Q&A. I am a director on my community association’s board, but I am not a “volunteer” director under the language of Civil Code section 5800 because I own three homes in our community. Does that mean I could be personally liable for a portion of the damages if the association is sued and loses the lawsuit?

A: Potentially, yes, but that does not mean you do not have insurance coverage. Civil Code section 5800 provides that volunteer directors of residential or mixed use associations will not be personally liable for damages in excess of the association’s insurance coverage so long as the volunteer director’s action(s) were performed in good faith, within the scope of their duties, and not willful, wanton or grossly negligent, and their association maintained the minimum levels of general liability and directors and officers insurance as provided in section 5800.  Section 5800 does not apply to “non-volunteer directors”, i.e., a director who is either (1) the declarant, (2) an employee of the declarant, (3) an employee of a financial institution that purchased a separate interest in the community via foreclosure, or (4) the owner of three (3) or more residences within a residential community.   Consequently, non-volunteer directors may have personal exposure.  Non-volunteer directors should contact their insurance agent to make sure that they have both types and amounts of insurance coverage (either personally or through their employer, if they are declarant employee or the employee of a financial institution as described above) to protect them.  The association’s insurance agent should also be consulted to confirm that the association’s insurance policies meet at least the minimum coverage requirements of section 5800 and that non-volunteer directors are covered by the association’s insurance policies.  – Dea C. Franck, Esq.