Q&A: Ownership Responsibilities?

Q We are a 38-unit condo complex. We have had trouble finding owners to serve as board. Can we require owners to serve at least one term on the condo board during the time that they are owners of a unit? Can we permit them to pay a fixed amount in lieu of not serving on the board?

—Mandatory Service

A “Unfortunately, the members of New Jersey’s condominiums and associations suffer from a large amount of apathy,” says David Byrne, an attorney shareholder with the Lawrenceville, New Jersey office of Stark & Stark. “It is still unclear as to what effect, if any, the difficult economy will have on this apathy. Condominiums and associations, especially those with a small number of units, often have trouble filling each seat of their boards of trustees. The bylaws, declarations and/or master deeds typically prohibit an association from compensating any member of that association’s board of trustees. Even if the association’s governing documents are silent, it is very likely that the compensation of a trustee would run afoul of that board’s fiduciary duty to its members.”

“That being said, should a condominium’s members vote to amend that condominium’s bylaws, as provided by those bylaws, to mandate owner service on the board, a court could very well validate same. The standard employed by a court in the review of amendments to bylaws is a liberal one, whereas the standard employed by a court in the review of a board decision is not. Obviously, any bylaw provision mandating service on the board would have to be connected to a policy providing for a consequence should an owner fail to so comply. To the extent that such a consequence was part of a bylaw amendment it could, as above, be validated by a court.

“Any such amendment by which members could avoid the mandatory service of the board by payment of a fee to the association could be found to violate the condominium act’s mandate that condominium expenses be paid via the proportionate contribution of members. Such would also be subject to attack as it could be seen to constitute the compensation of board members. This could be so given that those that comply with the mandate, and serve on the board, will be paying less to the association than those that do not serve on the board. A non-monetary consequence would likely be viewed more favorably by the court. Absent any such amendments however, it is very unlikely that a court would validate these policies. In the end though it should be remembered that the motivation of a person seeking to serve his community as a member of that community’s board only to avoid the consequences of not serving, or to receive compensation for such service, will typically not be consistent with the fiduciary duty of the board.”

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