Being elected to the board of a co-op or a condo comes with a great deal of power, and with that power also comes a great deal of responsibility. Whether they serve a co-op or condo community, trustees and board members, in their position of power, 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 their fellow residents must be made in good faith and with the best interests of the community firmly in mind. Violating this duty can lead to legal consequences for boards and individual trustees or board members who stray.
Fiduciary Duty in a Nutshell
The fiduciary duty in the co-op and condo board context arises out of the special relationship that exists between directors of the boards and the shareholders and unit owners who place their trust in these directors. A fiduciary relationship can be formed in other types of relationships such as lawyer/client, broker/client, or even clergyman/congregant.
“As board members they are elected officials, so they have various powers and responsibilities,” explains Frank A. Flynn, Esq., managing partner of Downing & Flynn in Boston. “So when they are engaging in the use of their powers and responsibilities, they have a duty that’s higher than their self-interest. Those higher responsibilities are what’s called their fiduciary duties. Board members are unit owners, too. It’s not about what’s best for them as a unit owner, it’s about what’s best for the condominium association as a whole and that’s where their fiduciary duties come about.”
In more practical terms, “Fiduciary duty is a duty of loyalty to the organization, and in this case the condominium community,” says attorney Charles A. Perkins of Perkins & Anctil, LLP in Westford, Massachusetts.
“The most general fiduciary duty that generally applies across the board is that the board members have a fiduciary duty to maintain, repair and restore the common areas of the complex,” says Dedham, Massachusetts-based attorney Pamela M. Jonah of Goodman, Shapiro & Lombardi LLC. “The upkeep of common areas is their [board members] big thing.”