Condo Media - August 2014 - 36

ASKED & NAME
COLUMN ANSWERED

Understanding Board and Manager Duties
Recognize Their Obligations Before Getting Angry

QUESTION: Owners in my condominium community recently received
a letter from the association manager
informing us that the ﬁnes for rules
violations are increasing and some
rules, previously overlooked, will be
enforced strictly in the future. The
board member to whom I complained about this said the board
was simply following the manager's
advice; the manager told me he was
simply carrying out the board's instructions. It sounds to me as if both
are passing the buck. I'm not sure
at this point with whom I should be
angry. What do you suggest?

ANSWER: It's not clear that you
should be angry with anyone, but it is
important for you to understand the
roles that an association's board and its
manager play. Their roles are different
and not always well understood.
Starting with the board, and using
your phrase, the buck stops with the
board members owners elect to govern the community, manage its operations, and handle its ﬁnancial affairs. It's
the board and not the manager that's
responsible for making decisions about
how the community will be run. The
manager implements the board's
policies (as your manager told you),
but the board decides what those
policies will be.
Board members have a "ﬁduciary
duty" to act in the best interests of the
association and its owners. This is another concept that is not always understood by owners or by board members
themselves. Fiduciary duty involves
more than a general obligation to act
responsibly. It imposes two separate
legal obligations on board members:

CONDO MEDIA * AUGUST 2014

* A duty of care, requiring them to
exercise good judgment and make
sound business decisions on the community's behalf
* A duty of loyalty, requiring them to
act in good faith, putting the association's interests ahead of their own.
This doesn't mean that their decisions must be "correct" or that they
can never make mistakes. And it certainly doesn't mean that you or other
owners should sue board members if
you disagree with decisions they make.
It just means the board has an obligation to make informed decisions that
they believe in good faith to be in the
community's interests.

Owners elect the board; the board,
in turn, hires the manager to handle
the association's day-to-day operations
and to ensure that the community's
business runs smoothly. If the board
is the equivalent of a corporation's
board of directors, the manager is its
chief operations ofﬁcer, responsible for
implementing the decision's the board
makes.
As a practical matter, most professional association managers know
more about association operations
than most board members, who are
not experts in the ﬁeld. So managers
can and should advise boards on the
best course of action to pursue. They
can recommend strategies and policies and suggest additional sources of
information and advice. They can even
lead from behind, inﬂuencing board
members to move in one direction
or another. But managers cannot and
should not tell boards what to do.
Unlike board members, managers
do not have a ﬁduciary obligation to
owners. The ﬁnal decisions and the
responsibility for them, rest with the
board.
This is not to suggest that you
should be angry with the board
about its rules enforcement policies or anything else. But it is to
suggest strongly that you should
try to understand the reasoning behind those decisions. It is
also important for you and other
owners to recognize that one of
the board's obligations, and one of
its toughest jobs, is to do what it
believes to be right, even though
owners may not like and may intensely dislike some of the decisions
they make. CM

Condo Media - August 2014

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