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Sharper Management

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A Lesson in the Business Judgement Rule

There are two key legal terms that are often times thrown around but seldom understood in regard to serving on the Board of Directors: responsibilities and protections. As to the former (responsibilities), it is important to understand the concept of Fiduciary Duty. In short and very simplistically, it is the premise that Board members are acting for the benefit of all and for the association – and not for one’s self-interests. For a more in depth exploration of this concept, see the article from last fall: https://sharpermanagement.com/2018/10/fiduciary-duty/. As to latter (protections), if the Board is, indeed, acting for the benefit of all and exercising their “duty of care” and “duty of loyalty,” then they are typically protected from lawsuits under the umbrella known as the “Business Judgement Rule.” This premise means that actions taken by the Board, if within their powers, must reflect a reasonable and honest exercise of judgment. Given that Board members cannot always ensure success in whatever the initiative may be, the business judgment rule specifies that the court will not review the business decisions of directors who performed their duties (1) in good faith; (2) with the care that an ordinarily prudent person in a like position would exercise under similar circumstances; and (3) in a manner the directors reasonably believe to be in the best interests of the corporation. The Cornell Law School has a rather concise overview here:  https://www.law.cornell.edu/wex/business_judgment_rule. Good Faith – has been covered a number of times. Acting in the best interest of the collective. With Care – this is the one that is fairly subjective and where a Board is susceptible to claims of negligence or ill-intent. Boards must always use their resources, illustrating careful thought and having researched information as contributing factors to a decision. Some examples illustrating this would include: reviewing a Management Report prior to a meeting; asking for an attorney to review a detailed or complex contract/agreement prior to executing; utilizing an engineer for an in-depth study of a complex structural problem and gathering formal recommendations; engaging with an accountant to do an annual audit of the financials; speaking directly to an insurance agent before binding coverage. Engaging with experts and showing due diligence is always a good way to prove “duty of care” was taken Best Interest – if meeting minutes reflect these steps were taken, and if the discussion and decisions happened in a recognized open meeting of the Board, the Board is acting in a reasonable manner and in the best interest of the association. As volunteers of a non-profit corporation, it is sometimes hard to recognize and accept there is a significant amount of liability put on the Board. If Fiduciary Duty is understood and followed, and Directors & Officers insurance is put in place, the Board should be comforted in the protections afforded under the Business Judgement Rule doctrine.

Sharper Management Expands Condominium Management Contracts in St. Paul, MN

April 23, 2019 — Sharper Management, a locally-owned, mid-sized property management company located in Eden Prairie, MN has recently been brought on board to manage the Hague Commons Condominium Association in St. Paul, MN. Sharper Management’s ability to customize financial-only management contract was one of the key factors in the associations decision to bring Sharper on board. Known for their professionalism and transparency, Sharper Management manages several other HOAs in the area including Dakota on the Park in the Lowertown area of DT St. Paul. “We’re excited about our growing presence in St. Paul,” states Dan Cunningham, Partner and Managing Broker. “Our clients truly appreciate our ability to tailor services to their specific needs. This flexibility along with the exceptional and reliable property management services we offer is continuing to be a deciding factor in many local association’s choice to hire Sharper. We’re happy to grow with our clients and help board members throughout the area.” Known for their reliable and committed approach to services for condominium and townhome associations in Minnesota, Sharper Management specializes in providing exceptional property management solutions. Offering a full-suite of premier services to the Minneapolis-St. Paul seven-county area, Sharper Management continues to expand their service area and look forward to building more new relationships throughout the Twin Cities.

How Associations Work – Sharper Management’s Role

While the elected board of a CIC, or Common Interest Community, operates on behalf of preserving their community, they will most likely hire a management company to aid them in the day-to-day duties. The management company will act under the board’s orders and takes direction from them on how to manage the association under their specific regulations. In some cases, the management company will also assist with the budget process, prepare board meetings, and serve as a consultant in the event of issues in the association’s community. Essentially, management companies are there to make it easier for the board to uphold their community’s standards and investment in their homes. Our role as a management company to many association communities includes helping the board in their administrative, maintenance, and communication duties. Our high-quality service revolves around a culture of communication, teamwork, and growth; we show this through our typical services, which we further outline on our website. In general, our team helps the board manage the maintenance of the community, staffing a 24-hour emergency phone line and help facilitating emergency services, providing and maintaining a web portal that all homeowner and board members can utilize, taking care of all aspects of the financial management of the association, help facilitating various needs or questions from homeowners within the association, and so much more.   Our services may differ slightly by type of CIC we are managing, but we follow our overarching values as a locally-owned company dedicated to supporting our partnered associations. We help protect each association member’s investment in a home by preserving the property and streamlining communication between unit owners and the board, the most important relationship in a Common Interest Community. We are proud to be managing the properties you call home, and look forward to continuing to support all members of the association.