The motivation for volunteering to be an uncompensated (and sometimes underappreciated) condo, HOA, or co-op board member is usually a sense of civic duty combined with the desire to protect one’s own investment and quality of life. This means that the majority of board members actually live in the buildings and communities they serve. And that means that most board members are neighbors, serving with and for people who share not just common areas with them, but maybe even actual walls and ceilings.
Such closeness has its benefits: familiarity with the community’s unique issues, people, and history; easy access to documents and other on-site information; and proximity to other board members for meeting quora, for example. But closeness also can lead to conflicts, from the personal to the professional. So how do directors separate the business from the kibbitz in the boardroom?
Upon election, board members become fiduciaries, charged with making policies and decisions in the best interest of the community. A fiduciary has two primary duties: duty of care and duty of loyalty. The former means a board member must exercise reasonable care when making decisions that will impact the building or community. The latter is a standard that requires a board member to act in the best interests of the corporation or association.
Both of these duties prescribe a responsibility to put one’s personal interests aside in execution of board business, says Mary-Joy Howes, partner in the law firm of Goodman, Shapiro & Lombardi, LLC with offices in Massachusetts and Rhode Island. “Board members must always have the association’s best interest as their number-one priority,” she says, “and unit owners need to be able to trust that the elected board is acting in the association’s best interest at all times. The board members’ loyalty must be to the association and the association only.”
In practice, however, fiduciaries carry out their business more or less on the honor system—and much of real estate is a family affair. The stewardship of buildings and communities where multiple families live—served by the boards of directors and boards of trustees in condos, HOAs, and co-ops—often follows bloodlines. But on a residential board, close family relationships between members can lead to a concentration of power that does not serve the common interests of the membership. Additionally, existing family dynamics and inherent conflicts can also become problematic on an association board of directors.