Most condo board members are volunteers. They join to keep the building in good shape, not to take on legal obligations. But under Illinois law, the moment you take a board seat, you take on a serious duty.
Section 18.4 of the Illinois Condominium Property Act says that officers and board members — whether appointed by the developer or elected by owners — "shall exercise the care required of a fiduciary of the unit owners."
Here's what that means in practice, what it looks like when boards get it right and wrong, and how board members protect themselves.
What a fiduciary duty is
A fiduciary is someone trusted to act for someone else's benefit. For condo boards, courts generally describe it in terms of a few core obligations:
Loyalty. Put the association's interests ahead of your own. Don't use your position for personal gain.
Care. Make informed decisions. Read the materials, ask questions, get professional advice when needed.
Obedience. Follow the Act, the declaration, the bylaws and the association's rules — even when a shortcut seems easier.
Good faith. Act honestly and for a proper purpose.
Being a fiduciary doesn't mean being perfect. Boards make judgment calls, and some turn out badly. Courts generally don't second-guess reasonable, informed decisions made in good faith. What gets board members in trouble is self-dealing, ignoring the governing documents, or making decisions without any real information.
Why informed, good-faith decisions are protected
Courts often give boards room to make business decisions without being second-guessed after the fact — a principle frequently called the business judgment rule. The idea is simple: owners elect a board to make judgment calls, and a judge shouldn't substitute their judgment for the board's just because a decision didn't work out.
That protection generally depends on the board acting:
On an informed basis — having gathered and reviewed relevant information.
In good faith — honestly, for the association's benefit.
Without a conflict of interest — no personal stake influencing the decision.
Within its authority — consistent with the Act and governing documents.
When a board skips one of these, the protection weakens. That's why the habits described below — getting bids, relying on professionals, disclosing conflicts and documenting decisions — matter so much.
What fiduciary duty looks like in practice
A few examples help show the line between reasonable judgment and a breach.
Likely fine: The board gets three bids for masonry work, reviews an engineer's report, chooses the middle bid because the contractor has better references, and records the reasoning in the minutes. Even if the project later runs over budget, the board acted carefully.
Likely a problem: A board member steers the landscaping contract to a friend's company without bids or disclosure. That raises loyalty concerns, regardless of the price.
Likely fine: The board decides to defer a lobby renovation to build reserves for an upcoming roof replacement, after reviewing the reserve study. Owners may disagree, but it's a reasoned choice.
Likely a problem: The board ignores repeated engineer warnings about a deteriorating balcony because repairs would require a special assessment. Failing to act on known safety risks can be a breach of the duty of care.
Likely a problem: The board adopts a special assessment for a non-emergency addition without the two-thirds owner vote the Act requires. That ignores the governing law — a breach of the duty of obedience.
Conflicts of interest: the 25% rule
The Act has a specific rule for one of the most common conflicts. Under Section 18(a)(16), the board may not contract with:
a current board member, or
a corporation or partnership in which a board member or their immediate family (spouse, parents and children) holds 25% or more interest,
unless owners get a chance to weigh in:
1. The board must give owners notice of its intent to enter the contract within 20 days after deciding to do so.
2. Owners holding 20% of the votes may file a petition within 30 days of that notice, calling for an election to approve or disapprove the contract.
3. That election must be held within 30 days of the petition.
Even when a conflicted contract is permitted, best practice goes further: the interested board member should disclose the conflict, leave the discussion and abstain from the vote, and the minutes should record all of it.
Conflicts beyond the 25% rule
Not every conflict involves an ownership stake. Other situations that call for disclosure and, often, recusal include:
A vendor is a close friend, former employer or business partner of a board member.
A decision would benefit a board member's unit more than others — for example, a repair that only affects their floor, or a rule change that affects their rental.
A board member is in a dispute with the association or another owner involved in the matter.
A vendor offers a board member a gift, discount or personal service.
A simple rule: if a reasonable owner might wonder whether you're being objective, disclose it.
Other habits of a careful board
Get competitive bids for significant contracts, and document why you chose the vendor you did.
Rely on professionals — engineers, attorneys, accountants, reserve specialists — for questions outside the board's expertise. Informed reliance on qualified advice is strong evidence of care.
Follow the notice and voting rules for budgets, special assessments and rule changes.
Enforce rules consistently. Selective enforcement invites claims.
Keep good minutes showing what was considered and why decisions were made.
Keep association money separate and reconcile accounts regularly.
Read the financial statements every month or quarter, and ask questions about anything unclear.
Act as a board, not as individuals. Individual board members generally don't have authority to direct vendors or staff on their own unless the board has delegated it.
Protect confidential information, such as details about another owner's delinquency, litigation strategy or an employee matter.
A simple board code of conduct
Many boards adopt a short code of conduct that each member signs at the start of their term. Common elements include:
1. I will act in the best interests of the association as a whole.
2. I will disclose any potential conflict of interest and abstain from related votes.
3. I will not accept gifts or favors from current or prospective vendors.
4. I will keep confidential information confidential.
5. I will prepare for meetings by reviewing materials in advance.
6. I will support board decisions publicly once made, even if I voted against them, while respecting owners' right to know how I voted.
7. I will direct vendors and staff only as authorized by the board.
8. I will treat owners, fellow board members, staff and vendors with respect.
A signed code doesn't create new legal duties, but it sets clear expectations and makes conversations about conduct easier.
Insurance that protects the board
Illinois requires two types of coverage that directly protect volunteer boards (Section 12):
Directors and officers (D&O) liability coverage. The board must carry D&O coverage at a level the board considers reasonable, unless the declaration or bylaws set the amount. It must extend to contracts and other actions the board takes in its official capacity, and must include defense of non-monetary claims, breach-of-contract claims, and claims about insurance decisions. It must cover past, present and future board members, the managing agent, and employees. (It can exclude acts for which directors can't be indemnified under the General Not For Profit Corporation Act or the association's documents.)
Fidelity bond. Associations with six or more units must carry a fidelity bond covering anyone who controls or disburses association funds — including the management company and its employees — in the full amount of association funds and reserves. Management companies handling association money must carry their own fidelity bond as well.
Review both policies at every renewal. A D&O policy with a low limit or broad exclusions offers much less protection than board members may assume.
Questions to ask your insurance broker
What is the D&O limit, and is it shared with any other coverage?
Does the policy cover defense costs for claims seeking non-monetary relief, such as an injunction?
What are the major exclusions?
Is the fidelity bond at least equal to the association's total operating and reserve funds?
Is the management company's own fidelity coverage current, and has the association received proof?
Indemnification
Many declarations and bylaws include indemnification provisions, under which the association agrees to cover board members' costs of defending claims arising from their service, subject to limits. Indemnification and D&O insurance work together: the insurance funds the defense, and the governing documents set the terms. Ask the association's attorney to explain your building's provisions.
What to do if you're worried
If a board member thinks the board is heading toward a decision that violates the governing documents or the Act, the right steps are to raise the concern at the meeting, ask that it be recorded in the minutes, and suggest getting the association attorney's advice before voting. A documented objection is itself evidence of a board member doing their job.
For owners: if you think the board has breached its duty
Owners sometimes believe the board has acted improperly. Productive steps usually include:
Get the facts. Request the relevant records under Section 19 — contracts, bids, minutes, financial records.
Raise the issue at a board meeting during the owner forum, or in writing.
Talk with other owners. Owners holding 20% of the votes have petition rights on several decisions, including conflicted contracts.
Use elections. Owners can vote board members out at the annual meeting.
Consult an attorney if the concern involves serious misconduct, such as self-dealing or misuse of funds.
Keep in mind the difference between a decision you disagree with and a breach of duty. Many board decisions are judgment calls on which reasonable people differ.
Frequently asked questions
Can I be personally sued as a board member?
Board members can be named in lawsuits. D&O insurance and indemnification provisions are designed to protect volunteers who act in good faith.
Do I have to be an expert to serve on the board?
No. The duty of care asks you to make informed decisions, which includes relying on qualified professionals for questions outside your expertise.
Can the board hire my company if I recuse myself?
If you or your immediate family hold 25% or more of the company, the Act's notice and petition process applies. Talk with the association's attorney before proceeding.
Can a board member vote on a matter that affects their own unit?
Every board member owns a unit, so many decisions affect them. Disclosure and recusal matter most when a decision uniquely benefits a board member's unit or interests.
The bottom line
Fiduciary duty sounds intimidating, but most of it comes down to common sense: act for the owners, do your homework, follow the rules, disclose conflicts and write it down. Boards that do those things — and carry proper insurance — can serve with confidence.
Related reading:
How Condo Boards Should Solicit and Compare Vendor Bids
Board Turnover Checklist for Illinois Condo Associations: Developer Handoff and New Board Members
Rising Condo Insurance Costs in Illinois: What the Law Requires and What Boards Can Control
Open Board Meetings in Illinois Condos: Notice, Closed Sessions and Owners' Right to Record
Pimmit Run Management supports Illinois condo boards with bid tracking, conflict disclosures, organized minutes and insurance reviews, so volunteers can govern with confidence. Contact us to learn more.
This article is general information, not legal advice. Board members with concerns about liability should consult the association's attorney.
This article is general information, not legal advice. Consult your association's attorney about your specific situation.