Understanding Board and Manager Duties
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 an- other concept that is not always under- stood 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:
• 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.