Many of the board’s responsibilities involve conducting the business of the association—selecting contractors, working with a professional manager, deciding when repairs are needed and managing assets. The law doesn’t expect boards to know everything. So the business judgment rule suggests boards ask qualified and knowledgeable experts in the appropriate field when specialized information is needed to make a decision.

The business judgment rule offers directors some protection from liability. For instance, the board’s decision-making authority, which is defined in the governing documents, is protected. But the board is required to consider all reasonable alternatives when making decisions, and, if needed, to consult with experts. As long as directors exercise the same degree of care and skill as an ordinary, prudent person in a similar situation, they will be protected. Courts will not second guess a board decision unless the board acted unreasonably or irresponsibly.

Board authority allows directors to delegate some functions. Although boards are often eager to accept volunteer help, they must delegate carefully. Delegating too much and supervising too little may result in liability. Though the tasks may be assigned, responsibility cannot be transferred. The board cannot excuse other volunteers’ mistakes simply by claiming it did not know what was happening. The business judgment rule requires the board to exercise due care and diligence.

Board members will not be held liable for honest mistakes—if the directors follow proper association rules and procedure. But if directors use their position to further personal interests, courts will closely scrutinize their actions. Such a breach may result in personal liability for the director. The board must consider the welfare of the association above all other interests.