All too often, individuals hastily volunteer to become a member of the board of directors in their condo or co-op building. Although these people should be commended for their effort and enthusiasm, often lost upon the typical board member are the complex responsibilities - and potential liability - that come along with their position.
The most important thing for a board member to keep in mind when considering the potential liability arising from the business role or function of the board is simply that there is a business role or function. According to Hyatt and Rhodes' "Concepts of Liability in the Development and Administration of Condominium and Home Owners Associations" (Wake Forest Law Review, 1976), "Too often, Board members approach their Association responsibility as if they were on the committee of a social club, religious group, or other similar organization."
A board member must understand and appreciate that they head an organization that is often responsible for millions of dollars in assets, and while it is admirable to even consider assuming this time-consuming, sometimes thankless task, a board member's most important responsibilities lie not in ensuring the sociability of the board itself, but in upholding the character, use, and occupancy of the co-op or condo community. Each potential board member must come to respect the potential for serious liability inherent in any position of such broad power and scope.
There are critical roles and duties expected of co-op and condo board members and significant pitfalls that may arise from the board - or individual director's - failure to fulfill his or her role. A dearth of authoritative New York state case law on this topic, combined with the ever-growing number of residential boards in the region, makes this an area of law fraught with uncertainty. In light of that, the issue of board member responsibility and liability will inevitably be addressed by our judiciary - and the resultant decisions will greatly impact thousands of individuals, both residing in and sitting on the governing boards of New York-area co-ops and condos.
There is perhaps no greater insurance towards the preservation of a co-op's character than strict enforcement of its governing documents, which typically include the corporation's bylaws, covenants, and restrictions, and are designed to regulate and govern the use of the property.