The Call of Duty The Importance of Fiduciary Responsibility

When electing board members to serve on behalf of your co-op, condo or HOA community, you expect them to be on their best behavior and think of the needs of the building and the people who live there when making their decisions. Regardless of the type of community they serve, board members have a responsibility to govern and make decisions on behalf of that community—often referred to as the board's “fiduciary duty.”

Decisions made on behalf of a board's fellow residents must be made in good faith, with the good of the community firmly in mind; violating this duty can lead to legal consequences for boards, and individual board members who betray their constituents. And, sadly, as with any position of power, some people do stray—and this is why the legal community is steadfast about clearly defining what is expected and required in a board's fiduciary duty.

A Fine Line

Board members must walk a fine line when navigating the breadth and limitations of fiduciary duty, as it applies to co-op, condo and HOA board members in New Jersey, and they must therefore be extremely knowledgeable regarding their responsibilities. But the burden of fiduciary duty does not fall solely on the board; owners and residents must too be aware of their rights, so that they will know what to do should a board member make a decision that perhaps is not in the best interests of the entire community.

“In New Jersey, The Condominium Act sets forth the duties and responsibilities of a condominium association,” explains Melissa Clarke, an associate attorney with the law firm of Lomurro, Davison, Eastman & Munoz P.A. in Freehold.

According to Clarke, an association is governed by both a master deed and its bylaws. These documents generally contain provisions to the effect that “the association is formed to administer, manage and operate the common affairs of the unit owners; shall provide for the maintenance, preservation and control of the common elements; and that the board of directors (or board of trustees) is empowered to maintain the common elements according to the governing documents.”

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