Ken Harer
More often than not, D&O Claims are filed when a Board or and avoid having to make a Directors and Officers claim on your Association policy?
Among all the other benefits of serving on the Board of a community association is the risk that the Board, or you as a Board member individually, would be sued by a disgruntled owner. Even though your Declaration and state law protect you from such lawsuits, and you can buy insurance to defend business in a way to avoid legal claims. So how can you best avoid claims against your Board and/or individual Board members?
Communicate with owners and act with their support a moment, consider that if your community is informed
and gets to participate in decision making, members are less likely to be upset and sue everyone. If everyone agrees with a course of action, no one will challenge it. Tell your members about decisions you are making, and give them an opportunity you know there is a major repair needed, communicate early potential costs. Make sure that resale certificates provide enough information that a prudent buyer would know that
reasonable if it were evaluated after the fact by a court.
Process is everything. Decisions made by Boards are difficult to challenge successfully, but process failures
the assessment is invalid. Courts will apply the “business if the process they use is correct.
22 Community Associations Journal | September 2017
Act only within the scope of your authority; as a Board, and as an individual Board member. Governing
are prohibited. Remember that Boards make decisions as a authorized by the Board.
and applicable statutes. If you must have audits or annual meetings, get them done on time. If you have
to provide an opportunity to be heard before you assess a the fine. If your documents obligate you to perform tasks, get those tasks done.
homeowner associations, act with such care, including
reasonable inquiry, as an ordinarily prudent person in a like position would, under similar circumstances.
Make appropriate inquiry, and use objective information. Washington courts require you to make informed decisions to meet your duty of care. Make
sure that you have reliable and accurate information to complaining owner is telling you the truth when dealing with a dispute between owners.
Document that you have acted consistent with your duty of care. Keep minutes of Board actions taken. Keep written down, it is as if it never happened.
building just because you would have difficulty paying
the assessment required. As a Board member, you should also avoid voting on issues that involve you personally; simply abstain from voting on those issues.
Our hope is that these common sense tips will be helpful to Boards seeking to minimize Board/Board member liability. Lawsuits against Boards are rare, and usually unsuccessful. But to avoid the lawsuits all together, act reasonably, follow sure you are doing that, seek guidance from professionals.
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