Breach of Fiduciary Duty
A legal claim that a board member failed to fulfill their obligations of care, loyalty, or good faith to the association. Examples include misusing association funds, failing to maintain adequate insurance, ignoring professional advice, or engaging in self-dealing transactions. Board members found to have breached their fiduciary duty may be held personally liable for resulting damages.
Example in Context
A homeowner filed a breach of fiduciary duty claim after discovering that a board member had awarded a $200,000 painting contract to their own company without disclosing the conflict of interest.
Related Terms
Frequently Asked Questions
What constitutes breach of fiduciary duty by an HOA board member?
Breach of fiduciary duty occurs when a board member fails to act with care, loyalty, or good faith. Examples include misusing association funds, awarding contracts to friends or family without disclosure, ignoring professional advice, failing to maintain adequate insurance, or making decisions that serve personal interests rather than the community. Board members found in breach may be held personally liable for damages.