Do Condo Board or HOA Volunteer Directors Deserve Exemption from Liability?
Re:
Condo Board of Directors Liability,
HOA Board of Directors Liability
David I. Goldenberg,
Ph.D.
Another specious argument promoted by pro-board attorneys and regulators is that volunteers should be exempt from personal liability for their mal-, mis-, and/or nonfeasance on the grounds that as it supposedly is a thankless task and they are not compensated for the hard work they do.
BUT those rationales are clearly false and misleading.
First, being an association director is neither a thankless task nor an uncompensated one. Directors are rewarded in many ways. The technical economic term for these nonpecuniary rewards is psychic income.
1.1 Good and bad directors gain visibility, power and prestige in their communities.
1.2 Good directors also earn the satisfaction of a job well-done.
1.3 Bad directors have opportunities to: abuse people they don’t like and reward those they do like by selective interpretation and enforcement of the rules, steal from the association, extort kickbacks from suppliers, rig elections, choose suppliers, and stay in office.
Second and conversely, if the assertion were correct, then simply by paying directors a token sum such as a peppercorn or a dollar-a-year, one could justify holding them personally liable for their acts. Referees appointed by courts to manage associations are paid much more and are held responsible for their actions. Therefore, regular directors could be paid and held liable.
Third, consider an implication of that phony assertion. If it were true, then not only should anyone doing pro bono work [such as attorneys, accountants, architects, engineers, physicians, etc.] automatically be exempt from liability for their acts, but anyone bungling a task undertaken for money also should be able to escape liability if they refund the monies received and/or refuse to accept any monies due within a reasonable period of time. This would, of course, revolutionize tort law. It's happened several times in the past and can happen again.
Fourth, if volunteer directors are exempt from liability, why do associations need directors and officers liability insurance?
Fifth, an
insane, incompetent, dependent, malevolent, power-hungry and/or thieving
director cannot, by definition, satisfy the requirement that directors
serve as in a fiduciary capacity, regardless of whether or not they’re
compensated for their “service” or how they are compensated. So why are
such people allowed to serve at all let alone without being held liable
for their misdeeds?
For more
information about condo board of directors liability or HOA board of directors liability, purchase
our Homeowners Defense Kit and/or Homeowners Survival Kit
.
===============================================
Dr. David Goldenberg is author of Creating Home Owner
& Condo Association Documents
and "How to
Recall Your Condo or HOA Board in 10 Easy Steps."
His book explains what excellent
community association documents should contain and how to amend them. No condo owner or hoa member should attempt to recall their community association board before reading his community association
board recall report .
Copyright 2008 by David I. Goldenberg, Ph.D. All
Rights Reserved.
To learn more about condo board liability or HOA board liability,Click Here.
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