Taylor Legal Blog

Lessons From the Florida Condo Collapse

Posted by Andrea LeWinter, Of Counsel, Property Law ProOct 24, 20210 Comments

The causes of the tragic collapse of the Champlain Towers South in Surfside, FL will likely not be known for many months. However, one factor that has come to the fore is the role that the Condominium Association Board (“COA”) may have played in delaying or failing to understand the urgent need for building repairs.

COA Boards and their counterparts, Homeowners Association Boards (“HOAs”), are typically elected lay individuals selected amongst the owners of units or homes within a defined residential community. Board members perform fundamental community services: they ensure that their communities comply with existing land use and community rules, and they fulfill the standard obligation of most owners' mortgagers (Deeds of Trust) to maintain an active COA/HOA.

COA and HOA Board candidates may campaign and promote positions and community goals, but no specific background or credentials are typically required for service. Thus, unless a community is lucky enough to have an architect, engineer, or other similar professional volunteer to serve, Boards rarely have immediate access to construction expertise, and this is lack of access is likely true in other areas relevant to community management, like disaster preparedness, health, etc.

Regardless, by assuming a COA or HOA Board position, an individual accepts a significant and critical fiduciary duty. Fiduciary means exercising a high standard of care in managing the assets of others – a fiduciary owes a duty of good faith, trust, confidence, and candor to those they serve.

And COA/HOA service and fulfilling the duty of fiduciary care does present real challenges. Board members may be required to make decisions in multiple arenas in which they have no direct experience, and limited COA/HOA finances often hamper officers' ability to access expertise. Additionally, Board members are volunteers juggling their own professional and familial obligations, potentially limiting the time they can devote to Board responsibilities. Most Boards do obtain Directors and Officers (“D&O”) insurance to protect themselves individually from claims that they have violated their fiduciary obligations, and it is always wise for a Board to do so.

Still, no Board member wants to oversee a harmful situation in their community or access their insurance protections. One thoughtful approach is to ensure that the COA/HOA Board has retained legal counsel with knowledge of COA/HOA law so that Board members can regularly receive feedback on how they are managing their responsibilities; be alerted when outside expertise should be consulted; and, have access to immediate advice should they learn of any concerning information.