Co-op and condo shareholders and unit owners elect board members to execute the day-to-day decisions if the building. Board members owe a fiduciary duty to protect the interests of the building. A common question that arises is whether board members of a co-op or condo may continue to fulfill their duties and obligations if they have commenced litigation proceedings against the board.
Board member may still technically hold their position even if they have brought an action against the board. However, members of the board owe a duty of care and loyalty, which requires them to act in good faith and not let personal interests compete with the interests of the building. The Cooperator explains that, a board member who is suing the board could “recuse himself from all discussion that relate to his situation” however, “in practice it would be better if such a person did not serve on the board, particularly where … he is in violation of the house rules.”[1]
If co-op shareholder or condo unit owners feel that the board member should no longer serve his or her role due to the pending lawsuit, they may vote to remove the board member. Board members may be removed with or without cause by a majority of the shares entitled to vote or by a majority of the unit owners, or as otherwise directed in the building’s by-laws. On the other hand, if board members feel that they can no longer separate personal interests while upholding the best interests of the board, they may resign their membership at any time by giving written notice to the board. Each building’s by-laws will have a provision specifying the process they require for a board member’s resignation. Resigning will also eliminate the risk of the board member breaching their fiduciary duty to the building. When in doubt, it is best to be transparent with the board and the building’s shareholder and unit owners to avoid further conflict.
[1] Weisberg, P. (Feb. 2018) “Q&A: What If A Board Member Is Involved In A Lawsuit?” The Cooperator. Available at: https://cooperator.com/article/qa-what-if-a-board-member-is-involved-in-a-lawsuit/full#cut. Accessed on July 13, 2018.