To The Community

Photo of attorneys John Gettinger, Gregory Monteleone and Steven Waldinger
  1. Home
  2.  → 
  3. Homeowners' Associations
  4.  → What are the fiduciary duties required of HOA board members?

What are the fiduciary duties required of HOA board members?

On Behalf of | May 5, 2024 | Homeowners' Associations

Homeowners associations (HOAs) serve an important role. They help protect the investments that individuals have made in New York real estate. They establish and enforce certain community standards.

For example, they may have limits on the types of plants people grow in their front yards or impose noise restrictions beyond those maintained by the state and municipal authorities. HOAs can help homeowners maintain and even increase the value of their properties. They work to ensure consistent character to neighborhoods and provide recourse for scenarios in which the actions of one property owner impact the rights of others.

Those elected to a position on an HOA board have a fiduciary duty to the community that they serve. What are the key elements of that fiduciary duty?

The duty of care

Certain types of relationships create an obligation to acknowledge and address the needs of others. Someone serving on an HOA board has a duty of care to other homeowners in the community. They should understand the needs of the community and make informed choices about how to address community issues. Ensuring proper compliance with community guidelines and consistently enforcing them are part of the duty of care.

The duty to respect authority limitations

Board members helping operate an HOA have the authority to adjust and enforce community standards. They can also penalize those who fail to conform to them. They sometimes need to make decisions about improving the community or adjusting its rules. Those serving on an HOA board need to understand the limitations of their authority and avoid exceeding the power granted to them under both New York State statutes and community bylaws.

The duty of loyalty

One of the most important aspects of fiduciary duty is loyalty to those who depend on the party in a position of authority. HOA board members should act in the best interests of the community as a whole rather than prioritizing their own interests. They have an obligation to act in good faith when making decisions about the community’s budget or the enforcement of rules. Any attempts to put personal interests ahead of community interests could be a violation of the fiduciary duty owed to others. In scenarios where community members can show that an HOA board member violated their fiduciary duty to the community, it may be possible to take legal action to remove them from their position.

Both those living in a community subject to HOA regulations and those serving on HOA boards may benefit from learning about fiduciary duty in the laws that govern community associations. Learning about fiduciary duty can help people either steer clear of or identify clear violations of that duty accordingly.