I am always amazed at the willingness of some unit owners to run for a board of directors. I am even more impressed when they choose to do it for a second, third, or fourth time. Being a director is not easy. Undoubtedly, a faction of the association will disagree with the board and will make their opinions known. Sometimes this leads to contentious situations that can drive a wedge between friends and neighbors.

One common concern that comes up in conversations with directors is the fear that they could be personally liable if a board decision has an unintended negative effect. All boards have (or should have) Errors and Omissions Insurance, but if things go wrong and a director is sued personally for an action, the litigation and an adverse judgment can be time consuming and financially problematic.

Luckily for directors and associations alike, Florida law strictly limits the situations in which a director can be held personally liable for actions taken in furtherance of their position on the board. The longstanding precedent discussed in Munder v. Circle One Condominium, Inc., 596 So.2d 144 (Fla. 4th DCA 1992), provides that directors are immune from individual liability unless a crime or fraud has been committed or there has been self-dealing or unjust enrichment. Thus, negligent actions are not individually actionable, even if such actions are clearly wrong.

This rule has been applied in numerous situations. Personal actions for failing to correct construction defects, failing to provide workers compensation insurance, and failing to properly administer insurance proceeds have all been rejected by various courts.

While boards of directors have a fiduciary duty to the association, mistakes will happen. Luckily, the law protects the individuals involved in most situations and unit owners can run for office without fear of personal liability. All boards should check their Errors and Omissions policies and ensure that it is effective and adequate to cover any situation that may arise. Boards should also ensure that they have coverage to defend any individuals who may be wrongly sued for actions taken in furtherance of their positions.