Director Limitations

DIRECTOR LIMITATIONS

Vendors. The role of the Board is to oversee operations and set policy. Directors do not have the right to individually contact vendors or give vendors instructions. Allowing multiple directors to interact with vendors will result in higher costs to the association, conflicting instructions to vendors and potential loss of vendors. It also creates the potential for ultra vires acts by directors.

The proper procedure is to direct matters through the board president to the association's vendors or through its managing agent to vendors. Directors who violate these procedures and disrupt operations may be censured by the board and may be subject to personal liability for their acts.

Personnel. Directors are similarly restricted in their ability to interact with employees. Individual directors do not have the right to direct or discipline employees. That function is reserved to the board as a whole or delegated to the board president, manager or a managing agent. To allow individual directors to take such actions is to invite potential liability via Labor Code violations, harassment issues, and wrongful termination actions.

Records. Directors have a right to review books and records of the Association but that right is limited. Individual directors' access to owner's records should be limited out of respect for the owner's privacy. Even though Corporations Code §8334 gives directors the absolute right to inspect all records, that right was modified by the courts. In Chantiles v. Lake Forest II, (1995) 37 Cal.App.4th 914, Chantiles ran for the Board and won but thought his friend should have won as well. He wanted to inspect the ballots and proxies to see how people voted. The Board refused and he sued. The Court of Appeal imposed a balancing testrights of privacy vs. the right of a director to inspect records.

However, the entire board could review an owner's file in relation to a pending disciplinary action, maintenance issue, etc. If a director misuses the records, that director could be censured and could be personally liable for his or her actions.

Updated by ADAMS KESSLER 5/7/2008