Developers Breach of Fiduciary Duty
When the developer of a common interest development serves on the board of a homeowner association, or otherwise controls the board, the developer owes a fiduciary duty to the association and its members. This means the developer must:
The failure of the developer, acting as a board member, to place the interests of the association and its members above his own interests can lead to a legal claim by the association or its members for monetary damages, including punitive damages.
Developers sometimes breach in their fiduciary duty to the association and its members by signing contracts on behalf of the association with management companies and other service providers with which the developer has a special relationship. New board members taking over from a developer controlled board should investigate all existing contractual relationships to make certain they are arms
- length agreements.
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