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M A R C H , 2 0 1 7
arbitrarily, or in bad faith. See
Billig
v. Buckingham Towers Condo. Ass’n I,
Inc.
, 287 N.J. Super. 551, 563 (App.
Div. 1996). This fiduciary relationship
requires the board to act in accordance
with the Condominium Act and its own
governing documents as well as for its
actions be free of fraud, self-dealing,
and unconscionability. In other words,
all that the law demands is trustees act
reasonably and in good faith using the
degree of skill and care an ordinary
person would exercise under similar
circumstances. If a contested act of the
association meets each of these tests,
the courts will not interfere or substitute
the court’s judgment for the judgment of
the board.
2. APPLICATION OF THE
BUSINESS JUDGMENT RULE
New Jersey courts considering the
application of the business judgment
rule have concluded the scope of
judicial review of condominium asso-
ciation decisions is limited to a two-
pronged test: (1) whether an asso-
ciation’s action was authorized by
statute or its own bylaws and, if so,
(2) whether the action was fraudu-
lent, self-dealing or unconscionable.
Thanasoulis v. Winston Towers 200
Ass’n,
110
N.J.
650, 655 (1988).
In
Thanasoulis,
the New Jersey
Supreme Court considered wheth-
er a rule adopted by the Board of
Directors of a condominium associ-
ation increasing the parking fee for
tenants of nonresidents owners but not
for those of resident owners constitut-
ed a breach of the board’s fiduciary
duty to the nonresident owners. In
BUSINESS JUDGEMENT...
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