October 6, 2006
CONDOMINIUMS AND CODE OF ETHICS
By: Christopher Reinhart, Senior Attorney
You asked whether the statutes contain a code of ethics for members of a condominium association's board of directors.
The law does not include a code of ethics for condominium association directors or officers. But officers and members of the executive board must, when performing their duties, exercise the degree of care and loyalty of corporate officers or directors of non-profit corporations (CGS § 47-245(a)). An association could include additional ethical guidelines in its declaration or by-laws when defining the qualifications, powers, or duties of board members or officers.
In addition, a new law requires a condominium association's executive board, or an officer it designates, to encourage association and board members and managing agents or people providing association management services, to attend, when available, a basic education program concerning the (1) purpose and operation of common interest communities and associations and (2) rights and responsibilities of unit owners, associations, and executive board officers and members. The executive board, or a designated officer, can arrange to have a private entity conduct the program at a time and place convenient to a majority of association members. All or part of any program fee can be designated a common expense and be paid from association funds in a manner the board determines and the association approves as long as the bylaws and the Common Interest Ownership Act do not prohibit it (PA 06-23).
NON-PROFIT DIRECTORS AND OFFICERS
Generally, a non-profit corporate director or officer with discretionary authority must discharge his duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the person reasonably believes to be in the corporation's best interests. A director or officer can rely on information, opinions, reports, or statements, including financial statements and data, if it is prepared or presented by (1) a corporate officer or employee whom he reasonably believes is reliable and competent in the matter or (2) legal counsel, public accountants, or others as to matters he reasonably believes are within the person's professional or expert competence. In addition, a director can rely on a board committee of which he is not a member if he reasonably believes the committee merits confidence.
A non-profit director or officer is not acting in good faith if he has knowledge about the matter in question that makes reliance unwarranted. A director or officer is not liable for any action taken or any failure to act if he performed his duties in compliance with these provisions (CGS §§ 33-1104 and 33-1111).
Other provisions of the statutes on non-profit corporations could also apply govern specific activities by directors or officers (see chapter 602 of the general statutes).