Condo association board handles policy-making

MAILBAG

January 10, 1999

Dear Mr. Azrael:

I am becoming a board member in a condominium association and I would like to know what my responsibilities [are] and what should I look for as far as putting myself into a legal bind if there should be one?

I need to know the things I need to do to protect myself.

Joseph Stevenson

Woodlawn

Dear Mr. Stevenson:

The affairs of a condominium are managed by a council of unit owners. In larger condominiums, the council usually is incorporated. A board of directors is elected to handle the policy-making decisions for the condominium.

For example, the board of directors may recommend rules and regulations for the condominium, prepare or approve budgets for revenues and expenses, recommend or approve assessments for common expenses from the unit owners, approve contracts and act on other matters relating the operation of the condominium. Sometimes the board will delegate the day-to-day operational duties to a management company.

One of the express powers of a council of unit owners is to provide for and maintain liability insurance for officers, directors, any managing agent or other employee charged with the operation or maintenance of the condominium. So, if you are going to join the board of directors of your condominium association, you should inquire if there is "directors' liability" insurance in force.

In the event of any claim against the board of directors or you personally arising out of the operation of the condominium, the insurance would provide a defense and indemnify you for any claim that is covered by the policy.

In addition to insurance, Maryland law limits liability of condominium officers and directors for certain claims.

The law provides that a person who sustains injury as a result of the wrongful act of an officer or director of a condominium while the officer or director is acting within the scope of his/her duties must bring an action against the council of unit owners.

The law states that a director or officer may not be held liable for injuries sustained by anyone if the director or officer acted within the scope of his/her duties, acted in good faith and did not act in a reckless or grossly negligent manner.

The purpose of the law limiting liability is to encourage people to serve on condominium boards and to take active roles in the affairs of the association. The board of directors, however, must follow the provisions of its own charter and bylaws in administering the affairs of the condominium.

They cannot act arbitrarily or discriminate against a unit owner.

An aggrieved unit owner could file a suit which alleges that directors or officers acted in bad faith or were grossly negligent. Insurance is still an important protection against such claims.

As long as the council of unit owners (condominium association) has an insurance policy that covers officers' and directors' liability, you should have no hesitation about serving on the board of directors.

Questions?

Real estate questions are answered by Jonathan A. Azrael of Azrael, Gann and Franz of Towson.

Questions -- including name, address and daytime telephone number -- may be sent in the following ways:

Mailing address: Real Estate Mailbag, Fifth Floor, 501 N. Calvert St., Baltimore, Md. 21278-0001. Fax: 410-783-2517. E-mail: real.estate@baltsun.com

Call our Sundial audio-response number, 410-783-1800. Enter code 6170 after the greeting.

Pub Date: 1/10/99

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