Florida HOA, Condo, and Co-op Board Fiduciary Duties: What Association Boards and CAMs Need to Know
Fiduciary Duties
Most authority in a community association is exercised by its volunteer board of directors and officers. To help manage the substantial workload, community associations often engage community association management firms. These firms assist directors with day-to-day responsibilities, and directors frequently delegate duties to a community association manager (CAM).
To protect the rights and interests of members, Florida law imposes fiduciary duties on officers, directors, and certain committee members. A fiduciary duty is a legal obligation to act in the best interests of another party. In Florida community associations, these duties generally include:
Duty of care — To act with skill and diligence.
Duty of loyalty — To refrain from self-dealing.
Duty to act in good faith — To act fairly and with proper motives.
CAMs and CAM firms likewise owe similar fiduciary duties to their community association clients. Florida law deems CAMs and CAM firms to act as agents for their association clients. This principal-agent relationship carries fiduciary duties to act in the association’s best interests. These duties require CAMs and CAM firms to act loyally, skillfully, and diligently; deal honestly and fairly; act in good faith and with care and full disclosure; account for all funds; and refrain from charging unreasonable or excessive fees.
Failure to meet these obligations can expose directors, CAMs, and others to personal liability. However, recognizing that community association directors are unpaid volunteers, appellate case law has consistently held that, absent fraud, criminal activity, self-dealing, or a substantial betrayal of trust, directors will not be personally liable for decisions made in their capacity as directors.
The Business Judgment Rule
The actions and decisions of non-developer-appointed directors, officers, and committee members are usually evaluated under the “business judgment rule.” This legal principle generally applies when these individuals act:
Within the scope of their association’s authority; and
In a reasonable and good-faith manner.
The business judgment rule is a standard of judicial deference that creates a limited presumption of correctness. It reflects the view that directors are often better positioned than judges to understand the circumstances and make business decisions at the time those decisions are required.
However, the protections of the business judgment rule may not apply in cases involving:
Self-dealing;
Fraud or bad faith;
Conflicts of interest;
Criminal conduct; or
Actions outside the association’s legal authority (also known as ultra vires acts).
To help ensure that the business judgment rule applies, directors and CAMs should seek expert or professional opinions when needed. Following professional advice on complex issues further demonstrates that a director or CAM has met the duty of care. Directors are also entitled by law to rely on information, opinions, reports, and statements—including financial statements and other financial data—prepared or presented by professionals acting within their areas of expertise or professional competence.
Directors, CAMs, and CAM firms should also recuse themselves or their companies from decisions or transactions that could create conflicts of interest or self-interested transactions. In certain cases, a board may find it appropriate to establish a legal committee of independent directors to make decisions concerning legal actions involving other directors.
Indemnification
If a director or CAM faces legal action for an alleged breach of duty, indemnification by the association may be available. By law, a not-for-profit corporation must indemnify a present or former director or officer who is wholly successful in defending a proceeding brought against that individual because of their service as a director or officer. An association’s articles of incorporation or bylaws often expand these protections.
For CAM firms, the association’s management agreement may contain an indemnification clause providing similar—or greater—obligations for the association to indemnify the firm and its employees. A directors and officers liability insurance policy may also provide for the defense of a director or CAM facing legal action arising from actions taken on behalf of a community association.
About the Author
Alexander J. Menendez is a founding partner at Pope Mazzara & Menendez, PLLC. He represents condominium and homeowners associations throughout Southwest Florida and regularly advises boards and community managers on governance, compliance, and enforcement matters.
Last updated October 2026.
Disclaimer: This article is provided for general informational purposes only and is not intended as legal advice. Associations should consult legal counsel regarding their specific circumstances.
