What Board Members Need To Know...

Board Members Held to Higher Standard; Otherwise Personal Liability

Some board members think that they are immune to personal liability. Some do not think at all.  They take the job of board member and do not realize that they are now held to a fiduciary duty to their organization’s members and if they breach that duty, they are exposed to personal liability.  That means their own individual bank accounts.

Although their organization may agree deep within their organization’s governing documents to cover them (it’s called indemnification), try forcing that one upon your organization and its members.  You’ll first have to defend yourself which means likely hiring an expensive lawyer.  There may or may not be insurance.  You need to be proactive as a board member and know your exposure.  It is real.

Board members in Washington state found out in Waltz v. Tanager Estates Homeowner’s Association.  The Court decided that board members who  fail to act in good faith with the care that an ordinary, reasonably prudent person would act, may be held personally liable for their actions. That means possibly open your bank accounts.  As the Court put it,  if the board President and the other members of the board failed to act in good faith with the care of an “ordinarily prudent person,” they could be personally liable to the plaintiff Waltzes. Wow.

Leave a Reply

Your email address will not be published. Required fields are marked *