Cohousing-L Mailing List: Re: Orienting to fiduciary duties

[lienjud [at] aol.com (lienjud]

  Hi Kathryn:
This Is Judith Lienhard from Cascadia Commons. I saw your post on the listserv 
today and am answering as best as I can. Cascadia is similarly structured with 
all owners being board members. We have 3 officers, chairperson-secretary and 
treasurer. Much is filtered through the coordinating committee and finance 
team. you are asking a good question! Just a few months ago, we introduced a 
document to our community that we are also using to orient newcomers. Donna, 
our chairperson, religiously reads the CAI forum and she copied a statement 
from another member, Jim Norman re fiduciary duties.  I will post it below in 
case you wish to use it. I see that Daybreak is a member of CAI as well and I 
think we can learn much from them. I just yesterday ordered the board members 
handbook to inform myself better about my responsibilities. Hoping this is 
helpful. Warm regards, 
Judith

Board Member Fiduciary Duties


At Cascadia Commons Cohousing all owners of units, or their designated 
representatives, are members of the board and have specific duties. 


3.14.2025 According to CAI's M-203 class on Community Leadership, a board 
member's fiduciary duty is bound to act within their authority, to exercise due 
care, and to act in good faith, taking into account the association's best 
interest.  Board members do not have individual power or authority, rather the 
decision-making ability rests with the full board.

Specific board duties:

• Protecting the association from liability through the purchase of insurance 
against both foreseeable and unforeseeable risk

• Maintaining the common areas

• Adequately funding a reserve for the repair and replacement of major 
components

• Promulgating reasonable rules and following fair and reasonable due process 
enforcement procedures

• Adopting policies to collect assessments

• Administering the affairs of the association

• Ensuring that a system of internal financial controls is in place

• Exercising fiscal responsibility (adopting an annual budget and independent 
audit)

• Review and understand periodic financials

First, Board members are expected to follow the Business Judgement Rule which 
states that if board members act in what they believe to be the best interest 
of the association -- in a thoughtful, deliberative, prudent manner, after 
reasonable inquiry -- then they're not liable, even if the decision turns out 
to have been a poor one.

Second, Board members have a Duty of Care when means that Board members are 
expected to act in accordance with both law and the association's governing 
documents; and to use the care and skill that a prudent person would use in 
similar circumstances.  Board members can rely on information, opinions, 
reports, and statements prepared by their committees, management company, legal 
counsel, and other advisors provided they use this input to act in good faith, 
with no knowledge that their actions are inappropriate.

Third, Board members have a Duty of Undivided Loyalty which is the most 
stringent duty the law imposes on board members.  As a fiduciary, a board 
member cannot in any sense be in conflict with the association; he or she must 
act for the sole good of the association at all times.  Board members should 
avoid conflicts of interest, which occur when board members permit 
self-interest to interfere with their duty to the association.

------------------------------
Jim Norman, CMCA, AMS, PCAM


Message: 3
Date: Thu, 25 Sep 2025 19:49:17 -0700
From: Kathryn Lowry <kathryn.lowry [at] daybreakcohousing.org>
To: Cohousing-L [at] cohousing.org
Subject: [C-L]_ How do cohousing communities orient boards to
    fiduciary duties?
Message-ID:
    <CANAzszp6qpb+JUYR+00dMO6cLWjuCoWSMJF9005+D6mV7f0J4Q [at] mail.gmail.com>
Content-Type: text/plain; charset="UTF-8"

Hello friends,

In our condominium-based cohousing community, every unit purchase comes
with a seat on the Association's board of directors. That means most of our
neighbors step into fiduciary responsibilities under state condo and
nonprofit law simply by virtue of ownership.

I'm curious how other communities structure this.
  Do all owners automatically serve as directors, or do you elect a
  smaller group to serve?
  -

  How do you ensure that directors are trained in their fiduciary duties
  of care, loyalty, and good faith?
  -

  Have you developed orientation materials, brought in outside trainers,
  or found other ways to build this knowledge?

I'd love to learn what's worked for your communities so that we can
strengthen both our governance practices and our shared life together.

Warmly,

Kathryn Lowry

Daybreak Cohousing, Portland OR


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