Question: My husband is serving on our condominium association's board of directors. I'm not worried about his judgment but I think some of the other board members may not be as wise. Could my husband be exposed to legal action if the board makes a foolish decision?
Answer: Anyone can file a suit against anyone else at any time. Some boards and board members have been sued for many reasons, including mismanagement of funds. They have also been sued for failure to enforce association bylaws, overzealous enforcement of association bylaws, discrimination against a unit owner or an employee, poor investment decisions, failure to conduct meetings in accordance with condominium documents, violations of the Sunshine Laws and for not following loss control and claims prevention recommendations.
Your husband could use this list of complaints against other boards and board members as a checklist to assure that your association's board has examined its exposure for each.
Boards that know their documents well and follow the rules are much less likely to be faced with a legal complaint. Risk can be further reduced if meetings are conducted in accordance with the condominium documents and by thoroughly documenting all board actions while keeping meeting minutes to a minimum. Only the passage of motions needs to be recorded. It is not necessary or wise to record all discussions. Overall communication about meeting dates and related information should be varied and consistent.
Bylaws should be enforced in a fair and consistent manner. BIlls should be paid on time and the board needs to be knowledgeable about issues of insurance, especially new legislation because it is the board's responsibility to guarantee adequate insurance per the documents.
Risk management should include more than simply guaranteeing adequate insurance on the association's properties. Fidelity bonds can be used to cover the association for losses that they incur as a result of fraudulent acts or dishonesty by specified individuals. These bonds insure a community association for losses caused by dishonest acts of its employees.
If the board is concerned about its exposure for any reason, it should investigate Directors and Officers Liability Insurance (D&O), which provides financial protection for the directors and officers of the association in the event they are faced with legal action in conjunction with the performance of their duties as they relate to the association.
Attorney Sylvia Heldreth is a certified specialist in real estate law. Her office is located at 1215 Miramar St., in Cape Coral.
This article is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.