Community Trends - May 2025

The Fine Art of Leadership: Understanding Fiduciary Duties By Justine A. DelVecchio, Greenbaum, Rowe, Smith & Davis LLP actions taken by a board member should be free of fraud, unconscionability, dishonesty and/or self-dealing, and all board members must act reasonably and in good faith. In terms of the duty of good faith, a board member’s actions should always be to advance the interests of the associa tion as a whole and the member must fulfill their various duties without violating any applicable law. At all times, a board member must always remember the larger picture of the association and make decisions in the best interest of the entire association. The Duty of Loyalty Much like the duty of good faith, the duty of loyalty emphasizes that a board member must place loyalty to the association above any other interests. This means that a board member must place the needs of the association at large above their own personal interests, even if a decision made by the board would result in personal detriment to that board member. The duty of loyalty also includes disclos ing any actual or potential conflicts of interest that a board member may have when making decisions on behalf of the association. It is vital that any potential or actual conflicts of interest that arise are disclosed to the entire board at the earliest opportunity possible. By disclosing any kind of conflict of interest, the board can determine if a conflict does indeed exist and, if there is indeed a conflict, if the board member in question may need to recuse themselves completely from the discussions or simply abstain from the ultimate vote on the issue. The Duty of Care Regarding the duty of care, this duty requires board members to exercise the skill and care that a reasonable

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“At all times, a board member must always remember the larger picture of the association....”

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A t the center of all community associations are the board members chosen to maintain the integrity and governance of a community. These board members are entrusted with fiduciary duties, which extend far beyond the day-to-day administrative tasks within a com munity. Rather, board members must also review various doc uments and fact patterns while making decisions related to the financial and legal well-being of the community at large. The fiduciary duties that board members must keep in mind while making these decisions can be complex, but it is essen tial that board members apprise themselves of key fiduciary duties to ensure they are making the best decisions possible for their community. The key fiduciary duties include, but are not limited to, the duty of good faith, the duty of loyalty, the duty of care and the duty of confidentiality. The Duty of Good Faith In general, board members must act in accordance with their association’s governing documents and the New Jersey Condominium Act (N.J.S.A. 46:8B-1, et. seq.). All

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MAY 2025