Whether they serve a co-op, condo, or HOA community, board members have a responsibility to govern and make decisions on behalf of that community—a charge that is often referred to as the board's 'fiduciary duty.' Decisions made on behalf of their fellow residents must be made in good faith, with the best interests of the community always guiding those decisions. Violating this duty can lead to legal consequences for boards and individual board members who stray from this rule.
That’s why understanding the breadth and the limitations of fiduciary duty is essential for both multifamily community board members and residents who don’t hold an office in their community. All residents must keep their elected officials honest by paying attention to their actions, whether they are city councilmen or condo board members. They must stay attentive to ensure that the proper actions and methods are performed by board members. Failing to do so could mean a special assessment is levied on everyone in the community, in order to pay for unnecessary legal fees.
To pursue the best practices in governing their community, board members must fully comprehend the concept of fiduciary duty, and allow that guiding principle to inform all of their choices as elected members of the community. They need to take the idea to heart, and keep it in the front of their mind, always asking, “What’s in everybody’s best interest?”
Defining fiduciary duty as it applies to board members means, in part, always putting the overall interests of the community first, regardless of the issue that the board is considering. But a selfless perspective for a community politician is just part of the responsibility that every board member of a co-op or condo assumes when they are appointed to their new position. The particulars of that duty are what give some board members pause, sometimes leading them to wrongheaded thinking.
“Fiduciary duty is their standard for being responsible for the association’s assets. It means having a loyalty to the association and a responsibility for the community’s property and money,” says Marc Garrison, president of Private Holding Group, a full service real estate management company based in Chicago. “Board members are supposed to look out for the association’s interests above all others, including their personal interests.”