Condo questions: What are newly-elected board members’ responsibilities?

Editor’s note: Attorneys at Goede, DeBoest & Cross respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, civil litigation, estate planning and commercial transactions.

Q: What are new condominium and HOA board members required to do after being elected?

— L.N., Boca Raton

A: Since 2013, all new board members have been required to be “certified” to serve on their board. Even though board members are unpaid volunteers who serve their community, they still undertake important responsibilities.

In short, as a director on your board, you have the obligation to enforce your governing documents in accordance with Florida laws, adopt budgets, minbtain bareas and oversee all aspects of your community, whether it is a condominium or a homeowner’s association.

Although you have a property manager to assist you, along with your association attorney, Florida law requires that directors be familiar with applicable laws, accounting rules and the articles, bylaws and other governing documents for their community.

As such, Florida law requires that all new directors — within 90 days of being elected — either file a certificate declaring they have read the association’s governing documents or complete an approved education course.

Although you can do either under Florida law, actually attending a certification course is the recommended option. Attending an approved training course allows you to learn from a qualified attorney who can answer questions and help you through the process.

By just reading through your documents, you may be in technical compliance with the law, but you will likely miss out on having everything put in context for you. Keep in mind that if you do not do this within the first 90 days of your election to the board, Florida law requires you to be suspended from the board until you comply with the requirement.

Also, as you will come to understand as you serve on your board, Florida’s association laws are extremely complex and are continually changing. Understanding your fiduciary duties and board member requirements for condominium and homeowner association boards regarding is critical for new directors.

There are law firms and property management firms that offer the certification course for board members, some free of charge, including my firm which regularly offers board certification courses for free.

Q: It is my understanding that Board members immune from lawsuits. Is that true?

— M.B., Delray Beach

In short, no. Unfortunately, it is a fairly common occurrence that board members are often brought into lawsuits as defendants, even if such a move is done purely for tactical reasons.

As a board member, your association should have insurance to cover such claims and the insurance carrier should step in and provide you with an attorney to represent you in the lawsuit.

As such, you must put your insurance carrier on notice as soon as you are served with a lawsuit. However, as a board member, you do have a fair amount of protection for holding you liable under most circumstances.

Board members of a condominium and homeowner’s associations owe the association a fiduciary duty, just as if you were on a board of a corporation. Under Florida law, breach of fiduciary duty requires the existence of a fiduciary duty, and the breach of that duty such that it is the proximate cause of the plaintiff's damages.

However, because the law starts with the presumption that a director is immune from liability, suing a board member for breach of fiduciary duty requires something more than simply alleging that the director had a fiduciary duty that was breached.

In order to be subject to liability, a board member must have not only breached his or her duties as a director, but that breach must rise to the level of criminal activity, fraud, self-dealing, unjust enrichment, or some other improper personal benefit.

It is also well-settled absent evidence of the foregoing behavior, directors of condominium associations are not personally liable for the decisions they make in their capacity as directors.

Florida law requires that directors of a condominium association discharge their duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances and in a manner in which they reasonably believe to be in the best interests of the corporation, in this case, the association.

This is known as the “business judgment rule,” which is a standard originally created to determine if a director of a corporation breached his/her fiduciary duty to the stockholders.

Under this rule, corporate directors and officers generally do not violate their fiduciary duty, absent actual wrongdoing in the form of fraud, self-dealing or unjust enrichment. To determine if a director’s actions fall under the business judgment rule, Florida courts look at (1) whether the association has the contractual or statutory authority to perform the relevant act and (2) the decision is reasonable.

This rule is no different when applied to a directors on the board of their association, giving those directors the ability to use their business judgment when making decisions, as guided by professionals such as their property manager and attorneys.

Harris Katz, Esq., is partner of the Law Firm Goede, DeBoest & Cross. Visit www.gadclaw.com or to ask questions about your issues for future columns, send your inquiry to: question@gadclaw.com.

The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, or any of our attorneys.

Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

This article originally appeared on Treasure Coast Newspapers: Condo questions: What are newly-elected board members’ responsibilities?