Q.Our 10 year old clubhouse apparently has some settlement problems that started several years ago. No Boards had done any study of the cause until last Fall. It is going to cost about $35,000.00. They say we do not have money in reserve to take care of this expense. Is the board of directors responsible for failure to fund proper reserves? Is the Board liable to the other members?

A.It appears that something major is occurring with the Clubhouse the significance of which could not have been reasonably anticipated until a couple of years ago. Of course, an earlier study of the problem would have been appropriate and may have allowed for collection of funds over a period of a couple of years to remedy the problem. Continue Reading Reserves

Q. Because of some recent decisions by the Board of Directors of the condominium I live in, some of us are wondering if the Directors should be putting more association matters to a vote of the unit owners. It doesn’t seem fair that the Board of Directors can decide to eliminate a service or make other important decisions without the owners’ consent. How can we determine what decisions our board is authorized to make without consulting us?

A. As a rule, the Board of Directors of a community association has the authority to make decisions on the use of the common area, to set the assessments and to do all things necessary for the operations of the condominium. The Board oversees and has to approve all of these items unless the governing documents specify that the owners have to approve a particular action, such as the election of Directors, amending the bylaws or declaration and selling part of the common area. Generally, the scope of the board’s powers is fairly broad.

Board decisions are measured against a standard known as the “business judgment rule”. The Board must ask themselves this question: Is the decision one that a prudent businessperson, having gathered all the pertinent facts, would reasonably make under the circumstances? If the answer to that question is yes, generally the Board’s decision will withstand legal scrutiny. Continue Reading Board Authority