By Marc A. Smiley / Published November 2021
Without a doubt, the tragic disaster of the collapse in Surfside, FL, has impacted condominium association boards of directors across the country. In addition to board members’ grief for the 98 victims who lost their lives and their loved ones, many condominium directors have also grown concerned over the news of numerous lawsuits against the association for the Champlain Towers South. They are wondering whether the association’s directors or their estates may now face legal consequences and liabilities, and if perhaps the lawsuits are an indicator that they themselves are potentially taking on serious liabilities with their voluntary board service.
In response to the misconceptions that are now circulating among board members and those who may be considering serving on associations’ boards, they should be aware that there are several reasons why they should not be so concerned about potential legal liabilities. On the contrary, the collapse of the tower should serve as a call to action for unit owners to become more involved and take on the responsibilities of becoming a director.
Board members are shielded from liability under a community’s directors and officers (D&O) insurance, which defends and protects them from lawsuits, in addition to the indemnification provisions of the articles of incorporation of their association and the Florida laws governing not-for-profit corporations.
Essentially, directors who act in a reasonable manner and seek the guidance of qualified professionals will be able to rest assured that their indemnity and insurance protections will shield them from liability, and any legal actions taken against them should be covered under their association’s D&O insurance.
These protections safeguard board members who are performing their duties from personal liability for monetary damages for any statement, vote, decision, or failure to act. They are indemnified from liability unless they engage in violations of criminal law, transactions with improper personal benefits, willful misconduct, recklessness, or acts or omissions which are committed in bad faith, with malicious purpose or in a manner exhibiting wanton and willful disregard for human rights, safety, or property.
Instead of becoming overly preoccupied with unwarranted concerns over legal liabilities, condominium association directors should focus on giving careful consideration to their buildings’ structural safety and financial health. As condominium boards begin reassessing their associations’ reserve commitments, they will need the guidance of dedicated directors who are willing to put in the time and effort to make difficult decisions and gain the approval of the unit owners for major repairs and structural remediations. All buildings deteriorate over time, so condominium boards of directors need to set aside funding on an ongoing basis to repair any structural elements that require attention.
In the absence of provisions to the contrary in associations’ governing documents, Florida law stipulates all condominium associations must have a president, secretary, and treasurer to perform the duties such officers typic-ally perform in corporations. Most condominium associations also include a vice president and another board member for a total of five, which is perhaps the most effective number of members for a well-functioning board.
The vital nature of effective board service for condominium associations was made horribly and tragically apparent by the Surfside collapse. Unit owners, especially those with special skills such as financial professionals who could serve as treasurers, should view it as a civic duty to serve on their community’s board of directors. They should ask themselves, would I feel more confident playing this vital role myself or leaving it in the hands of others to do it for me?
Marc A. Smiley
Partner, Siegfried Rivera
Marc A. Smiley is a partner with the South Florida law firm of Siegfried Rivera which focuses on community association law. He is based at the firm’s Coral Gables office and is a contributor to its association law blog, www.FloridaHOALawyerBlog.com. The firm also maintains offices in Broward and Palm Beach counties, and its attorneys focus on community association, construction, real estate, and insurance law. For more information, visit www.SiegfriedRivera.com, email MSmiley@SiegfriedRivera.com, or call (305) 442-3334.