Overview
When you buy a home in a California HOA, you’re putting trust in the people elected to run your community. These HOA board members are volunteers. But they’re not just volunteers. They are also fiduciaries, which means that the law holds them to the highest duty of trust and responsibility. In other words, HOA board members owe what’s called fiduciary duties to their HOAs and its members.
This Fact Sheet explains what fiduciary duty is, the specific duties HOA directors owe to their members, how bad HOAs from HELL betray that duty, and what you can do as a homeowner when directors put themselves first instead of the community.
For more information on this topic, listen to my HOA HELL podcast episode, “California HOAs: What is a Fiduciary Duty?“
Key Points
Here are the key rules, expectations, and remedies tied to fiduciary duty in California HOAs—from what it means, to how boards should uphold it, to what you can do if they don’t.
- What fiduciary duty means. At its core, fiduciary duty means acting for the benefit of others while putting aside personal interests. California courts confirm that HOA directors owe this duty to all members. Corporations Code 7231 defines and imposes these duties on corporate directors.
- Two core duties. HOA board members’ fiduciary duty includes:
- The duty of care. A fiduciary duty of care which requires HOA board members act diligently, in good faith, and to make informed decisions.
- The duty of loyalty. A fiduciary duty of loyalty requires HOA board members to put the HOA’s interests first, conserve and care for HOA funds, and avoid self-dealing and conflicts of interest.
- Duty of Care in practice. Directors must:
- Attend meetings, which means that they must participate in the governance of their HOAs.
- Review financials and contracts, which means that they must prepare for and then make reasonable decisions regarding the governance of finances of the HOA.
- Ask questions and rely on experts where appropriate, which means that they not only need to seek out appropriate expertise to guide them, but also to follow that advice when it’s given.
- Keep accurate records, which includes taking accurate minutes of all meetings and meticulously tracking all spending.
- Enforce rules, and do that consistently, which means that board members have to have a working knowledge of the governing documents that they’re supposed to be enforcing, and then apply those rules fairly across the board.
- Duty of Loyalty in practice. Directors must:
- Avoid self-dealing, which means that board members must avoid the appearance of impropriety and avoid siphoning benefits to themselves, their families, or their friends at the expense of other HOA members.
- Keep confidential information confidential, which means not divulging private information from executive session matters, attorney-client communications, and member discipline.
- Protect and preserve HOA assets.
- Continue to honor confidentiality even after leaving the board.
- Common breaches. Bad boards members often breach their fiduciary duties by:
- Ignoring reserve studies and professional advice.
- Selectively enforcing rules.
- Using HOA money for personal gain.
- Refusing to produce records under Civil Code 5200.
- Neglecting obvious maintenance or safety issues.
- What homeowners can do. If your board breaches fiduciary duty, you have tools:
- Hire an attorney with deep experience in HOA law (and the Davis-Stirling Act).
- Demand records (Civil Code 5200).
- Demand ADR if required (Civil Code 5930).
- Litigate if necessary. Claims for breach of fiduciary duty can be powerful when backed by evidence of abuse.
Fiduciary duty isn’t just legal jargon. It’s the standard that keeps HOA boards honest. When boards follow it, communities thrive. When they break it, homeowners pay the price.
FAQs
What is fiduciary duty in the context of a California HOA?
It’s the duty that HOA board members owe to their HOAs and their fellow members. It’s the highest legal duty of trust, loyalty, and care, requiring board members to act in the best interests of the HOA rather than themselves.
What are the two main fiduciary duties HOA directors owe?
The duty of care (diligence, informed decisions, consistent enforcement) and the duty of loyalty (putting the HOA first, avoiding conflicts of interest).
Can HOA board members use their position for personal gain?
No. That would violate the duty of loyalty. Self-dealing and conflicts of interest expose directors and the HOA to liability.
What are common examples of fiduciary breaches by HOA boards?
Ignoring reserve studies, selectively enforcing rules, steering contracts to friends or themselves, refusing to provide records, and neglecting safety or maintenance.
What can homeowners do if fiduciary duties are breached?
They can demand records under Civil Code 5200, hire an HOA attorney to seek ADR if required under Civil Code 5930, and ultimately sue if necessary.
Why should fiduciary duty matter to homeowners?
Because it directly impacts your property values, assessments, and quality of life. When directors breach their duties, homeowners often face higher costs and declining community standards.
What are some examples of fiduciary duties outside of the HOA context?
Lawyers, trustees, guardians, parents, babysitters, teachers, conservators, real estate agents, and financial advisors are other examples of people who owe fiduciary duties to others. Like HOA board members, they must act in the best interests of others and avoid conflicts.
About MBK Chapman Fact Sheets
Homeowners searching for answers online will often come across articles that appear authoritative, but are actually written as search-engine marketing content rather than by an experienced HOA lawyer. These pieces tend to prioritize keyword density over clarity, accuracy, or legal context, which often leaves homeowners more confused than informed.
At MBK Chapman, our Fact Sheets are part of our HOA Law Library and are written by Michael Kushner, an HOA lawyer with decades of hands-on experience representing California homeowners. In fact, Michael Kushner is the HOA lawyer who pioneered the systems and strategies used by some of California’s most successful homeowner-side HOA law firms.
Each Fact Sheet is deliberately concise, statute-based, and designed as a quick-reference guide to help homeowners understand key HOA laws and enforcement rules at a glance.
AND DON’T FORGET TO TUNE INTO MY PODCAST, HOA HELL
YOU CAN ALSO ORDER MY GROUNDBREAKING BOOK
HOA HELL | California Homeowners’ Definitive Guide to Beating Bad HOAs
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