Co-op, condo and HOA living represents a unique social arrangement; it’s a paid-for membership club and a home at the same time. Many people enter into this arrangement without a complete understanding of the responsibilities of membership. Others, fully aware of their community responsibility, volunteer to help guide, shepherd and monitor the health and welfare of the community by serving on association or corporation boards.
A typical single-family homeowner employs the skills of various professionals over the course of years to maintain and manage their home; attorneys, accountants, contractors and others as needs arise. The management of a large residential complex, one that may contain hundreds of units, often requires more complex skills. A single-family homeowner might require an attorney to close the purchase or sale of their property, an accountant to do their annual personal income tax, a contractor to repave a driveway or fix a roof. In large residential complexes legal, accounting and other skills often come into play more frequently and in a more complex manner.
Those association or corporation members who volunteer their own time to serve on a board may not themselves have the skills, education, experience and time to provide the expertise for these functions. That’s why co-ops, condos and HOAs have managing agents. But sometimes, unfortunately, things can go awry. As much as we don’t want to think about it, and we’re not suggesting it happens often, what is a board to do to keep everything on the up and up?
Protecting the Association, Yourself and Your Fiduciary Responsibility
Michael Kim, an attorney who represents co-ops and condominiums and is the principal at Michael C. Kim & Associates, a law firm located in Chicago, suggests the following as a rule of thumb for boards and board members in protecting themselves: