The law specifically provides that Board members have a fiduciary relationship with the owners and requires Board members to disclose conflicts of interest. However, the law does not specifically address acceptable (and unacceptable) behaviors for discharging these responsibilities. As such, a Code of Conduct for Board members is a good idea to have so that all Board members have a better understanding of their responsibilities as Board members and the limitations of their office.
A well-drafted Code of Conduct will address subjects such as:
- Participation in and attendance at Board meetings, including but not limited to, setting the agenda for meetings, debating issues, inviting guests, and decorum at meetings.
- Conduct outside of Board meetings, including, but not limited to, the use of electronic mail, and interaction with management, employees, and other agents of the Association.
- Duty of confidentiality, including but not limited to, sharing Association information with third parties, privileged and protected information, interaction with owners and residents, interactions with other board members, interactions with Association agents.
- Duty of good faith and fair dealing.
- Duty of loyalty to the Association.
- Recusal from access to information and participation in votes, when applicable, such as when a director and the Association are on opposing sides of an adversarial legal matter or potential legal matter.
The Code of Conduct would be approved at a Board meeting, and each Board member would be asked to sign an agreement to abide by same. However, a violation of the Code of Conduct is not a basis to remove a director, and there is no way to “force” a director to sign the Code of Conduct. (Directors may only be removed by recall or by operation of the statute, for example, when a director is convicted or a felony or becomes 90-days delinquent in the payment of a monetary obligation due to the Association).
Enforcement of the Code of Conduct would be by way of a “censure” or through other remedies permitted by law.
Any Code of Conduct should be drafted by the Association’s attorney, and if your Board thinks that a Code of Conduct would be helpful, you should reach out to the Association’s attorney for guidance.
