It’s called “sleep insurance” for a reason.
Directors and officers (D&O) liability insurance helps community association board members sleep well at night without worrying that their personal assets are at risk because of a decision or action – or inaction – they make on behalf of the association.
When board members find themselves faced with a conflict of interest, it can derail an entire association – that’s why it’s so important for board members to nip these types of problems in the bud before trouble begins.
According to court documents, the 700 S. Brentwood Condo Association is suing Shaw Credit Investments and Shaun Hayes, its director/registered agent, for breach of contract concerning a settlement the two made in November.
Authors: Community Associations Network National
Why do directors have a fiduciary duty?
A fiduciary duty arises out of a relationship in which one person or entity is entrusted to control the decisions or interests of another. For example, the common estate planning device of an inter vivos trust sometimes provides for a lending institution to be the trustee and to control the funds within the trust. In such a relationship, the lending institution would be a fiduciary and have fiduciary duties to the beneficiaries of the trust. Similarly, the board of directors of a homeowners’ association exercises control over the affairs of its membership, and based on this special relationship, the directors of the association owe a fiduciary duty to its members. Most jurisdictions have either enacted statutes or have specific case law on point which provides that directors of non-profit corporations are fiduciaries.