Your Board’s Legal Obligations Fiduciary Duty, Disclosure, Meetings, and More

The board of a condominium, cooperative or homeowners’ association has a fiduciary duty to make decisions in the best interest of the community as a whole. But individual board members may have different ideas as to what those decisions might be, and some may even have joined the board more for self-serving reasons than as a way to serve their community. Fortunately, every community has governing documents – supported by state and local laws – that specifically address what’s expected and required of its board. 

While laws obviously vary between cities and states – and of course each multifamily community is different –  there are general obligations that a board must uphold on behalf of its constituents, usually pertaining to things like annual meetings, elections, special assessments, referendums, and contracts. It behooves both board and residents to be aware of the various limitations under which the board is placed in order to guarantee maximum accountability.

Fiduciary Duty

Fiduciary duty is the distilled essence of board obligation, which a board can use as a kind of litmus test when facing any decision. ‘Does this decision benefit the collective more than any individual board member, owner, or shareholder?’ is a great question to ask routinely. And should the answer be anything other than a definitive ‘yes,’ some more thought needs to be put into the course of action in question.

“I think that at the most basic level, the duties that the board owes the unit owners and members comes down to that fiduciary duty,” says Jennifer Horan, a senior attorney with the law firm of Becker & Poliakoff in Naples, Florida. “The officers and the directors have to keep the interests of the association above their own. They’re a representative body responsible for administering the association in good faith. They have a duty to abide by any requirements set forth in their governing documents.”

State and city regulations can put a finer point on what a board is required to provide to their community’s residents. In New York, for example, co-ops are mainly governed by the Business Corporation Law (BCL). “My firm represents over 30 cooperative corporations throughout the boroughs of New York City, and in my experience, the majority of them them are formed under the BCL,” notes Stephen Chiaino, a real estate attorney with Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone, LLP. “Therefore, the BCL should be referred to as a starting point when considering these issues. BCL § 717 (a) states, in relevant part, that ‘[A] director shall perform his duties as a director, including his duties as a member of any committee of the board upon which he may serve, in good faith and with that degree of care which an ordinarily prudent person in a like position would use under similar circumstances.’ Consequently, each decision made by a director must be made in accordance with that standard.” 


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  • As a nonprofit condo association, are we allowed to have our a portion of our money in an annuity? It does yield a higher rate than a CD, but is tied up for 7 years. We have a money market which we use to allocate reserve funds for the purposes of capital expenditures. My question is in case of a catastrophic incident that would require more than what the money market has available, is it wise or legal to have this annuity?
  • Question at a budget committee in co-op the manager & treasurer refuse to show a copy of the proposed budget so the stickholders in the audience can follow along in the discussion. Manager claims & treasurer concurs that stock holders will be copy to review once committee approves budget draft the stockholders will be given time to review of 14 days before board meeting approves budget. the budget is submitted by the board at the budget meeting. Do the stock holders approve the budget and also reserves at the board dealing with fla co-op. Also can the board borrow funds for construction project that is line item in the reserve and pay it back the end of year. This might be considered in authorized assessment and co mingling of reserve & budget funds. Does such transaction have to be approved by stockholders ?
  • At a Board Meeting when the Agenda had been set and distributed with nothing under new business, can they make a motion and vote to approve items not on the Agenda? They had done it at least other times. This time it was a video meeting with no voice response allowed by the Community! Is this LEGAL?
  • I live in a condo cooperative in pompano beach fl. We have board member who personally enriches herself by taking money from condo owners for renting their parking place to other owners and watching their apts while they are away for the summer. We also have an owner who works in the association office with a board member and profits from selling real estate (condos) in this development. In your opinion is this self dealing and violation of fiduciary responsibilities?