The Fear of Setting Precedents

Association Boards often contact our office to determine how to deal with a regularly-occurring problem that just doesn't seem to require or deserve the response that has customarily been given. Understandably, the Board desires to treat each owner fairly and believes that to do so, it must treat each owner similarly. However, the value of a Board of Directors is that it is composed of people who each bring their life experiences and judgment to the position. A Board need not—and in fact—should not treat each owner in an identical manner when the circumstances do not justify such treatment. Instead, the Board should exercise its collective business judgment in a good faith and reasonable manner to treat similar circumstances similarly. This is much different than treating each owner in the same manner.

If the Board believes that an unusual circumstance should be handled in a certain manner, then the Board should make findings of fact (documented in the minutes of the Board meeting) that acknowledge the uniqueness of the issue and that take into account that uniqueness when the final decision is made. Owners often do claim that they are being singled out or treated in an "arbitrary and capricious" manner in an effort to persuade the Board that they should be given some other outcome that is more to their liking. However, "arbitrary and capricious" is a legal term that rarely describes a thoughtful Board's actions. The legal definition of "arbitrary" is "lacking purpose or objective." The legal definition of "capricious" is "willful and unreasonable disregard of facts or law." These standards are quite low and should not be a problem for most Board decisions made without emotion or anger.

When emotion becomes intertwined with a Board's factual analysis of a matter, though, problems often arise and no amount of post-decision rationalizing can convince the aggrieved owner (and potentially a court) of the propriety of the decision. The need for a calm and rational view of the facts cannot be overstated. If the Board members can establish legitimate and good-faith-based reasons for their beliefs, those beliefs should be followed in making decisions on behalf of the Association. To blindly follow the same course of action without regard to the specifics of any particular case does not further the interests of the community.