Are HOA board members immune from lawsuits by residents?

By September 23, 2018News, Questions & Answers

Q: We live in an HOA and purchased a single-family home with a three-car garage. At settlement we were given 3 electronic “clickers” garage door openers. The openers included a button for the community entrance gates. The HOA Board is changing the entrance gate access to windshield stickers and want to charge us for the third sticker. We object to paying for a third sticker when we pay HOA dues and have 3 garages. We think 3 clickers entitle us to 3 stickers. Is it legal for the HOA to charge residents for a third sticker under these circumstances?

-KC, Stuart

A: Thank you for your question. Although we do not have the benefit of reviewing your specific HOA documents, as a general statement, it would seem logical that since the developer-built houses with 3 car garages then it would have assumed that people would have three cars. This is why you were given 3 garage door/community gate remote controls. If your Board is now changing the system and are only providing you with two stickers and charging for the third sticker, it would seem to be wrong based upon the history of the community and the fact that you were previously provided with three remote controls. Most communities give a certain limited number for free and charge when people want more beyond what is reasonable. In this case three should be reasonable based upon the set of facts you provided.

Q: I serve on a Board of a condominium. Without getting into too much detail, recently, the Board members were sued by a resident who claims that the budget that we passed last year was somehow inappropriate. I was under the impression that Board members were immune from lawsuits like this.

-RK, Fort Pierce

A: First, I would not panic about being sued. Unfortunately, it is a fairly common occurrence that Board members are brought into lawsuits as Defendants. As a Board member, your association should have insurance to cover such claims. The insurance carrier should step in and provide you with an attorney to represent you in the lawsuit. Second, as a Board member, you do have a fair amount of protection for holding you liable under most circumstances.  

Board members of a condominium and homeowner’s associations owe the association a fiduciary duty, just as if you were on a board of a corporation. I do not know the specific issues in the lawsuit you are dealing with, but the resident suing you must prove that you breached your fiduciary duty. Under Florida law, breach of fiduciary duty requires the existence of a fiduciary duty, and the breach of that duty such that it is the proximate cause of the plaintiff’s damages. Suing a director for breach of fiduciary duty requires something more than alleging that the director had a fiduciary duty that was breached, as the law starts with the presumption that a director is immune from liability. In order to be subject to liability, the director must have not only breached his or her duties as a director, but that breach must rise to the level of criminal activity, fraud, self-dealing, unjust enrichment, or other improper personal benefit. It is also well-settled absent evidence of the foregoing behavior, directors of condominium associations are not personally liable for the decisions they make in their capacity as directors. Florida law requires that directors of a condominium association discharge their duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances and in a manner they reasonably believe to be in the best interests of the corporation (i.e., the Association). This is known as the “business judgment rule,” which is a standard originally created to determine if a director of a corporation breached his/her fiduciary duty to the stockholders. Under this rule, corporate directors and officers generally do not violate their fiduciary duty, absent actual wrongdoing in the form of fraud, self-dealing or unjust enrichment. To determine if a director’s actions fall under the business judgment rule, Florida Courts look at (1) whether the association has the contractual or statutory authority to perform the relevant act and (2) the decision is reasonable. 

I hope that this helps you, but without knowing more about the particular allegations being made against you, I cannot give you any specific advice. I would speak to your attorney about the details of the lawsuit and what is specifically being alleged against the Board members in your case.