Fiduciary Duties & Common Sense

The board of directors has a FIDUCIARY DUTY to ENFORCE the association's governing documents

A FIDUCIARY relationship is one where one party has to look out for another party’s best interests

Duty of Loyalty

Duty of Care

Untitled Slide

• Disclose conflicts
• Rely on experts
• Be honest
• Do your homework

Enforcement

The board enforces:

• Declaration
• Bylaws
• Rules and regulations

The board does NOT enforce:

• Statutes
• Local ordinances
• Rules of etiquette
• Social norms

Ok, so how do we enforce?

Informal Enforcement

Self-Help

Fines

Court

Due Process
Enforcement Resolution
Schedule of Fines

Alternative Dispute Resolution

Sometimes you have to

• Governing document requirements
• Contractual provisions
• Statutes - offer!

Negotiation

Mediation

Arbitration

Decisions...

Maude is a board member for the Springfield Acres Homeowners Association. Maude’s neighbor, Marge, is a great friend to Maude. Recently, Marge has been going through some difficult times. Her husband, Homer, the local drunk, spends all his time and all their money at Moe’s bar. As a result, Marge is three months delinquent on her assessments. At the Association’s most recent meeting, the board is discussing whether to turn Marge’s and Homer’s account over to collections. The Board has a policy of turning over accounts when they become three months delinquent. Maude, however, sympathizes with her friend and feels it is unfair to submit Marge to the collections process when it is not her fault that the assessments have not been paid. How should Maude vote on the question of whether to turn Marge’s account over to collections?

Kramer is a happy-go lucky, eccentric board member at The Manhattan Condominium Association. The Association turned over from Developer control only about six months ago. Recently owners within the Association Jerry, Elaine and George have been complaining about water leaking into his unit from the common element windows. The Association has hired a maintenance repair man to re-caulk the window, which seems to have stopped the leak. Jerry, Elaine and George, however, think that there may be something seriously wrong with the windows, and insist that the board hire an architect to do an investigation. Kramer, however, has some experience in construction, watched the building being built, and is confident that the windows are fine because they are brand new. He thinks the inspection will be a waste of money. How should Kramer vote on the question of whether to hire an architect to do a building envelope inspection?

mdm@vf-law.com