What is the Business Judgment Rule?

This rule has been codified in Florida Statute §607.0830 and provides that an association Board must make decisions in good faith; with the care of an and in a manner that the Board reasonably believes to be in the best interest of the corporation. The reasonable and prudent person acts sensibly, does things without serious delay and takes proper precautions. The reasonable and prudent person conforms to the standards of behavior and responsibility among ordinary people in our society at the present time, he seldom allows his emotion to overbear his reason and his habits are moderate and equable.

How does the Business Judgment Rule apply to community associations?

A Board or Director that performs their duties in accordance with the Business Judgment Rule is NOT personally liable for the actions taken.

What does fiduciary mean?

Board members owe a fiduciary duty to the association and owners within the association to act in good faith and in the best interest of the association, with candor, loyalty, and care.

What is the duty of loyalty and care?

Board members also owe a duty of loyalty and care to the association and owners within the association. This duty requires the Board and individual Directors to act in the best interest of the association and not self-serving.

What is candor?

The duty to disclose all material facts about a transaction or vote.

How should a Board make decisions and generally behave toward the association and owners in order to comply with their duties, effectively run the community, and avoid personal liability?

  • Be reasonable and prudent
  • Be sensible
  • Be fair
  • Be honest and trustworthy
  • Keep confidences when appropriate
  • Do not act with self interest
  • Do what you belive is best for the Association
  • Prior to making a decision gather all the necessary facts and rely on experts and other impartial people to assist.