The Call of Duty The Importance of Fiduciary Responsibility

When electing board members to serve on behalf of your condo or co-op community, you expect them to act as crusaders for prosperity, considering the needs of the building and the people who live there to be paramount when making their decisions. The responsibility that a board has to serve in the best interests of its community is called “fiduciary duty,” and it is not to be taken lightly.

Decisions made on behalf of a board's fellow residents must be made in good faith, with the good of the community firmly in mind; violating this duty can lead to legal consequences for boards and individual board members who betray their constituents. And, sadly, as with any position of power, some people do stray – and this is why the legal community is steadfast about clearly defining what is expected and required in a board's fiduciary duty.

The Burden of Authority

Board members must walk a fine line when navigating the breadth and limitations of fiduciary duty, as it applies to co-op and condo board members in New York, and they must therefore be extremely knowledgeable regarding their responsibilities. But the burden of fiduciary duty does not fall solely on the board; owners and residents must too be aware of their rights, so that they will know what to do should a board member make a decision that perhaps is not in the best interests of the entire community.

“Article 9-B of the New York State Real Property Law provides for, among other things, a requirement that a condominium shall be governed by the by-laws which are part of said condominium's declaration, and such governing documents are required to be recorded in the appropriate governmental offices located in the county in which the property is located,” explains Dennis H. Greenstein, Esq., a partner with the law firm of Seyfarth Shaw LLP in Manhattan.

“The bylaws must contain certain requirements relating to board members, such as their number and election, powers and duties, removal and operation of the property and such restrictions and requirements respecting the use and maintenance of the units and common elements 'as are designed to prevent unreasonable interference with the use of their respective units, and of the common elements shard by several unit owners.'”    

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