What is the liability if a homeowner association board makes a purchase over the amount that has been set in the covenants/bylaws? What is the liability of a homeowner association board if they take
The Board of Directors has a fiduciary duty to the Association. As part of this duty, Directors must perform their obligations in accordance with the authority granted to them by statute and in their governing documents. If the Directors are making purchases and using Common Areas in a manner which exceeds the authority granted to them by your Association’s governing documents, then the Board may be breaching this duty.
In addition, Directors are obligated to be loyal to the Association and its members, which means they must act only for the Association’s benefit and with an eye to its best interests as a whole. When transactions have been challenged, Courts have taken this duty very seriously and often place the burden on the Directors(s) to demonstrate the fairness of any transaction in which the Director is personally involved. The basic legal principle to be observed is that the Director(s) shall not use his or her Association position for individual personal advantage.
