High & Mighty When Boards Go Overboard

High & Mighty

There’s nothing worse than being a unit owner in a building and seeing someone on your board breaking a rule and seemingly getting away with it.

Some board members or trustees believe that they are “above the law” so to speak, and seem to be operating under a different set of rules than the rest of the residents. This could be anything from giving themselves preferential treatment for parking spots, flouting pet rules, fast-tracking their own alteration projects or voting on financial matters when they themselves are in arrears.

Diane Rubin, a partner with the law firm of Prince Lobel & Tye LLP in Boston has seen her share of board members try to get away with things, and she does what she can to help right the ship.

“By and large, most board members are more aware of what the bylaws and rules are than non-board members,” says Rubin. “But there’s two things that I’ve seen happen. One is where you get a board member or sometimes a whole board that is completely disconnected and they don’t pay any attention to the governing documents. They just run the place the way they want to. They run amok and are not respectful of the documents. It’s very rare but it does happen. The other thing that I have seen from time to time is that sometimes you’ll get a board member who not so much wants to ignore the bylaws but they’d like special treatment.”

Rogue board members or trustees are awful for building morale and can have a corrosive effect on residents’ confidence in their board.

On the other hand, Clive D. Martin, an attorney with the Boston-based law firm Robinson & Cole LLP rarely sees cases of board members and trustees not following their own bylaws. “I have no doubt that it happens but in all of the condos that I represent people are very respectful of the laws,” says Martin. “I think it’s human nature, sometimes people will try to skirt the rules or bend the rules. How could it not happen with all of the condos in Massachusetts?” he says.

Fiduciary Duty

A fiduciary relationship exists when one party puts its trust in another party and grants to that second party a degree of influence and power. There is the understanding in a fiduciary relationship that the second party has a high level of accountability, including moral accountability, to the first party, and that the second party—the fiduciary—will put the best interests of the first party above his own.

“Fiduciary duty means three things: preserve, protect and enhance,” says Jean Dobbin, the president of Dobbin Management in Naugatuck, Connecticut. “Board members have to realize it is their duty to preserve the association, to make sure it is kept in the best possible condition and to do nothing that will bring lawsuits against the association.”

In a black-and-white world, a board member or trustees shouldn’t be held to any higher standard than any other unit owner in terms of their obligation to follow rules, but in real life, they must be to keep things running smoothly. If not, unit owners get upset and all of a sudden it undermines a board’s authority and it makes them wonder what else they can be doing wrong—like possibly embezzling—it creates a firestorm of problems.

“A fiduciary duty is the highest level of obligation,” adds Martin. “In Massachusetts, most communities are set up with trusts and a trustee has the highest level of obligation to the people to which he or she is a trustee. Board members have fiduciary obligations and that doesn’t run to any one member, it runs to every member of the community, every beneficiary of the trust. They have to make decisions that are good for everybody — not what is good for one person, but what’s good for the entire community they are representing.”

Breaking the Rules

There are a number of things residents can do if they know or suspect that their board—or even just one board member — is breaking rules, self-dealing or otherwise abusing their position.

“If a unit owner suspects that an individual board member is self-dealing or breaking any rules they should talk first to other board members and then put it in writing. Do a very thoughtful presentation of the problem and submit it to the board and or property manager for consideration and then ask for an opportunity to follow up so it doesn’t go into the black hole. Say ‘I’d like to hear back from you in two weeks,’” says Rubin. “All documents include a provision where a unit owner can request and ask for a recall for a new election and ask that someone steps down for cause, or you can do a petition. Also, there is usually a provision in the documents that says a unit owner can ask for a meeting and actions can be taken at a meeting like having someone step down. You can do it without a lawyer but sometimes a lawyer can be helpful to try to guide you through that process.”

Board members and trustees who break rules may do so out of a feeling of superiority, or it may just be in their nature and they think they can get away with it.

“I’ve seen that happen where a whole board have decided they are going to repair the roof and they don’t need a vote, they don’t need any approval and they are just going to go ahead and do it,” says Rubin. “Then I’ve had people come to me about it. That’s when you need to get a lawyer involved. The lawyer can say to the board ‘wait a minute—what you are doing might not be in accordance with the governing documents.’ The unit owner might need to pay for the lawyer.”

Martin believes that there should be no differences between how a rule-breaking board member should be dealt with compared to a unit owner or trustee who may step out of line. In fact, he believes that the board member should be held to a higher standard and should be setting the example in the community.

“I don’t think there should be any differences in how rules are enforced,” says Martin. “I think they should be enforced against the trustee at the exact same level as against the other unit owners. The board may take a laissez-faire approach or they may take a very strict hands-on approach on how they deal with rule breakers, but I don’t think they should vary it if it’s a trustee or a non-trustee. If there is a smoking rule or a pet rule, it should be rigidly enforced against everybody. There is no question in my mind about that.”

Prime Suspect

Without question, unit owners expect board members and trustees to lead by example and comply with the same rules and regulations all unit owners abide by. To do otherwise breeds distrust in the board and lowers the morale of a community.

If a unit owner sees a problem they should contact the manager or property manager and complain about the board member’s infraction.

Another thing unit owners can do if they suspect fraud is attend board meetings to follow the issues, speak up at owners’ forums at a board meeting or write the board and management raising issues of concern.

Then, of course, the easiest course of action against a board member or trustee breaking rules is to simply campaign against them in the next election and make sure they don’t get their position back.

“My feelings about governing documents are that they are really important where there is a problem. Especially if it’s a mom-and-pop type condo with three or four units,” says Rubin. “Lots of times they rarely look at them because everybody is getting along. There are no problems with noise or parking and if they need to fix something, they fix it. They’ll talk about it and figure out a way to pay for it. It’s a casual thing. The same principles apply in a larger building in that the rules become really important where there is a disagreement because there has to be a way to solve the problem. The bylaws provide clear direction about how to allocate responsibility.”

Final Thoughts

One of the best ways to make sure everyone—board members included—is on the same page is to have a good set of rules with all procedures in place, such as a complete set of documents for suspected rule violations as well as guidelines for disputes, such as arbitration or mediation.

Keith Loria is a freelance writer and a frequent contributor to New England Condominium. Staff writer Christy Smith Sloman contributed to this article.

Related Articles

Men and women sitting on chairs at round table in office boardroom. Board, leader and CEO having big talk about business strategy flat vector illustration. Team work, corporate culture concept

Conducting Better Meetings

Tips for Saving Time & Staying On Track

Performance rating or customer feedback, credit score or satisfaction measurement, quality control or improvement concept, strong businesswoman pull the string to make rating gauge to be excellent.

Evaluating Management

How to Improve & When to Cut Ties

Two hands holding a sign reading THE WINNER IS...in front of a blurred multicolored background

Who’s a Good Board?

Pros Weigh in on Co-op, Condo, HOA Leadership

 

Comments