Righting a Wrong Condo Board

Representing several home owners associations and condo boards, as well as sitting on three of them as a Board member (President once!) , I have heard a lot of complaints from all sides.

Board members think that no one appreciates them (which is generally true). Unit owners worry that some Boards have gone too far, asserting too much power. Or that they don�t care. Or that they are “letting things go.”

Clearly, there are pros and cons to living in a condo form community. While you surrender some independence, on the one hand, on the other you share costs and responsibilities, which in a way lightens the load for everyone.

This form of home ownership has many benefits and it works very well most of the time. Yes, everyone gripes at one time or another, but for the most part this is a system that meets everyone�s needs.

Unfortunately, there are some exceptions. There are some, really just a few, Boards that are out of control. Or that are not doing their job.

And worse yet, there are some Boards that are more interested in what will best serve the interests of the Board members rather than the community as a whole. Of bad Boards, this is the worst kind of offender by far. Because here we are not talking about sloppiness or nonfeasance, here we are actually talking about Board involvement in self dealing.

As I said, these “bad Boards” are by far the exception. If you encounter one, you need to know the rules, and your legal rights.

The rules are that Board members have a special legal duty to the unit owners. This is called a fiduciary duty.

This means that they must put the interests of the entire Association ahead of their own interests. And when there exists any kind of conflict of interest that might preclude this kind of mind set, they must step aside and not participate in a vote or a particular Board action. Simply put, a Board member can never make a decision that promotes his or her own interest over the interests of the unit owners.

Board members must make decisions that follow the following: state laws, local laws, and the association governing documents. Usually Boards have lawyers who help ensure that they follow these requirements and act accordingly.

Boards must protect the Association assets, often called common grounds or common elements. This means that they must be properly maintained, they must meet legal requirements for safety, they must be insured, and replaced when necessary.

And as part of this, Boards must ensure that everyone pays their Association fees and special assessments. Without this money, the Association simply cannot function and the Board must ensure that people pay, and pay on time.

Some Boards ignore their responsibilities either as to applicable laws or association documents. When this happens the first thing an affected owner should do is raise the violation to the Board�s attention.

Most likely, the mistake was accidental and by politely pointing it out, it will be fixed. Many Board members really do not understand their individual obligations. Sometimes they forget or become confused. Calm and appropriate mannered discussion will usually fix this kind of error.

Every once in a while a Board acts improperly and does so deliberately, or refuses to correct a legal defect even after it is pointed out and documented. When this occurs, unit owners may seek recourse in the Courts. This is not a good situation and should not be taken lightly.

In addition, various States regulate associations through some kind of agency process. If that applies where you live, you may be able to contact the agency and ask for an investigation and relief.

Sometimes, but rarely, Board members make decisions that favor themselves personally, and are not in the interests of the Association as a whole. This is a serious breach of trust that may be remedied by serious litigation� litigation that may impact the wrongdoing Board members personally in the form of a legal judgment for monetary damages. Again, this is an extreme any very rare situation, that must never be taken lightly by Board members or unit owners.

Associations usually are insured, and these policies will often cover legal expenses when an Association has been sued, even by a unit owner.

But allegations as serious as fraud and self dealing may likely not be covered by insurance �leaving a wrongdoing Board member in a very bad position of having to hire his or her own lawyer to defend against a lawsuit.

Condo forms of government generally work well and meet a lot of necessary needs. When Boards make errors, they are most often addressed through civil discourse. Boards usually want to do the right thing.

But in the rare event that civility fails, State agencies may be able to assist unit owners. If that is not available as recourse, and the fight is over an important issue, litigation may be considered as a final choice of action.

I represent  Condominiums and Homeowner Associations throughout New Jersey. I can be reached at 732-355-1311.  www.liebermanblecher.com

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6 thoughts on “Righting a Wrong Condo Board

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