Condominium Association Director Liability

Being a director of a condominium association can be a thankless job. First, as a director of the association, you are an unpaid volunteer and the Association itself is a not-for-profit corporation. Nonetheless, under Florida Statutes Section 718.111(1), the “officers and directors of the association have a fiduciary relationship to the unit owners.” Accordingly, an officer or director may be liable to association members in certain situations where he or she has breached her fiduciary duty.

This fiduciary relationship requires the board member to act in good faith and in the best interests of the unit owners. Board members must act within the scope of their authority and must exercise due care and diligence when acting for the community. Board members may not use their position for personal gain. Nonetheless, in order to protect individual directors from liability for negligent management, the rule in Florida as regards liability of association directors and board members was articulated in Sonny Boy, L.L.C. v. Asnani, 879 So.2d 25 (Fla. 5^th DCA 2004). The rule is that absent actual wrongdoing in the form of fraud, self-dealing or unjust enrichment, directors and officers are not liable for corporate acts simply by reason of their official relationship to the Association. See also Perlow v. Goldberg, 700 So.2d 148 (Fla. 3d DCA 1997)(finding directors of condominium associations not individually liable for actions and governance of condominium association); Taylor v. Wellington Station Condominium Association, 633 So.2d 43 (Fla. 5^th DCA 1994)(finding that in general, corporate directors and officers cannot be personally liable for corporate acts absent actual wrongdoing in the form of  fraud, self-dealing or unjust enrichment to trigger individual liability); Munder v. Circle One Condominium, Inc., 596 So.2d 144 (Fla. 4^th DCA 1992)(reversing lower court’s finding of individual liability by condominium developer). Thus, it is well settled in Florida that negligent conduct is not enough by itself to trigger liability on the part of an individual director.  Negligent acts or omissions, even where the conduct was clearly wrong, will not give rise to individual liability on the part of a condominium director.

Boards controlled by developers may have to follow a higher standard in terms of their fiduciary relationship. Florida Statute Section 718.303(1)(c) provides a cause of action against directors “designated by the developer for actions taken by them prior to the time control of the association is assumed by unit owners other than the developer.” Florida Statutes Section 718.111(11)(a) requires a developer controlled association to obtain and maintain adequate insurance, and its failure to do so constitutes a breach of fiduciary duty by the developer-appointed board members. Further, in B&J Holding Corp. v. Weiss, 353 So.2d 141 (Fla. 3d DCA 1978), directors appointed by the developer were held personally liable for failure to pay maintenance assessments on unsold units as required by statute. The foregoing illustrates that directors appointed by the developers may be held to a higher standard of personal liability than directors appointed by unit owners.