ARE HOA's fiduciaries? (not just Board members)

JohnR48 (Utah)
Posts: 1

Posted:

My community association is being alleged to have violated its fiduciary duties. The claim is not being made against the Board - it is made against the HOA entity. (just a threat at this point)

It seems to me that the HOA entity (nonprofit) would not be a fiduciary as it can only act through it Board members - who I would agree are fiduciaries.

Does anyone have any thoughts on whether the "HOA entity" owes fiduciary duties to its members?

RichardP13 (California)
Posts: 3,868

Posted:

This might help you.

https://www.davis-stirling.com/HOME/Fiduciary-Duties-of-Directors

MarkM19 (Texas)
Posts: 1,459

Posted:

Richard,
I have read this section of the DS many times. I always thought that the board members are the fiduciaries and never even considered the HOA as also being one. Do you view it as 2 separate fiduciaries even though the Board runs the HOA? It is a little confusing to me and I look forward to some clarification from you and others on the site.

RichardP13 (California)
Posts: 3,868

Posted:

The Association is through their governing body, the BOD. Ever notice when a lawyer writes a letter on behalf of the BOD, it starts, " As you know, our firm represents the "ASSOCIATION".

KerryL1 (California)
Posts: 14,550

Posted:

Richard is right. The Association is sort of an abstraction. It means all members of it. Board of directors act on behalf of the Association. Boards have duties and powers that are spelled out in HOA's governing documents. As directors, for instance, they can enter into contracts. They vote to approve contracts and sign them.

In everyday talk, we might say "our HOA has a contract" with this vendor. But we know that the Board is responsible for it. Don't know if this helps.

CathyA3 (Ohio)
Posts: 6,299

Posted:

What is the claim being made against the HOA? It may be easier to answer if we have some details.

JenniferG12 (Texas)
Posts: 103

Posted:

Why are we looking to California law for a person in Utah?

JenniferG12 (Texas)
Posts: 103

Posted:

Quote:

Posted By JohnR48 on 10/04/2018 10:29 AM
My community association is being alleged to have violated its fiduciary duties. The claim is not being made against the Board - it is made against the HOA entity. (just a threat at this point)

It seems to me that the HOA entity (nonprofit) would not be a fiduciary as it can only act through it Board members - who I would agree are fiduciaries.

Does anyone have any thoughts on whether the "HOA entity" owes fiduciary duties to its members?

The fiduciary duty lies with the directors. However, a suit would likely be styled as to address the corporation. Every HOA lawsuit I ever read sued the entity. Homeowner(s) vs The _______ Association.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By JenniferG12 on 10/08/2018 12:18 AM
Why are we looking to California law for a person in Utah?

If you would take the time to read, it is case law, not state law. Case law can be used anywhere in the U.S.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By JenniferG12 on 10/08/2018 12:33 AM

Posted By JohnR48 on 10/04/2018 10:29 AM
My community association is being alleged to have violated its fiduciary duties. The claim is not being made against the Board - it is made against the HOA entity. (just a threat at this point)

It seems to me that the HOA entity (nonprofit) would not be a fiduciary as it can only act through it Board members - who I would agree are fiduciaries.

Does anyone have any thoughts on whether the "HOA entity" owes fiduciary duties to its members?

The fiduciary duty lies with the directors. However, a suit would likely be styled as to address the corporation. Every HOA lawsuit I ever read sued the entity. Homeowner(s) vs The _______ Association.

AND, every insurance company that may defend that association is going to do their fiduciary duty to determine IF the BOD acted in the very best interest of the association OR were they negligent in ANY way.

RoyalpitA
Posts: 195

Posted:

Quote:

Posted By RichardP13 on 10/08/2018 10:05 AM

Posted By JenniferG12 on 10/08/2018 12:33 AM

Posted By JohnR48 on 10/04/2018 10:29 AM
My community association is being alleged to have violated its fiduciary duties. The claim is not being made against the Board - it is made against the HOA entity. (just a threat at this point)

It seems to me that the HOA entity (nonprofit) would not be a fiduciary as it can only act through it Board members - who I would agree are fiduciaries.

Does anyone have any thoughts on whether the "HOA entity" owes fiduciary duties to its members?

The fiduciary duty lies with the directors. However, a suit would likely be styled as to address the corporation. Every HOA lawsuit I ever read sued the entity. Homeowner(s) vs The _______ Association.

AND, every insurance company that may defend that association is going to do their fiduciary duty to determine IF the BOD acted in the very best interest of the association OR were they negligent in ANY way.

If negligent to the point of malfeasance then the BOD is NOT covered by the 'policy'.

Nonfeasance is a 'grey area'.

Misfeasance, as in an error of judgment, IS covered since the BOD was performing its duty.

..... else no need for the determination .....