According to Webster Dictionary, Fiduciary Duty is “the legal duty of a fiduciary to act in the best interest of the beneficiary.” Yeah, OK. That’s well enough. In the context of your role as a Board member, however, we can dig a little deeper.
As a governing body, the Board of Directors has three primary functions:
- A policy making body (creating Rules)
- An approval body (approving a budget, managing architectural controls or contracting services)
- An oversight body (reviewing financials or evaluating vendor services)
- Duty of Care – making reasonable and informed decisions; regularly attending and participating in Board meetings; exercising independent judgement; relying on experts, but still exercising good business judgement; and acting in the best interest of the Association as a whole.
- Duty of Loyalty – putting aside all personal interests; eliminating conflicts of interests; and exercising power in good faith to benefit the best interests of the community.