The key to having a well-functioning community and homeowner’s association is probably to know the regulations, the documents and rules (bylaws, etc.) and the law, but also to keep a well organized board. A key problem is that board of directors don’t communicate clearly and directly enough with their homeowners. As such, the homeowners are left questioning the management of their association, the allocation of their funds and the increasing costs of their community. By taking into consideration the following concepts and maintaining as much transparency and clarity with its members, board of directors may more easily diminish or protect themselves and the board as a whole from potential disputes.
The Board of Directors Owes a Fiduciary Duty to the Homeowner’s Association and the Homeowners of their Community
The Board of Director’s fiduciary duty requires the directors to use good business judgment and act in the best interest of the association. Using good business judgment means that the decisions taken by the board are financially sound, well analyzed and thought through. Furthermore, a decision taken by the association must be within the scope of the association’s authority and reasonable.
Specifically and in accordance with Florida statute 617.0830, “an officer, director, or agent shall discharge his or her duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner he or she reasonably believes to be in the interests of the association. An officer, director, or agent shall be liable for monetary damages as provided in statute 617.0834 if such officer, director, or agent breached or failed to perform his or her duties and the breach of, or failure to perform, his or her duties constitutes a violation of criminal law as provided in statute 617.0834;constitutes a transaction from which the officer or director derived an improper personal benefit, either directly or indirectly; or constitutes recklessness or an act or omission that was in bad faith, with malicious purpose, or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.”
Decisions taken where directors felt that the responsibility to act in the best interests of the corporation conflicted with personal or emotional needs, such as the basic human need for personal approval from one’s neighbors and friends, are usually considered improper and must be remedied.
The Board of Directors Must be Careful as to How they Allocate Funds so as not to Breach Fiduciary Duties
As explained above, the Directors’ obligations are towards the corporation as whole. Loyalty to the corporation means subordinating personal objectives and needs to the financial requirements of the association. It further means allocating association funds in the best interest of the association, especially when the economical situation already places the association in many thousands of dollars of debt from unpaid dues. The allocation of funds for unnecessary expenses violates the good business judgment rule and negates any implication that good faith was used. As a board, make sure you are applying association funds in necessary places and try to save money wherever possible.
The Board of Directors Should Make Sure There are No Conflicts of Interest 
While any attorney who represents a client has the ethical obligation of ensuring there are no conflicts of interest with his representation, whether personal or professional, the Board of Directors also has the obligation to make sure no such conflicts exists. The combination of representing the association with other interests in the community, especially financial interests, are unethical. In such a case, the Board of Directors should change the attorney representing the HOA.
Election Procedures and Board of Directors Meetings Must Follow Florida Statutes and the HOA’s Bylaws  
Most Bylaws state how the elections should take place. Additionally, Florida Law gives further guidance on how they must directed. An example is the secret ballot requirement where  the election of directors may be conducted by placing the ballot in an inner envelope with no identifying markings and mailing or delivering same to the association in an outer envelope bearing the name of the owner, the lot or parcel for which the vote is being cast, and the signature of the lot or parcel owner casting the ballot. The bylaws must be respected and any changes to the rules and procedures of the association must be voted on by a majority of the homeowners. Failure to do so may invalidate decisions that were taken and may also result in civil liability for the Board of Directors.
Additionally and in accordance with Section 720.303(2)(a) of the Florida Statutes, “all meetings of the board must be open to all members except for meetings between the board and its attorney with respect to proposed or pending litigation where the contents of the discussion would otherwise be governed by the attorney-client privilege.” This rule requiring open meetings further applies to “the meetings of any committee or other similar body when a final decision will be made regarding the expenditure of association funds. There often seems to be decisions made with regards to expenditure of association funds in closed meeting sessions or without informing homeowners. Such decisions are improper under Florida Law and under most association’s bylaws.
NOTICE:  This article is reproduced with permission.  Stephanie Padly is not associated with the Blog, members of the Blog, nor the homeowners' association.  Contact the author via this link: http://www.239lawyer.com/2012/04/naples-lawyer-board-of-directors-hoa/