HOA and condo Board members owe their association a duty of care and a duty of loyalty. In DC, Maryland and Virginia they must act in good faith, make informed decisions and put the association ahead of their own interests. Directors who meet that standard are shielded from personal liability. Directors and officers (D&O) insurance typically pays defense costs when someone claims they fell short.
Key takeaways (the short version)
- The duty of care asks for informed, good-faith decisions. The duty of loyalty puts the association first.
- DC, Maryland and Virginia set the standard in their corporate statutes. The business judgment rule shields a director who meets it. It protects less when directors benefit personally.
- DC's volunteer immunity and Maryland's damages shield for condo, HOA and co-op directors (§ 5-406) apply only if the association carries minimum liability insurance.
- No DC, Maryland or Virginia statute requires D&O insurance. It typically pays defense costs that immunity statutes do not. Verify terms with your agent.
What fiduciary duties does an HOA or condo Board member owe the association?
A duty of care and a duty of loyalty, exercised within the powers your governing documents give the Board. Our governance pitfalls guide covers how to stay within them.
Care means doing the work before a vote: read the packet, ask questions and get expert advice.
Loyalty means putting the association first. A director with a personal stake in a vote, such as a relative's company bidding for a contract, discloses it. Good practice is to step out of the vote. Your bylaws or conflict policy may require it. Our articles on HOA conflicts of interest and avoiding conflicts as a Board member cover the steps.
Which law sets our standard of conduct in DC, Maryland and Virginia?
As of September 2026 each jurisdiction's corporation statute sets the standard for an incorporated association. All three require directors to act in good faith and in what they believe are the association's best interests.
- DC. The Nonprofit Corporation Act asks for "the care that a person in a like position would reasonably believe appropriate" (D.C. Code § 29-406.30).
- Maryland. The Maryland General Corporation Law, which also applies to nonstock corporations, requires "the care that an ordinarily prudent person in a like position would use" (Corporations and Associations § 2-405.1).
- Virginia. The Nonstock Corporation Act states the standard as a director's "good faith business judgment of the best interests of the corporation" (Va. Code § 13.1-870).
Every DC condo Board, incorporated or not, also owes "the care required of a fiduciary of the unit owners" under DC's Condominium Act (§ 42-1903.08(d)). Maryland's Condominium and Homeowners Association Acts and Virginia's Condominium and Property Owners' Association Acts add no separate standard for owner-elected Boards. Other unincorporated associations and co-ops should confirm the standard with counsel.
What does the business judgment rule protect?
It protects good-faith, informed Board decisions. DC applies the "business judgment" standard to condo Board decisions by statute (§ 42-1902.09(b)). In 2013 a Maryland appellate court restated the rule that an HOA Board's decisions "will not be disturbed unless there is a showing of fraud or bad faith."
When no director has a personal stake, a challenger has to prove the director fell short of the standard. The protection narrows when directors benefit personally. In 2022 a Maryland appellate court required a condo association to prove a budget assessment was fair and reasonable. Every director lived in the unit type the assessment allegedly favored.
Can a director be held personally liable?
Yes, in narrow cases. The shields below limit what a director pays. They do not stop a claim from being filed.
- DC. Unpaid directors and officers of a DC nonprofit corporation are immune from civil liability except for willful misconduct, crimes, improper personal benefit and bad-faith acts beyond the corporation's authority (§ 29-406.90). The immunity applies only if the association carries liability insurance of at least $200,000 per claim and $500,000 per occurrence.
- Maryland. A director who acts within the § 2-405.1 standard has no liability for that act, insured or not (Courts and Judicial Proceedings § 5-417). Separately, directors, officers and volunteers of condos, HOAs and co-ops are not personally liable for damages when the association's insurance covers the claim (§ 5-406). That policy needs limits of at least $200,000 per claim or $750,000 per policy year, plus $500,000 per occurrence, with a deductible of $10,000 or less. A director found to have acted with malice or gross negligence is liable for damages above the policy limits.
- Virginia. Unpaid officers and directors of a community association are not liable for damages except for willful misconduct or a knowing criminal violation (§§ 13.1-870.1(E) and 13.1-870.2). A paid director's damages are capped at the pay received in the 12 months before the act.
Your articles of incorporation, and in Virginia member-approved bylaws, may limit director liability further. Your documents also decide whether the association indemnifies directors. Ask counsel what yours provide.
What does directors and officers (D&O) insurance cover for our Board?
D&O insurance covers claims tied to governance decisions, such as alleged mismanagement, breach of duty or failure to enforce the governing documents. A typical policy pays defense costs, which immunity statutes do not, and covered damages. Confirm the scope with your agent.
General liability covers bodily injury and property damage. Fidelity or crime coverage protects association funds from theft. Maryland and Virginia require it for condos and HOAs, except very small Maryland ones.
At renewal, ask your agent:
- Are defense costs inside the limit or on top of it?
- Is the policy claims-made and does it cover acts before it began?
- Does it insure the association, former directors, committee members, volunteers and the management company?
- Which exclusions apply? Many policies exclude fraud, bodily injury, property damage, contract disputes and claims between insureds.
Report demand letters promptly and avoid a coverage gap when changing carriers. Review D&O alongside your master policy renewal.
How do these duties apply to the budget vote?
A director elected at a fall annual meeting often votes on the 2027 budget weeks later. The packet holds the manager's draft budget, reserve study, insurance indication and last year's audit.
- Read the packet first. In an incorporated DC association, an uninformed decision is a statutory ground for director liability (§ 29-406.31).
- Rely on qualified experts. All three statutes let directors rely on experts they believe competent, such as the reserve specialist and auditor, unless they know reliance is unwarranted.
- Share what you know. If the roof is failing faster than the study assumes, say it before the vote. DC's nonprofit statute requires directors to disclose material information the Board lacks (§ 29-406.30(c)).
- Follow your documents. Your declaration and bylaws decide who adopts the budget and what notice owners get. Our budget season playbook covers the sequence.
- Record the basis in the minutes. Note what the Board reviewed, the insurance and collection assumptions and the vote.
Frequently asked questions
Do Board members get paid in DC, Maryland and Virginia?
They can be. DC and Virginia let the Board set director pay unless the articles or bylaws say otherwise (D.C. Code § 29-406.11; Va. Code § 13.1-863). Maryland's corporate law refers to a Board fixing "reasonable compensation for a director" (Corporations and Associations § 2-419(d)(2)). Pay ends a director's DC volunteer immunity and federal Volunteer Protection Act status and caps a Virginia director's damages at the prior 12 months' pay. Check your bylaws and ask counsel first.
Does the Board owe a fiduciary duty to each owner?
The corporate statutes measure a director against the association's best interests. In DC, condo Board members also owe unit owners a fiduciary's care (§ 42-1903.08(d)). A Maryland appellate court declined owners' request to apply trust law in place of the business judgment rule. Ask counsel about a specific dispute.
Does the federal Volunteer Protection Act cover HOA and condo directors?
It may not. The Act covers unpaid volunteers of 501(c)(3) organizations and of public-benefit not-for-profits with charitable, civic or similar purposes. Whether a community association qualifies is unsettled. Ask counsel before relying on it.
Does our association have to carry D&O insurance?
Not under DC, Maryland or Virginia statute, though your documents may require it. DC's volunteer immunity and Maryland's § 5-406 shield depend on minimum liability insurance. Ask your agent and counsel which policies qualify.
This article is general information for association Boards and is not legal advice. Your governing documents and association counsel control.
On Full-Service accounts, EJF prepares the annual operating budget and presents it to the Board. EJF Real Estate Services was founded in 1996 and manages more than 650 associations in Washington DC, Maryland and Virginia. If your Board is seating new directors this fall or comparing management companies, request a proposal at ejfrealestate.com/request-proposal or call 202-537-1801.
