Condo and co-op board members: Understanding your fiduciary duties made simple

Thinking about joining your condo or co-op board? Or maybe you recently joined the board. It's a big step that can really make a difference in your building. But before you jump in, it's important to understand what you're signing up for. Board members have a lot on their plate, from keeping the building in good shape to managing finances.

Even though you’re volunteering, the most effective board members are those that are really driven to do what’s best for the building and dedicate the time to make the best decisions. Here’s some tips to help you get started.‍

Understanding your fiduciary duties‍

As a condo or co-op board member, you’ll have three main fiduciary duties:

1. Duty of care: Before making any big decisions, you need to gather all the facts. For example, if you're choosing a new security system for the building, you'd need to research different options, get quotes, and understand how each system works. These tips on vendor selection can help you make smart, informed choices that benefit your building.
   
   
2. Duty to act within authority: Your role has limits, set by laws and your building's rules.. You need to follow proper procedures, like getting board approval and, sometimes, even owner votes.

3. Duty of loyalty: Board members should always put the building first. 

Financial responsibilities

Managing the building's finances is a critical aspect of board membership. This includes:

• Facilitating due collection: Set up simple ways for residents to pay their dues. This could mean offering online payment options or automatic bank transfers. The easier it is to pay, the more likely people are to do it on time.
  
  
• Maintaining accurate records: Good record-keeping is crucial. This means tracking every dollar that comes in and goes out. Consider using accounting software or hiring a professional to help keep everything organized and accurate.
  
  
• Budgeting and planning: When you're budgeting, think about both near-term needs and future projects. This might include regular maintenance like elevator servicing, as well as saving up for bigger projects like roof replacement. Effective annual planning and goal setting are crucial for board members.
  
  
• Building reserves: It's important to build up a reserve fund. This is your building's emergency savings account. It helps cover unexpected costs or big repairs without having to suddenly charge residents extra fees.
  
  
• Ensuring transparency: Regularly share financial updates with residents. This builds trust and helps everyone understand how their money is being used. Just remember to keep sensitive information private.

Tips for new board members

1. Observe and learn: Take time to understand existing processes before proposing changes.
2. Seek clarification: Don't hesitate to ask questions about things you don't understand.
3. Maintain open communication: Learn how to run efficient board meetings to facilitate better communication amongst the board. And make sure to keep owners and shareholders informed about board activities and decisions. 
4. Form a strong board: Work to build a positive and collaborative rapport among the board, if everyone is aligned you will be able to govern smoothly.
5. Consider professional support: Daisy can assist with day-to-day operations, financial planning, and leverage technology to streamline building management.
6. Stay informed: Keep up to date on relevant laws and best practices for building governance and management.

If you read this article you’re starting off on the right foot! For a deeper dive into responsibilities and tips for board member involvement, check out our toolkit for board members. Staying educated is the key to effective building management and making your building move forward and an amazing place to live.