Q: I am seriously thinking of running for a position on the board of directors of my condominium. I have seen too many problems that I would like to attempt to correct, and feel that the only way is to become active in the leadership of the condominium. Is this a wise idea? Am I subjecting myself and my family to any liability?
A: Service on the condominum (or cooperative) board of directors is no picnic. It is a relatively thankless job, the hours -- for a dedicated board member -- are long and tedious, there is no pay, and you will rarely get anyone to even say thank you.
However, since you chose the condominium life style, I strongly recommend that you do run for a position on your board of directors.
Unfortunately, as this column has reported on numerous occasions, apathy sets in rapidly in condominium associations. Often, it is very difficult to get people to become involved on the various committees or on the board of directors. Yet, a condominium is a mini-democracy, and thus requires the full participation of everyone in order for that democracy to survive.
Here are some points to consider before you decide to serve on your board of directors.
First, read your condominium documents (the bylaws and declaration) very carefully. Is there an indemnification clause, whereby the members of the board of directors are held harmless by the unit owners for any action taken by the directors. Generally speaking, condominium documents should contain indemnification language, holding the member of the board of directors harmless for any action taken on behalf of the condominium--other than bad faith, wilful misconduct, or misappropriation of funds.
Read the language in your condominium documents carefully. You may also want to consult the condominium association attorney to determine the full extent of the indemnification clause.
A recent 1979 case from New York is quite instructive on the question of liability. In that case, certain unit owners sued the condominium association and the members of the board of directors individually seeking damages for certain activities. The appellate court of New York dismissed the action against the individual directors. The court, in addressing the question of the role of a member of a board of directors, stated that "this type of gratuitous quasi-public service should be encouraged by exhoneration from personal liability rather than be discouraged by the imposition of individual liability."
This concept should give you comfort, and I suspect that if lawsuits are filed against you individually as a director, the courts in the Washington metropolitan area will follow the New York view.
It is also suggested that you find out from your management company whether the current condominium insurance policy contains directors and officers coverage (the so-called D&O policy). Again, it is important to review the extent of the D&O coverage, and you should discuss this with the insurance agent for the condominium.
Needless to say, there are always risks when one serves on the condominium's board of directors. However, with D&O insurance coverage and with clear indemnification language in the condominium documents, you should be able to get comfort that you and your family's personal assets will not be put in jeopardy.
Benny L. Kass is a Washington attorney. Write him in care of The Washington Post, 1150 15th St. NW, Washington 20071,