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Deciding what to doLesson 17 of 20

Academy/Starting as a Board Member

What shouldn't a new board rush to change?

Learn the test that separates a defensible decision from one that creates real risk for you personally.

A decision your predecessors made after real investigation, in good faith, and within the board's authority is legally protected even if it looks wrong to you today. Don't reverse it until you understand why it was made. A rushed reversal made without that inquiry is what actually creates exposure, not the outcome itself.

01

The test that decides what's safe to touch

A board decision does not have to be right to be safe. It has to be made the right way. Courts consistently defer to a board's choice among reasonable options when the board investigated first, acted in good faith, and stayed within its authority. That protection is called the business judgment rule, and it is why a decision you disagree with is not automatically a decision you should undo.

"where a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority under relevant statutes, covenants and restrictions to select among means for discharging an obligation to maintain and repair a development's common areas, courts should defer to the board's authority and presumed expertise."

Source: Lamden v. La Jolla Shores Clubdominium Homeowners Assn., Supreme Court of California

This is a California Supreme Court holding. Other states apply their own version of the business judgment rule to community associations, and the exact contours differ, so confirm how your own state's courts treat board decisions before assuming this ruling applies directly to you.

02

Ask why before you vote to undo it

The instinct to fix things fast is normal. You were probably elected because something felt broken. But before you vote to reverse a vendor contract, a fee schedule, or a reserve study funding plan, find out why the prior board made that choice. Ask the departing directors, ask the property manager, or read the minutes from when the decision was made.

Florida's nonprofit corporation statute requires directors to act in good faith, with the care an ordinarily prudent person would use in a similar position, and in a manner they reasonably believe serves the association. Other states word their own nonprofit corporation statutes differently, so check what standard applies to your association.

A reversal made without that inquiry is the kind of decision that loses this protection. Not the outcome itself, the skipped investigation.

03

Thin minutes are normal, not a red flag

If a year of minutes reads like a list of motions and vote counts with no discussion, that is not evidence the prior board hid something. It is how minutes are supposed to work.

"Minutes are a record of what was done at a meeting, not a record of what was said."

Source: Robert's Rules of Order, Frequently Asked Questions, Robert's Rules Association

To understand why a decision was made, you'll need to ask the people who were in the room, not just read the record. Start with the departing directors, the property manager, or whoever chaired the meeting where the decision happened.

Check yourself

Answer before you read the explanation, recalling it is what makes it stick.

Six weeks in, a fellow director wants to vote tonight to cancel the landscaping contract because it "seems overpriced." What should happen first?

A new board wants to change the reserve funding amount at its first meeting, before anyone reviews the reserve study. Under the business judgment rule, what actually protects that decision from later challenge?

You're reading a year of prior board minutes and most entries are one line, such as "Motion to approve landscaping contract, passed 4 to 1." What does that tell you?

Sources

Related elsewhere in the Academy

Starting as a Board Member

Once you know what to leave alone, the next question is what you can safely act on right away. See What can you change immediately?

How strictly courts apply the business judgment rule, and the exact wording of the standard of conduct for directors, vary by state. Confirm which standard governs your association with its attorney.