Do Condo Board Members Have Fiduciary Duties To Owners?

A fiduciary is a person who has a duty to act in good faith when protecting another person’s interests. Many different people in many different positions may have fiduciary duties, but one that most people remain unaware of is that of a community association board member. A Florida condo board and its members all have a fiduciary duty to each owner in their association, and a failure to uphold that duty may be actionable in court.

An Ethical Concept, Rather Than Settled Law

The concept of fiduciary duty is a difficult one to define, because it tends to be more of a moral or ethical concept than a hard and fast legal rule. In general, those chosen to act for others are required to act in their clients’ best interests, from an ethical standpoint – and in some states, Florida included, the law holds explicitly that “officers and directors” of a condo association have a fiduciary relationship to the unit owners. This means that they cannot put their own interests above those of the association’s.

The majority of condominium associations are not-for-profit corporations, with the unit owners holding shares in the corporation itself. As one might imagine, board members of a corporation are required to act in the company’s best interests, rather than in their own interests or those of the board specifically. This is generally true even if the condo association is a different type of business entity, but regardless, the duty remains.

Finding A Breach

It is clear in Florida that a fiduciary duty to condo unit owners exists for board members or directors. However, it can be difficult in some situations to determine whether that duty has been breached or not – or, if it has, whether the breach is actionable or not. Florida courts observe what is known as the business judgment rule, which insulates individual condo board members from liability in most cases (though not the board itself).

The business judgment rule effectively presumes that board members are acting in good faith – unless a “crime, fraud, or unjust enrichment” has occurred. This is true even if the board’s actions turn out to be to the detriment of the association – the rationale is that subject matter experts tend to choose better courses of action than judges. One negative outcome does not mean a board member has abandoned their duty; rather, they are simply human and make mistakes.

Contact A Hollywood, FL Condominium Association Attorney

If you are a unit owner who has had a negative experience with your condo board, know that while everyone makes mistakes sometimes, you may have a cause of action if you can show that the board (or its members) has not upheld its fiduciary duty. A Hollywood, FL condominium association attorney from the Law Offices of Steven A. Mason, P.A. can help you clarify your options moving forward. Call our office today to speak to an attorney.

Source:

flsenate.gov/Laws/Statutes/2021/718.111