CAI-NJ March 2022

A Look into the Legal and Practical Reasoning Behind the CAI Model Code of

for Community Association Board Members By Andrew J. Podolski, Esq. Stark & Stark Attorneys at Law

“Board members acting as fiduciaries will often make difficult and unpopular decisions that are still in the association’s best interest.”

T he Community Associations Institute is widely recog- nized as the preeminent trade organization for the community association industry. In addition to host- ing thousands of events and seminars worldwide among its 63 Chapters, CAI provides community association board members with extensive written resources to help effectively lead a community. Among the most important of these resources is the CAI Model Code of Ethics for Community Association Board Members (the “Ethics Code” or “Code”) 1 . Straightforward and concise, the CAI Ethics Code lists eight guidelines board members should follow. This article will review each of these guidelines and dis- cuss the legal and practical reasoning behind them. 2

The Code provides that board members should follow the following ethical guidelines:

1. Strive at all times to serve the best interests of the association as a whole regardless of their personal interests. This first guideline implicates the concept of fiduciary duty, which is perhaps the most fundamental principle board members must follow. A fiduciary is a person or group of people that have a duty to act on behalf of another group of people, putting the other group’s interests ahead of their own. Board members acting as fiduciaries will often make difficult and unpopular decisions that are still in the associ- ation’s best interest. An example of this would be a board

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1. Although each guideline is listed verbatim in this article, the Code can be found at: https://www.caionline.org/HomeownerLeaders/ResourcesforHomeownerLeaders/G2G_ModelCodeEthics.pdf

2. The CAI Ethics Code also includes a list of eleven things board members should not do. However, the legal and ethical principles supporting those eleven prohibitions are generally the same for the list of things board members should do. Therefore, for the sake of brevity and to avoid redundancy, this article will focus on the eight affirmative guidelines.

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