HOA board member liability guide

Yes. Board members can be personally liable if they breach their fiduciary duty — for example by knowingly approving a budget that does not fund reserves adequately, by commingling reserve and operating funds in violation of state law, or by making decisions that benefit themselves at the expense of homeowners. D&O insurance reduces but does not eliminate this risk.

HOA board members owe homeowners three duties: the duty of care (make informed decisions), the duty of loyalty (act in the association's interest, not your own), and the duty to act within authority (follow governing documents and state law). Reserve fund management is where the duty of care most commonly creates liability risk for volunteer boards.

If operating and reserve funds share the same account or ledger without proper fund separation, board members who allow operating expenses to be paid from reserve funds may face personal liability. Most states with reserve statutes require reserves to be kept in a separate account, not just tracked as a separate line in a general ledger.

Board meeting minutes are the primary legal record. Every meeting where reserve fund status is reviewed, discussed, or voted on should include the reserve balance, the percent-funded figure, any reserve study update status, and the board's decision or deferral on reserve-related motions. A clear record of informed decision-making is the board's main defense.