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.