read the entire article……………………………….
Conflicts of Interest – Recognize Them Now to Avoid Problems Later
If you live in a condo or a co-op, you most likely have heard the term fiduciary duty, usually in reference to the responsibilities and obligations of board members and management. But what is a fiduciary duty? In essence, it’s a legal relationship between two parties that gives one party the right to act and […]
Fiduciary Duties Of HOA Board Directors
When a person is elected to be an HOA Board Director (“Board Director”), such person is likely aware that they will be acting as a volunteer to lead the Association as part of a Board of Directors group. What they may not consider is that they are taking on fiduciary duties, which many times are […]
Fiduciary Duty and Your Board (IL)
When an owner agrees to serve on a condominium board, one must recognize that they take on additional legal responsibilities and obligations. On the other hand, when electing board members, you expect them to be on their best behavior and think of the needs of the property and the people who live there when making […]
A Board Member’s Guide to Fiduciary Duty
When a candidate accepts their election to the board of directors, they take on a number of duties that come with a set of risks. We always recommend that each association provide great insurance coverage for their board members and access to the education they need to help prepare them to successfully carry out their […]
Aging Infrastructure and Fiduciary Duties for Communities (CO)
Our communities are like our bodies; all the stress alleviation endeavors in the world won’t help us if we aren’t taking care of ourselves or our communities. Reflection or Meditation will not do us any good if we aren’t getting sufficient sleep. When we try to reflect or meditate, we might doze off because we […]
The Ethical Dilemmas of Community Association Insurance
The procurement and maintenance of Insurance in the community association industry is shrouded in unique ethical considerations that do not apply to individual insurance consumers. Enter the Community Association Board’s (“Board”) “fiduciary Duty.” This process is imbued with inherent ethical considerations for not only Boards, but also Community Association Managers (“CAMs”), Community Association Attorneys, Community […]
Fiduciary Responsibility of HOA Board Members
As a Board member, you are entrusted with the money, property and the day-to-day business of your Association. Serving on your Association’s Board can be an important way to positively impact and maintain the well-being of your community. However, to serve responsibly, as well as avoid potential legal liability, it is important to know what […]
Identifying Conflicts of Interest
As a board member, you strive to make the choices that protect your community and create a neighborhood that homeowners are proud to be a part of. You follow your obligations to complete your duties in good faith and with due care, and you act in the best interests of the association. Read the article………………………….
Application of the Business Judgment Rule to Community Association Board of Directors (FL)
The board of directors of community associations are responsible for making important decisions affecting the community and its members. As a result, disputes sometimes arise between the association and its members. In the event the dispute evolves into a lawsuit, the business judgment rule will protect directors from personal liability so long as they did […]
Call of [Fiduciary] Duty: How Good Faith, Due Care, and Loyalty Guide Community Associations’ Boards (NC)
Nearly 30 percent of North Carolina’s population lives in a community association of some sort, be that a condominium or single-family community. Yet, confusion among the general population about the nature of community associations is pervasive, and that confusion extends to the understanding about the actual duties of the volunteer directors who serve their community […]
Conflicts of Interest in HOA Boards
A conflict of interest can range from problematic to disastrous for a homeowner association board. HOA board members should be impartial representatives of their communities who make decisions with the entire association’s wellbeing in mind. A conflict of interest will interfere with these duties and can lead to severe consequences if not dealt with in […]
Maryland Court of Appeals Recognizes a Cause of Action for Breach of Fiduciary Duty
In a newly issued opinion, the Court of Appeals of Maryland has clarified existing law and expressly recognized an independent cause of action for breach of fiduciary duty. In William H. Plank, II, et al. v. James P. Cherneski, et al., Misc. No. 3, September Term, 2019. the Court observed that whether Maryland recognizes an […]
Court Finds This Triptych Sufficient To Establish A Director’s Breach Of Fiduciary Duty (CA)
Yesterday’s post discussed one aspect of the Court of Appeal’s holding in Coley v. Eskaton, 2020 Cal. App. LEXIS 629. The case involved a homeowner’s lawsuit against two directors of the homeowner’s association and their employers. Among other things, the plaintiff alleged that the directors approved assessments that benefited their employers in violation of the […]
The Rule of Judicial Deference: Protecting HOA Decisions Based on Reasonable Investigation and Made in Good Faith
Volunteer officers and directors of a common interest development (“HOA”) are required to make decisions which often have significant legal and financial implications for the HOA and its membership. Because they are unpaid volunteers, officers and directors are afforded certain protections against personal liability similar to those afforded to directors and officers of other types […]
Co-op and Condo Boards’ Fiduciary Duty Is to All Residents (NY)
Subletting is an attractive option, particularly in condos, so how can it get out of hand? It’s the board’s financial responsibility not to saturate the building with sublets. Once the building hits a certain level, lenders will not lend in that property. If it goes over 50 percent, Fannie Mae and Freddie Mac for sure […]
State laws govern HOAs in all Nevada communities
Q: I live in a homeowners association in Pahrump. I was appointed to the board on May 2018 and I resigned August 2019. I resigned because of the reckless and (uncaring) behavior of the other board members about the Nevada Revised Statute 116. The president said it twice — in an illegal closed meeting — […]
The Business Judgment Rule: A Shield for the Community Association Board Member and Directors (FL)
Disputes between community associations and their members are common. These disputes may evolve into lawsuits. In some instances, the plaintiffs in these lawsuits attempt to hold the directors or officers personally liable for damages. Luckily for the directors and officers, the business judgment rule shields them from personal liability, unless they breach a fiduciary duty. […]
What does it mean to be on the Board of Directors of your HOA? Fiduciary Duties (Part 1 of a series) (VA)
Board members are told that they have fiduciary duties to the community association, but what does that really mean? Fiduciary duties arise because the members of the association entrust a board member to act in the best interest of the association when handling the association’s business. There are three components that are important to understand […]
5 HOA Terms Every Board Member Needs to Know
Whether you just got elected to the community association board or you’ve served for years, you want to make a good impression. Knowing these common HOA terms will help you sound like you know what you’re doing while you get up to speed or serve as the refresher you need to keep growing as a […]
Does a Colorado HOA and/or the members of its board owe fiduciary duties to the general members?
Does a Colorado homeowners’ association and/or the members of its board of directors owe fiduciary duties to the general members? It’s a simple question with a somewhat complicated answer. To start with, a fiduciary is a person who is required to act for the benefit of another person on all matters within the scope of […]
Problem Boards: What To Do When Your Board Breaks the Rules
A condominium, cooperative or homeowners’ association elects a board for a specific purpose: to manage the community’s day-to-day business, oversee special projects, and draft and uphold the rules and regulations that keep life orderly and harmonious. In fact, the board has an inflexible fiduciary duty to act in the best interests of the community as […]
What Does it Mean to be a Fiduciary?
In simplest terms, to be a fiduciary to another person or party is to be in a position of trust. For example, a patient trusts her doctor to make the correct diagnosis. A parishioner trusts his priest to keep his confessions confidential. And if you are our client we hope you will trust us, as […]
Fiduciary Duty and Community Association Board Members
We frequently talk about the fact that homeowner association board members have a “fiduciary duty” to the members. What exactly is it? Is it spelled out in the law? What sort of actions would violate that duty? A fiduciary duty arises out of a relationship in which one person or entity is entrusted to make […]
Court Affirmed Dismissal Of Breach Of Fiduciary Duty Claims Against Condo Board Members
In Brown v. Hensley, a condominium complex was damaged by a hurricane, and the board of the complex allowed the complex to be demolished. No. 14-14-00981-CV, 2017 Tex. App. LEXIS 727 (Tex. App.—Houston [14th Dist.] January 26, 2017, no pet. history). Some of the unit owners sued the board for breach of fiduciary duty and […]
Fiduciary Duty and What it Means for Your HOA Board
Just try saying that five times fast. Not only is it a serious mouthful, it also carries serious legal obligations and potential consequences. As board members, your community has entrusted you with the “power” to make decisions on their behalf and in the best interest of the community. It is your obligation to remove your […]
An HOA Board’s Fiduciary Duty: The Key to Avoid Conflicts of Interest
In general terms, fiduciary duty is the highest standard of care imposed under law, and it occurs when one or more persons are responsible for the money or property of another. The fiduciary is expected to be honest, free from fraud and faithful to his or her obligations. Read the article………….
Duties of the Managing Agents and Liability for Failure to Carry Out Those Duties
A managing agent’s duties to the association can arise out of the common law relationship of an agent to a principal, or by virtue of the contractual relationship between the managing agent and the association, or both. In the same manner that the board has a fiduciary duty to the association and its members, the […]
Corporations Have a Fiduciary Duty towards Owners in Breach of the Rules
This is the recent story of an Ottawa condominium corporation who brought a compliance application against the occupant of a unit. Unfortunately for the corporation, when came the time to rule on legal costs, the corporation was reminded that it must consider and balance the interests of all owners… even those in breach of the […]
Homeowners Association Boards– Things You Should Know About Fiduciary Responsibility
In the United States, HOAs are plentiful and some communities even have more than one. Some have great difficulty in finding volunteers and homeowners are often put into a position of saying yes just to fill a vacancy for a friend. Other times, highly successful individuals in the corporate world put themselves at risk because […]
Upholding Your Fiduciary Duty: Transparency is the Best Path for Boards
Being on the board of a co-op or condo is a big responsibility— one that shouldn’t be taken lightly. While some people may run for a board seat just to have the title, they need to be prepared to govern fairly and make decisions that are in the best interest of the community as a […]
Although Individual Board Members Owed a Fiduciary Duty to Individual Condo Owners, the Corporation Did Not (NY)
Condominiums—Homeowners Associations—Business Judgment Rule—Plaintiff May Assert Claim for Breach of Fiduciary Duty and Punitive Damages Against Individual Members of a Board of Directors, But Not Against the Corporation Itself—Although Individual Board Members Owed a Fiduciary Duty to Individual Condominium Owners, the Corporation Did Not Owe Such Duty Read the article………..
Water Damage Issues Create Liability for Boards Under Breach of Fiduciary Duty Theory
In Schuh v. Plaza Des Plaines Condominium Association, No. 1-13-1999 (Ill.App.Ct. July 24, 2014), an Illinois appeals court affirmed a ruling that a condominium association breached its fiduciary duty to a unit owner by failing to promptly address a water infiltration problem that resulted in extensive mold damage to the unit. Read more……….
The Call of Duty: The Importance of Fiduciary Responsibility
When electing board members to serve on behalf of your community, you expect them to be on their best behavior and to think of the needs of the building and the people who live there when making their decisions. Regardless of the type of community they serve, board members have a responsibility to govern and […]
What Does this Thing Called Fiduciary Duty Mean for HOA Board Members?
As a new or current HOA board member you may often hear terms that you’re unfamiliar with. It’s important to ask questions and stay educated when something is unclear, and nothing can be more convoluted than financial jargon. From time to time you may hear that the Board of the homeowners association operates in a […]
Old Cases Ring True: A Review of Wolinsky v. Kadison and Breach of Fiduciary Duty Claims
As boards and managers take in the Palm II opinion and digest its consequences, we want to provide a few case briefs on existing condominium and homeowners cases that describe core legal concepts in the field. One case is Wolinsky v. Kadison, 987 N.E. 2d 971 (Ill. 1st Dist. 2013), a 2013 decision in a […]
A Breakdown of Arizona HOA Fiduciary Law
In the HOA management industry, we often run into board members who not only don’t understand a law, but don’t even know it existed in the first place. Sure, most have a basic idea of what they can or can’t do and why they can or can’t do it; but, as a result of a […]
“A Man Cannot Serve Two Masters”-Directors and Breach of Fiduciary Duty
This past weekend, I visited my daughter who is a freshman at Washington University in St. Louis. I had asked if I could possibly attend a law school class at some point during my visit since my daughter had her own undergraduate classes to attend throughout the day.
Fiduciary Duty: What Boards & Residents Should Know
Being elected to the board of directors of a co-op or condo comes with a great deal of power, and with that power also comes a great deal of responsibility. Whether they serve a co-op or condo community, board members, in their position of power, have a responsibility to govern and make decisions on behalf […]