Living in a condominium offers a unique mix of community living and individual ownership. However, the smooth operation and harmony of this shared environment depends on the effective governance and management by the Board of Directors (usually called the Administrative Board). This article explores the main duties and responsibilities of the Administrative Board as the condominium’s administrator or managing body, shedding light on their main role in maintaining the community’s welfare, financial health, and legal compliance. Understanding these responsibilities not only helps residents appreciate the work behind the scenes but also helps creating a cooperative and engaged community.
The Board of Directors in a condominium act as its administrator and holds not only the obligations, responsibilities, and powers granted by law but also those expected of a responsible caretaker (buen padre de familia).
As a non-profit organization, the board aims for the overall benefit of the condominium. It must protect its assets and ensure its finances are in good health. In fulfilling these responsibilities, the board must exercise proper oversight over the organization’s operations and ensure the legal and ethical responsibility of its employees and volunteers.
The main legal responsibilities of Boards of Directors can be summarized in the “three Ds”:
- Duty of Care:Board members must actively participate in the condominium’s planning and decision-making processes, offering sensible and well-informed opinions for the community’s benefit.
- Duty of Loyalty:When acting on behalf of the organization, board members must prioritize the condominium’s interests over their own personal or professional interests to avoid any conflicts of interest.
- Duty of Obedience:Board members must ensure that all legal requirements and the HOA’s agreements are being met within the condominium.
In addition to these legal responsibilities, the board has a fiduciary duty regarding the condominium’s funds and must maintain strict financial control. Board members should evaluate the condominium’s financial policies, propose annual budgets for future approval, and periodically review financial reports to ensure the condominium has the necessary resources to fulfill its mission.
In Costa Rica, the Condominium Property Statute outlines the duties of the Condominium Administrator, particularly those related to maintaining and enforcing the Assembly of Condominium Owners’ decisions (the HOA). Depending on the specific situation, the Administrator must decide whether to resolve issues directly or escalate them to the HOA.
Article 30 of the Condominium Property Statute provides that the administration is responsible for: “the care and surveillance of common goods and services, the operation and maintenance of facilities and general services, all acts of administration and conservation of the condominium, and the execution of the agreements of the Assembly of Condominium Owners.”
Given the broad scope provided by the law, which includes “all acts of administration and conservation of the condominium and the execution of the agreements of the Assembly of Condominium Owners,” the Administrator must thoroughly analyze the day-to-day operations within the condominium. Some situations should be handled directly by the Administrator, supported by local personnel for routine tasks. However, there will be instances where the Administrator must refer matters to the HOA. These situations arise due to the complexity of the issue, or the measures required, necessitating the approval of the condominium owners.
How can the Administrator determine which situations to handle directly and which to bring to the HOA? Here, the experience and knowledge of the condominium legislation by the Board members and their legal advisors play a crucial role in avoiding potential conflicts with the condominium owners and ensuring that necessary actions are taken.
The Board of Directors can establish as many committees as it deems necessary for the condominium’s welfare, such as finance, construction or maintenance, and beautification committees. These committees often play a crucial role in integrating other condominium members into the community’s daily decision-making processes. While the committees’ decisions are merely advisory and not binding on the Board of Directors, they provide clarity on the wishes of the residents and serve as tools for better decision-making.
Lastly, it is essential to remember that the Administrator makes final decisions “for” and “on behalf of” the condominium and must assume the relevant responsibilities for their actions. For this reason, legally speaking, the Board of Directors is accountable not only for what it does but also for what it fails to do.
Guardia Montes & Asociados can guide you in making decisions, taking actions for the benefit of your community, and ensuring proper administration. Our advice will always aim for the condominium’s well-being, and we will support you in every step you take.
