CAI-NJ March 2022

BOARD MEMBERS... from page 33.

exercise due diligence and utilize appropriate resources in making key decisions for their community. Board members who refuse to consult profes- sionals such as property managers, attorneys, accountants and engineers in the face of difficult and sometimes

technical issues, instead simply “shoot- ing from the hip” with uninformed decisions, jeopardize the wellbeing of associations. While these boards are often motivated by the perceived, short-term cost savings of not hiring professionals, what results are knee- jerk decisions that often end up cost- ing the association more in the long run. 3. Act within boundaries of their authority as defined by law and the governing docu- ments of the association. Even though board members are not paid, they enjoy certain legal benefits so long as they act within the authority bestowed in the association’s governing documents. Most governing documents, along with the New Jersey Nonprofit Corporation Act, provide indemnifica- tion to individual board members in the event they are sued for a particular board action (or inaction). This means that the cost to hire legal counsel to defend the board and payment of any settlement or judgement is borne by the association. Associations typically purchase a directors & officers liability insurance policy to provide coverage for this obligation. However, board members may only be entitled to indem- nification if they act in accordance with the limits of their authority under the governing documents. Depending on the facts, boards risk losing indemnifi- cation for acts that are found to be ultra vires – meaning beyond a board’s legal authority. An example of an ultra vires action is if an association’s governing documents require a two-thirds vote on a particular issue but the board, for its own purposes, decided to use a simple CONT I NU E S ON PAGE 36

often work in unrelated industries and lack experience running multi-family communities. Therefore, the fiducia- ry duty requires board members to

tech touch value LEVERAGING TECHNOLOGY TO STREAMLINE COMMUNICATION, OPERATIONS AND REPORTING. CULTIVATING RELATIONSHIPS TO ENSURE HIGHLY SATISFIED ASSOCIATION RESIDENTS AND STAKEHOLDERS. PRESERVING AND ENHANCING VALUE THROUGH BEST-IN-CLASS SERVICES.

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Financial services Management services Communication services Construction & maintenance management Transition management services Emergency management Consulting Community Association Management

To learn more, visit IntegraMgtCorp.com or call Edward San George, MPA, PCAM at 973.770.1500 .

Corporate Office:

South Jersey Office:

364 North Main Street (Route 9), Suite 5 Manahawkin, NJ 08050 T (609) 660-0208

200 Valley Road, Suite 203 Mt. Arlington, NJ 07856 T (973) 770-1500

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