When you volunteered to serve your community association as a board member, did you realize you were agreeing to set aside your own interests and act as a fiduciary on behalf of the entire association? Are you confident you know every scenario where you might trip up and expose yourself to personal liability by failing to live up to this important duty?

The following information is intended to address one of the most important duties of all board members, that is executing your role with a clear sense of “fiduciary loyalty” to property owners you represent.

Understanding the responsibilities owed to its members is critical to helping board members effectively manage the association in a way that protects both the members participating in management, as well as all of the property owner.

What are Fiduciary Duties

Fiduciary duties require board members to stay objective, unselfish, responsible, honest, trustworthy, and efficient in all the financial dealings of the association. Board members, as stewards of public trust, must always act for the good of the organization, rather than for the benefit of themselves. This means board members need to exercise reasonable care in all decision-making, without placing the organization under unnecessary risk.

It also means that the board should consider how their financial decisions will be viewed by the association as a whole. This doesn’t mean that every decision will be viewed favorably by everyone in the community, undoubtedly increasing property owner’s assessments is rarely viewed as a possitive move, however often it is the right move in order to protect the community in the future, therefore being a fiduciarily responsible action.

What are the Financial Duties of a Board Member

Board service means that you are one of the parties responsible for fulfilling the business of the association. The business of associations is not all that different than those of a business or charity in the respect that certain basic financial needs must be addressed. However, they do differ in the manner and means in which they are carried out and in regards to some of the formalities and constraints imposed by your association’s by-laws.

The Duty of Care

Making informed decisions, which may require in-depth research before acting or voting on a measure.

The Duty of Loyalty

A term used in corporate law to describe fiduciary loyalty to the community. Performing one’s duties in a way that places the community’s financial benefit above personal benefit.  The avoidance of “self-dealing.”

The Duty to Act Within the Scope of Authority

Requires the HOA board to perform its duties, but prohibits the Board from making decisions or acting on matters without the authority to do so.

Duty of Confidentiality

The duty to maintain discretion on matters that should not become public information