Whose interests does a board have to consider when managing the affairs of the corporation?
Posted on November 04, 2009 at 11:39 AM
Whose interests does a board have to consider when managing the affairs of the corporation? Obviously owners, because much of the Condominium Act addresses protection for owners. "Owners" is most often a present-tense status in the Act. Future owners' interests are addressed in at least two areas. The Act specifies the declarant's obligations to future owners (e.g. disclosure obligations and turnover requirements) and the requirement for a reserve fund study plan to forecast for 30 years suggests that the legislature contemplated protecting the interests of those owners who will arrive far in the future.
But what about the relationship between future owners and the current board's decision making? Does the board have any obligation to consider the interests of future owners? Does that obligation require the board to balance the interests of future owners and current owners, for example when it comes to financial planning decisions. If so, who's interest can or should take priority?
Protecting Owners' Interests
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Name: Franz Hrazdira, January 04, 2010 at 01:01 AM
Good question. How about the function of the lawyer advising the board on such matters? If a board doesn't wish to determine the majority interest of owners, would a good lawyer not try to educate a board of their fiduciary obligation and assist the board in conducting a poll or in receiving a clear mandate in some form from the owners as to where the majority stands, before heading down a road based on unsubstantiated assumptions by the present board members?