Beyond Fiduciary Responsibility
It is clear the board that according to statute the board has a fiduciary responsibility to an HOA LLC. You have also said it has an equal responsibility to the community ownership for its considerations and well being, so to spoeak, and that the board must weigh the two when making decisions.
Would you please comment with that statute number and a short synopsis of its intent in case I am mistaken in what I wrote above.
Many thanks.
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Cynthia
The duties of the board are not currently established in statute but are established in case law for Arizona since 2007. The case is Tierra Rancho HOA v. Kitchukuv. The fiduciary duty is to the members not the association. The court decision established the criteria the duty of all board members to their members. It established 4 primary responsibilities of the board to their members and one statement of the responsibility of the board to the association. I’ve worked for three years to codify these duties into law unsuccessfully but will continue to pursue this every year until successful.
Dennis
I’m reviewing the case you mention. I see there are two standards that the courts may apply. One is the business standard and the other the reasonableness standard. As far as I can tell this case also states that the majority of the courts attitudes cleave to the reasonableness standard;.
I see this but not specific language noting 4 obligations…
I think I’m missing something..?
“ We hold that, where a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority under relevant statutes, covenants and restrictions to select among means for discharging an obligation to maintain and repair a development’s common areas, courts should defer to the board’s authority and presumed expertise.”
Read on. What the court applies is the Standard from the Restatement of Law Property Servitudes. As it finds both the business judgement rule and the reasonableness standards inappropriate.
Dennis