Q. Can a husband and wife serve at the same time on a condo board, or is it a conflict of interest? The husband is the president and the wife is the treasurer. There are three board members in a 13-apartment condo complex.
—Is This Appropriate?
A. “Community associations in the State of New Jersey are generally formed as nonprofit corporations,” says attorney Brian Rader of the law firm of Jardim, Meisner & Susser, P.C., in Florham Park. “Hence, the New Jersey Nonprofit Corporation Act, N.J.S.A. 15A6-1 (the “Act”) governs. The sole qualification for board membership is that an individual be 18 years of age. The Act further provides that the Certificate of Incorporation or bylaws may prescribe additional qualifications. Accordingly, there is nothing contained in the Act to expressly prohibit spouses from serving on the board. Similarly, there is nothing contained in the New Jersey Condominium Act, N.J.S.A. 46:8B-1, the Planned Real Estate Development Full Disclosure Act, N.J.A.C. 5:26, or any other statute or regulation, that would prohibit spouses from serving on the board at the same time. Accordingly, one should consult the community association’s Certificate of Incorporation and the bylaws to ascertain qualifications, as well as any restrictions on the ability to serve as a board member.
“Upon election, board members become fiduciaries who are charged with the duty to steer the community association. Generally, fiduciaries have two primary duties: (i) duty of care; and (ii) duty of loyalty. The duty of loyalty is a standard of faithfulness which requires a board member to act in the best interests of the community association. The duty of care relates to the level of competence expected of a board member. In other words, a board member must exercise reasonable care when making decisions that will impact the community association.
“Hence, spouses may serve on the board of directors so long as there is nothing contained in the Certificate of Incorporation or bylaws prohibiting it. In addition, spousal board members must ensure that their spousal relationship does not interfere with the ability to satisfy their fiduciary obligations. In other words, despite the spousal relationship, the respective individuals must place the community association’s interests before their own, and exercise reasonable care when making decisions that will impact the community association.”