So you want to be on the Board of Directors. Did you ever wonder whether or not by being on the Board, you are subjecting yourself to loss of your personal assets should your association get sued. Unless you’re truly a bad guy or gal, you have little to worry about. Getting personal liability against an officer or director is very difficult.
The condo and HOA statutes details the ways in which a director can get in trouble personally and actually lose their personal assets. Here they are:
The director commits a violation of criminal law. The simplest example of this is the director stealing the association’s money;
The director engages in a transaction from which the officer or director derives an improper personal benefit, either directly or indirectly. The best example of this of course is the director getting a kick back for awarding a contract to a specific vendor (I heard that this actually happens sometimes in Florida community associations)
The director’s behavior constitutes recklessness or an act or omission that was in bad faith, with malicious purpose, or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.
One example would be where a director singles someone out for prosecution in the community because of a person’s skin color, race, religion etc…. or simply because of a personal vendetta between the two. But we also need to focus on the last example which is where the director exhibits wanton and willful disregard of human rights, safety or property. That one can be dangerous.
Directors must be reminder over and over again about their need to fix potentially dangerous conditions on the condominium or HOA property if they have knowledge of it. For example….if the Board is repeatedly advised of a broken railing and they ignore their responsibility to fix it, and someone gets hurt because of that railing…….if I’m representing the plaintiff I may sue the directors individually because they acted with willful disregard for human rights, safety or property.
Often times community association boards say that they simply don’t have the available funds to make the repairs. Does that get them off the hook? Absolutely not. Not having the money to make a repair is never an excuse. You are an association with the power to assess and even borrow money. If there is a dangerous condition on your property, you better do whatever is necessary to get those funds and make those repairs……and if you don’t, you do so at your own risk…..and if someone gets hurt….I don’t want to be that Board member.
So why is it so difficult to get personal liability against a director? The answer is that there’s a public policy out there that says — we don’t want to prevent people from running for the Board. We want to encourage them to run for the Board. But, if we make them personally liable for everything they may do…..nobody will ever get involved.
Next week we’ll blog about what happens when Board members make really bad decisions that wind up costing the association lots of money. Are they now personally responsible for their dumb decisions, even though they weren’t done with malice or bad faith? For that answer you’ll have to wait until we talk about the “business judgment rule.”
While waiting….let us know if you agree with the policy of making it difficult to obtain individual liability against a director or officer. If it was easier to get personal liability wouldn’t it discourage people from volunteering their time? Has any Board member out there been sued personally? Was the case dismissed? Has anyone been successful or not in suing a director personally? Everyone chime in.