BY JOHN KIRITSIS, ESQ., CPA, MBA, MS, JD, LL.M
Condominium board members in New York City (NYC) owe a fiduciary duty to the condominium association and its unit owners. This duty requires board members to act in the best interests of the association and its members, putting their needs before their own. Here’s an overview of the fiduciary duty rules for NYC condo boards:
- Duty of Loyalty:
Board members must act with undivided loyalty to the condominium association. This means that they should not engage in self-dealing, conflicts of interest, or actions that benefit them personally at the expense of the association.
- Duty of Care:
Board members must exercise reasonable care and diligence in their decision-making processes. This includes staying informed about relevant matters, asking questions when necessary, and making informed decisions for the benefit of the association.
- Duty to Act in Good Faith:
Board members must act in good faith and with honesty when making decisions on behalf of the condominium association. Decisions should be made honestly and without any ulterior motives.
- Duty to Manage Association Finances:
Board members have a responsibility to manage the association’s finances prudently. This includes creating budgets, setting assessments or fees, and ensuring that financial decisions are made in the best interests of the association and its members.
- Duty to Enforce Rules Fairly:
Board members must enforce condominium rules and regulations fairly and consistently. This means that rules should be applied equally to all unit owners without favoritism or discrimination.
- Duty to Maintain and Protect Common Areas:
Board members are responsible for the maintenance, repair, and protection of the common areas and facilities within the condominium complex. They should ensure that these areas are properly maintained for the benefit of all unit owners.
- Duty to Preserve Confidentiality:
Board members should maintain the confidentiality of sensitive information and discussions related to the association’s operations and unit owners’ personal matters.
- Duty to Make Informed Decisions:
Board members must make decisions based on sufficient information and due diligence. This includes seeking professional advice when necessary, such as legal counsel or financial experts.
- Duty to Avoid Discrimination:
Board members must adhere to fair housing laws and avoid any discriminatory actions or decisions that may negatively affect unit owners based on protected characteristics.
It’s important to note that fiduciary duty is a high standard of care, and board members can be held accountable for breaches of this duty. To fulfill their fiduciary duty, condo board members should act in the best interests of the association as a whole and demonstrate transparency, accountability, and integrity in their actions.
Consulting with legal professionals who specialize in NYC condominium law can provide further guidance on the specific fiduciary duty obligations of condo board members and help ensure compliance with applicable laws and regulations.
Citations, References and Potentially Useful Resources for Further Information:
U.S. Constitution
New York State Constitution
Federal Securities Regulation
New York State Martin Act
New York Condominium Act
New York State Security Regulations
New York Business Corporation Law
New York Limited Liability Company Law
New York Uniform Partnership Act
Federal Internal Revenue Code
New York State Tax Laws, Rules & Regulations
New York City Tax Laws, Rules & Regulations
Winston Churchill Owners, Inc. v. Regents Real Estate Associates
Board of Managers of the Park Regis Condominium v. Park Regis Owners Corp.
Park Sutton Condominium v. 447 E. 57th St. LLC
28 E. 10th Street Corp. v. Veras
Riverside Syndicate, Inc. v. Munroe
Essex House Condominium v. Marks
The Parc Vendome Condominium v. Atkinson
54-56 Meserole Street Owners Corp. v. Rossi
The Beekman Regent Condominium v. Bottiglieri
Chelsea 19th LLC v. West 19th Street Realty LLC
ACRIS
New York Department of Finance
New York City Department of Buildings
New York City Bar Association
New York State Bar Association
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