Whether a member of the board can be personally responsible in a lawsuit linked to his or her job as a board member is a typical issue for new HOA members of the board or even for committee members who have been on the board for ages but have never been confronted with a litigation threat.
A board member may be held personally accountable, just as in for-profit businesses. Still, there are a variety of legal safeguards available to them as well as tactics to limit their exposure to risk. However, waiting until after a claim has been filed to implement these strategies may be too late. Click here to get the best help with your HOA issues.
Fiduciary Obligations of a Board Member
A board member who sits on an HOA board assumes a variety of legal obligations in regard to the HOA. Your state’s individual company laws will detail the specifics of these obligations. Still, generally speaking, board members are obligated to prioritize the HOA’s best interests over their own interests when discharging their duties. This entails managing the HOA with appropriate care, acting within the bounds of the authority allowed by the internal bylaws of the HOA, and sincerely interacting with the HOA.
When HOA board members fail to uphold these obligations, they risk legal issues and consequently liability.
Minimising HOA Board Members’ Personal Liability
There can be several safeguards to insulate a board member from personal culpability in a lawsuit, even if they have broken a fiduciary obligation. Some state regulations will restrict a board member’s personal responsibility in a lawsuit (even though the homeowner’s association itself may still be liable), considering that HOA members of the board are frequent volunteers.
A clause stating that the HOA will protect board members in cases of personal responsibility by paying for legal expenses may also be found in the governing papers of the HOA, which include the HOA bylaws. These clauses, however, are frequently constructed so that specific behaviors or activities, such as purposeful, intentional, or reckless behavior, are not covered by these protections. Legal disputes about whether a particular action falls under the exclusion or is outside the exclusion are not uncommon. Similar to how the HOA might have insurance protecting HOA members of the board from personal liability, excluding wording may apply when obtaining the benefits of this coverage.
Of course, before a lawsuit is filed, HOA dstvportal board members are advised to consult with knowledgeable outside Association counsel to ascertain what personal responsibility safeguards are contained in the HOA’s governing document.
