Fiduciary Duty: What is it?

From time to time you may hear that the Board of an association operates in a fiduciary capacity for its homeowners. Or you may read about the Board’s fiduciary responsibility in the governing documents. Just exactly what does this mean?

Fiduciary duty simply means the Board has an ethical and legal obligation to make decisions in the best interests of the entire association. That’s a small explanation for a very big responsibility.

Fiduciary duty includes a duty of loyalty to the association, which means that Board members should never use their position to take advantage of the association. They should never make decisions for the association that benefit themselves at the expense of the association and its members.

Fiduciary duty also includes the duty to exercise ordinary care. This means Board members must perform their duties in good faith and in a manner they believe to be in the best interest of the association, with such care as an ordinary prudent person in a similar position under similar circumstances would use.

In short, boards must act in the best interests of the association and act reasonably.

Board members fulfill their fiduciary duty by:

• Developing and using a formal budgeting process
• Establishing and adhering to budgetary guidelines
• Making sure the budgeting process reflects the wishes of the association members
• Promoting understanding and acceptance of the reserve accounts among the members
• Collecting sufficient fees to adequately operate the association 
• Soliciting bids and negotiating appropriate contracts 
• Authorizing expenditures

Keep Warm, but Safe

December, January and February are the deadliest months for home fires, according to the National Fire Protection Association (NFPA). And, heating equipment is the second leading cause of home fires and home fire deaths. That’s why it’s important for you and your loved ones to take extra precautions during the winter.

Thinking of buying a space heater? The NFPA recommends (and our association insists) that you make sure it carries the mark of an independent testing laboratory. Install it according to the manufacturer’s instructions or have it professionally installed. If you have an electric-powered space heater, plug it into an outlet with sufficient capacity. Never use an extension cord. The association does not allow liquid-fueled space heaters.

Turn off space heaters whenever the room is unoccupied or when manufacturer’s instructions say they should be turned off. Portable space heaters are easy to knock over in the dark. Turn them off when you go to bed, or at least make sure they’re placed in lighted areas or out of high-traffic areas.

If you use a fireplace or wood stove, use only dry, seasoned wood to avoid the build-up of creosote, an oily deposit that easily catches fire and accounts for most chimney fires and the largest share of home-heating fires. Use only paper or kindling wood, not a flammable liquid, to start the fire. Do not use artificial logs in wood stoves.

Make sure your fireplace has a sturdy screen to prevent sparks from flying into the room. After the ashes are cool, dispose of them in a metal container, which is kept a safe distance from your home.

Make sure fuel-burning equipment is vented to the outside, that the venting is kept clear and unobstructed, and that the exit point is properly sealed around the vent. This is to make sure deadly carbon monoxide does not build up in the home

Other reminders from the National Fire Protection Association include:

• Don’t use your oven to heat your home.
• Inspect all heating equipment annually, and clean as necessary. 
• Test smoke alarms monthly; install a carbon monoxide alarm outside each sleeping area.

For more information, visit www.nfpa.org.