Homeowner association must not let the manager control it
Los Angles Times
by Stephen Glassman and Donie Vanitzian
20 January 2012
Question:
I was elected to the board of directors because owners were
fed up with a controlling manager. After election, the manager handed
me a "board member tool kit," which instructs how to join in lock step
with other directors and not make waves. It espouses the importance of
listening to industry "experts" such as property management companies
and attorneys who, it says, know much more than board directors about
how to run an association.
One disturbing instruction says board directors should "stand united
and back the board's own majority decisions even if you voted against
them." When owners attend board meetings with complaints about a
decision, board members who disagreed with the decision are to be quiet
and "stand with the board."
Am I beholden to such instructions? Am I
prevented from speaking honestly at meetings and with owners?
Answer:
Regardless of who's responsible for the so-called tool kit, it
could be evidence of a board's illegal delegation of its obligations
and duties, and its use should be stopped immediately. Directors are to
make decisions after due deliberation and independent investigation,
not in accordance with an instructional kit.
The independent decision
this board must make is whether the manager or management company's
actions interfere with the board's obligations and should be terminated.
As a director you must find out who instituted, wrote and paid for the
"tool kit" and whether reproducing it involved any copyright
infringement.
A few simple, uncomplicated pages with director job descriptions and
contact telephone numbers is all that many boards need. Include
California Corporations Code section 7231, which states, in part, a
"director shall perform the duties of a director … in good faith … with
such care, including reasonable inquiry, as an ordinarily prudent
person in a like position would use under similar circumstances."
Using good common sense rarely fails any director, whereas an
instruction to march in lock step with the majority runs contrary to
the law. When a director fails to act reasonably and in a prudent
manner, his or her breach of duty subjects owners to damages.
In Lauriedale Associates Ltd. vs. Wilson, California's courts
recognized that a special fiduciary relationship exists between the
association and its titleholders, meaning that directors are to act in
the best interests of the owners and the association, not the board,
not the manager and not the management company, which is just another
vendor.
A director cannot delegate his or her duties to anyone, and
although a majority decision will govern how a board acts, you are not
obligated to sit back and do or say nothing. You have a duty to speak
honestly at meetings and with owners.
Make your own inquiry into facts pertaining to any vote and share that
information with the other directors before voting. In certain
circumstances, if you abstain from voting, it results in a "yes" vote
and you will be liable for the consequences of that vote, so it is
vital that the minutes record your vote accurately.
No law prevents directors from seeking opinions from experts on
occasion, but the final decision is the director's alone. Each director
is responsible for reaching an independent, well-reasoned and logical
decision without any external interference.
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