IN SUMMARY:
I found this article interesting due to its relevance to the Virginia, Maryland, Washington, D.C. region as well as the relatively high volume of condominiums in the area. The article focuses on a legal term, the “business judgment rule”, which is designed to protect board members of a condo association or HOA. If said board member were to make an error, they are considered to be personally liable for any damages resulting from that error. The individual presiding over a case involving “business judgment rule” would evaluate two factors to determine if the appropriate prerequisites were met to bring legal action.
Those factors are (1) whether or not the actions taken by the HOA are allowed by statute and/or the association’s bylaws; and (2) whether or not the act was fraudulent, for personal gain, and/or a misappropriation of the association’s funds. Basically, the courts want these bodies to be able to govern without fear of judiciary interference; therefore, they set out to provide a set of tests that can be used to determine whether or not the actions taken by said HOA or board member were for the benefit of their constituents. With the “business judgment rule” in place, these bodies can govern without worrying about losing personal assets, etc.
The article can be accessed here
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