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By: Ali Sabzevari
The Georgia Property Owners’ Association Act and an HOA’s governing documents govern the creation and operation of a homeowners’ associations (“HOA”) and the duties of its board members.
A Board of Directors is typically responsible for managing all aspects of an HOA, but what some people may not understand is that board members have what are called “fiduciary duties” owed to the HOA members in the neighborhood. A fiduciary relationship may be created by law, contract, or the facts of a particular case. The board members are in an important position of trust, and therefore owe a fiduciary duty to the HOA.
Board members owe fiduciary duties to the homeowners who form the HOA, including a duty of good faith and duty of care, among others. A board member’s failure to adhere to its fiduciary duties could expose the HOA to legal suits and potential liability. Under Georgia law, “a claim for breach of fiduciary duty requires (1) the existence of a fiduciary relationship, (2) breach of that duty, and (3) damage proximately caused by the breach.”
Before volunteering to serve on a Board of Directors, one should consider the legal duties involved. Moreover, newly-formed and existing Boards need to fully understand and appreciate the governing documents and the duties imposed therein and under Georgia law, including fiduciary duties. These duties should be taken into consideration when making decisions that impact the HOA members. Dealing with these issues can be complex.
If you have any questions or would like more information, please contact A. Ali Sabzevari at [email protected].