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Legal Obligations of Your Board

Real Estate Legality

Every board of condominium, cooperative, and homeowner’s association has governing laws that address what is expected and required of them. The board is expected to represent the building as a whole, and make decisions that will benefit the community. It is no easy task, which is why in New York co-ops are mainly governed by the Business Corporation Law. This sets the standard in which board members must act when making decisions. “Of course, transparency is a huge component of running an ethical board and a functional association. Thus, a board cannot perform its duties with adequate transparency if it’s not holding regular meetings with residents.”[1] The standard is that the board should hold regular meetings for the residents to discuss any upcoming capital projects, legal issues, or assessment charges. This allows for transparency and accountability for when issues arise.

One of the most important duties that the board owes to its unit owners is their fiduciary duty. “Fiduciary duty is the distilled essence of board obligation, which a board can use as a kind of litmus test when facing any decision. ‘Does this decision benefit the collective more than any individual board member, owner, or shareholder?’ is a great question to ask routinely. And should the answer be anything other than a definitive ‘yes,’ some more thought needs be put into the course of action in question.”[2] In New York, the BCL is a great starting point when it comes to dealing with a non compliant board. It specifies the duties under which the board of directors must act under.

“A director shall perform his duties as a director, including his duties as a member of any committee of the board upon which he may serve, in good faith and with that degree of care which an ordinarily prudent person in a like position would use under similar circumstances.”[3]

It is important to note that the board doesn’t owe any fiduciary duty to an individual unit owner. For the unit owner to bring up a complaint, the complaint must concern the organization as a whole. Another responsibility of the Board is to hold regular elections. The BCL states that there must be elections held regularly to allow unit owners the opportunity to run for a position on the board. The board must also provide any documents and information about the building upon the unit owner’s request. It is important for the unit owner to have knowledge of what is happening within their condo, co-op, or HOA.


[1] Odenthal, M. (2018, October). Your Board’s Legal Obligations. Retrieved from The Cooperator: https://cooperator.com/article/your-boards-legal-obligations/full#cut Retrieved on October 4, 2018

[2] Ib.

 [3] Business Corporation, § 717: Duty of Directors.

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