An issue that has come up quite often as of late is that of a board wanting to help its individual community members while still maintaining its fiduciary obligations to the association. Perhaps there is an owner who is struggling to afford assessments, perform upkeep on the property, or can’t afford a major repair to the unit, and the Board wants to step in to assist in whatever fashion it can. This can include, but not be limited to, attempting to waive assessments, holding off on sending enforcement notices, or paying for a repair that is not the association’s obligation to perform.
The risk taken by boards in the above scenarios is they may be violating their governing documents or Colorado law and exposing themselves and their associations to liability. As the saying goes, “no good deed goes unpunished”.
For example, if an association does not have a maintenance obligation for a particular component, but chooses to repair it nonetheless, in order to help an owner, such use of association funds constitutes not only a violation of the declaration, but also may constitute a breach of the board’s fiduciary obligation to properly manage association funds.
Furthermore, treating some owners differently than other owners oftentimes constitutes selective enforcement, which is also prohibited by law. All owners must be treated in the same manner.
If a board waives assessments for one owner but not others who are similarly situated, such board may face liability exposure for failing to uniformly enforce its covenants and the requirement for owners to pay their assessments.
Similarly, if an association pays for repairs it has no obligation or right to make, it is spending money without authority and arguably breaching its fiduciary duty to properly manage funds of the association. Remember, association funds are actually the owners’ funds and the association is ultimately responsible for ensuring the money gets spent in accordance with what the declaration allows and mandates.
So, what’s the solution? Well, sometimes the answer is “we just can’t.” However, below are other options that may be available to help your community:
- Amend your governing documents and policies if those documents and policies no longer represent who you are as a community. If the association wants to shift responsibility of maintenance or repair, then contact your attorney to see if an amendment to your declaration is feasible.
- Act within the authority of your governing documents and Colorado law. If the board is not authorized to take action by its governing documents or Colorado law, then don’t do it.
- Be kind. We’re all fighting some kind of battle and sometimes we just need to know we’ve been heard, even if the answer we receive isn’t what we hoped it would be.
Should you have any additional questions about board duties please do not hesitate to contact an Altitude attorney at (303) 432-9999 or at [email protected].