New Jersey Condominium Association Fiduciary Duties Attorneys
Homeowners associations exist primarily to protect the interests of their members in the common areas of the community. Associations are tasked with protecting, maintaining and repairing the property commonly shared by all of the owners.
Members of a condominium association elect individuals to a board and trust them to govern the association in good faith. These people are referred to as trustees or directors of the board. The trustees owe a fiduciary duty to the association and its members. Thus, the trustees are held to a very high standard: all decisions made by the trustees must be in the association’s best interest. If a trustee’s decision is self-dealing, discriminatory, arbitrary, or in bad faith, the members of the Association have various means of legal recourse.
The governing board of a condominium association is like the governing board of a corporation in many ways. Many of the rules that apply to a corporate board of directors apply to a condominium association board by analogy. For example, the business judgment rule states that courts shall defer to the business judgment of corporate executives. Courts don’t want to delve into speculations about business decisions—that is not their purview. This rule applies to condominium associations as well. So long as the decision of a board is not self-dealing, fraudulent, or criminal, board members are indemnified by their associations. Thus, the board is entrusted with a great deal of power.
Boards can breach their fiduciary duties in many ways, including:
- Misuse of association funds
- Improper enforcement of the association’s rules
- Not following procedures set forth in their bylaws
- Failure to conduct annual meetings
- Failure to vote on a budget
- Failure to maintain common areas
- Failure to perform services such as trash removal, snow maintenance, and landscaping (if these services are provided for in the budget and paid for by unit owners)
- Self-dealing decisions, for example, singling out members for disparate treatment
- Self-interested transactions, for example, hiring family or friends to fulfill contracts for the association, although they may not be the best choice for the Association
- Voting against fee increases because a member is facing personal financial difficulties
Our Capable Lawyers Are Experienced In All Facets of Condominium Association Law
Condominium associations must comply with complex state and local real estate laws and ordinances. At Shebell & Shebell, we are able to help associations meet their fiduciary responsibilities and avoid claims of breach. We counsel associations regarding:
- Enforcement of rules
- Election issues
- Alternative dispute resolution (ADR)
- Vendor and service contracts
- Open records and meeting requirements
- Forming the organization and drafting organizational documents
- Bankruptcy Court matters
- Lien enforcement against unit owners
- Foreclosure proceedings against unit owners – Civil litigation
We also represent condominium associations in bringing claims against trustees for breach of their fiduciary duties. Filing a lawsuit directly against a trustee can be difficult, since most constituent documents provide that board members are indemnified against personal lawsuits for actions taken while they were acting as trustee. However, we are able to assist our clients with bringing formal demands to the Board, and seeking resolution through ADR.
To speak with a New Jersey condominium association lawyer, call us at 866-957-5237 or contact us online today.