02/01/2022

When Joining a Board, Do Your Homework

Otherwise, you may risk paying a price

When the Florida Surfside condominiums collapsed, people started scrambling. Families searched for loved ones, insurance companies started paying the maximum limits available, HOA board members pointed fingers at inspectors, and the inspector disappeared. Experts are still evaluating what caused the collapse that killed 98 people, and the trial is to begin in March 2023.

As the uncertainty swirls around this event, one thing is very clear: HOA members should be concerned. Recently, a jury in Florida awarded homeowners a $34.8 million verdict against their HOA for improperly collecting fees. If the Surfside HOA board does not have an adequate liability policy in place, the board members might be held personally liable. They could be forced to pay an attorney out of pocket for any legal proceedings related to their potential responsibility or involvement in the disaster.

Prior to joining a board, consider the legal and fiduciary responsibilities, as well as liability and financial implications to your personal assets. Nonprofits can be sued by a host of complainants, including management, current and former staff, third-party vendors, beneficiaries, donors, and other board members. Without adequate directors and officers (D&O) insurance, the nonprofit’s assets and the personal assets of the directors and officers are potentially at risk.

Please select this link to read the complete article from USI.