CAI-NJ March 2017

arbitrarily, or in bad faith. See Billig v. Buckingham Towers Condo. Ass’n I, Inc. , 287 N.J. Super. 551, 563 (App. Div. 1996). This fiduciary relationship requires the board to act in accordance with the Condominium Act and its own governing documents as well as for its actions be free of fraud, self-dealing, and unconscionability. In other words, all that the law demands is trustees act reasonably and in good faith using the degree of skill and care an ordinary person would exercise under similar circumstances. If a contested act of the association meets each of these tests, the courts will not interfere or substitute the court’s judgment for the judgment of the board. 2. APPLICATION OF THE BUSINESS JUDGMENT RULE New Jersey courts considering the application of the business judgment rule have concluded the scope of judicial review of condominium asso- ciation decisions is limited to a two- pronged test: (1) whether an asso- ciation’s action was authorized by statute or its own bylaws and, if so, (2) whether the action was fraudu- lent, self-dealing or unconscionable. Thanasoulis v. Winston Towers 200 Ass’n, 110 N.J. 650, 655 (1988). In Thanasoulis, the New Jersey Supreme Court considered wheth- er a rule adopted by the Board of Directors of a condominium associ- ation increasing the parking fee for tenants of nonresidents owners but not for those of resident owners constitut- ed a breach of the board’s fiduciary duty to the nonresident owners. In BUSINESS JUDGEMENT... from page 20.

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