Fiduciary Duty

When a Member of the Association accepts the responsibility of being a Director on the Board of the Association, they are assigned a fiduciary duty by law and must act in the best financial interest of the Association as a whole. 

As fee-paying members of the Association, we are entitled to the fiduciary these protections. It means the Board does not treat the Associations money as they would your own. They must instead treat the money with reasonable do care.

There are three main fiduciary duties of a Director.

Duty of Care

Board members are required to exercise a duty of care when performing their responsibilities. An example of a breach of duty of care would be the lack of enforcement of the Governing Documents as written. They must make sound business judgments when spending the Associations' money.

It is not enough to just say you have a fiduciary responsibility.  You must understand Board members, as fiduciaries are required by law to enforce and uphold the Association's Covenants, rules, Articles of Incorporation, and Bylaws. The Duty of Care can get messy when the Board has to take action against a Member for violating a rule or covenant or even placing a lien against the property of a Member for failure to pay fees. The Board must consider if its house is in order before casting judgment on its Members. By this, I mean is the association's house in order? 

With the Duty of Care, comes the duty of confidentiality. Any discussion with legal counsel about a Member must remain confidential even if someone on the Board does not agree with the decision. As the fiduciary of the community, the Board must ignore their personal feeling when it comes to protecting the Association as a whole.

Duty of Loyalty

Requires Directors to place the interests of the Association above their own. They are not allowed to take advantage of their position that would benefit them in any way to the detriment of the Community. Board members need to act in good faith when conducting Association business.

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