The board's financial responsibility in a housing company – how far does it reach?
The board is responsible for the day-to-day management and can outsource the tasks, but not the oversight. Personal liability normally requires more than a decision that turned out badly: there has to be intent or negligence, a financial loss, and a causal link. Omissions can trigger liability too – not only decisions.
The board is responsible for the day-to-day management
In a housing co-operative the board has to run the business in accordance with the law, the articles and the general meeting's decisions. In jointly owned property the board has to see to the maintenance and operation of the property and otherwise manage its affairs in accordance with the law, the articles and the annual meeting's decisions. In practice the board needs an overview of running income and costs, the shared costs and arrears, payments to suppliers, insurance and standing agreements, the accounts and reporting, maintenance needs, and financing and loans. The board does not have to do it all itself – but it has to make sure it is handled properly.
Who sets the shared costs?
In a co-operative, section 5-19 of the Act says expressly that the board sets how much each member pays each month towards the shared costs. In jointly owned property the monthly amount is set by the annual meeting or by the board. The board should therefore follow the finances through the year and react where the payments no longer cover the obligations. But note: the allocation between owners follows its own statutory rules and cannot simply be changed by the board – see Budgets and shared costs
The board cannot decide everything alone
The board has wide authority over ordinary operation and maintenance, but some decisions have to go to the general or annual meeting. In co-operatives at least a two-thirds majority is required for certain measures going beyond ordinary management and maintenance. The same applies in jointly owned property for conversion, extension and other changes to the building or the site beyond ordinary management. Before a large refurbishment starts, the board should settle who has the decision-making authority, what financing is needed, how the costs will be allocated, and whether the matter has to go to a meeting. Starting first and settling afterwards is the most expensive order.
Can the board leave the financial work to others?
Yes. It is common to use an external accountant or managing agent for bookkeeping and reconciliation, invoicing the shared costs, chasing payments, payroll and directors' fees, budgeting, reporting, the year-end close and public filings. Jointly owned property can also delegate parts of the board's decision-making authority to a managing agent, within the limits of the law. But outsourcing tasks does not mean the board can stop paying attention. An external accountant is a tool for the board – not a replacement for the board's own oversight. See Accounting and management
When can a board member become personally liable?
It normally takes more than the board having made a decision that turned out badly. For co-operatives there is a specific rule in the Housing Co-operatives Act: a board member who intentionally or negligently causes a loss to the co-operative, a member or others in carrying out the role can be liable in damages. The Ownership Units Act does not have an equivalent general provision on personal liability. Board members can still be liable under the general law of damages. The assessment is normally: did the board member act intentionally or negligently, has someone actually suffered a financial loss, and did the act or omission cause it? It is made specifically for each board member – see also Directors' liability and personal liability for the equivalent rules in limited companies.
A bad decision does not automatically create liability
The board often has to take decisions where the outcome is uncertain. A maintenance project can cost more than expected, rates can rise, a contractor can run into financial trouble. None of that in itself makes the board liable in damages. What matters is what basis the board had when the decision was taken, whether the relevant risks were considered, and whether the board stayed within the law and its authority. Good board minutes and written documentation are therefore not bureaucracy – they are the evidence.
Omissions can trigger liability too
A 2023 judgment from Borgarting Court of Appeal, LB-2023-51940, illustrates this. Two board members of a jointly owned property were held liable in damages to a unit owner after failing to pass on information of material significance. The case is described as an information failure and negligence on the board members' part. The point is worth noting: board liability is not only about what the board decides. Withholding important information, or failing to follow up a serious matter, can also have consequences.
Conflicts of interest and the prohibition on favouring
A board member must not take part in a matter where they or a related person have a particular personal or financial interest of sufficient significance – typically where the board is considering a bid from a company owned by the board member or close family. The board should document the conflict assessment in the minutes and keep the conflicted member out of both the discussion and the decision. Both Acts also have rules to prevent misuse of the board's authority: the board cannot give particular owners or outsiders an unreasonable advantage at others' expense. That matters particularly in allocating costs, agreements with related parties, the use of shared areas, larger investments and maintenance benefiting only some homes.
The property's liability is not the board members' liability
This distinction is decisive. Where jointly owned property fails to meet its statutory maintenance duty and that damages a unit, the property can be liable in damages. The claim is formally made against the board, but where it succeeds, the damages are a shared cost for the property. The board members still do not automatically pay the damages privately. Personal liability requires its own assessment of each board member's acts or omissions.
Five routines that make the board's job safer
1. Follow the finances through the year – not only when the annual accounts arrive. 2. Document important decisions and the basis for them in the board minutes. 3. Settle whether larger measures have to go to the general or annual meeting. 4. Handle conflicts of interest openly. 5. Follow up the accountant, the managing agent and anyone else carrying out tasks on the housing company's behalf. A board member who disagrees with a decision should make sure that disagreement appears in the minutes. It can be decisive documentation if the decision is later challenged. Greenleaf helps housing co-operatives and jointly owned properties with bookkeeping, financial reporting, budgeting and the year-end close.
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This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.
More on housing companies and voluntary organisations
- Accounting and management for housing co-operatives and jointly owned property – what applies?
- Annual accounts for a housing co-operative – which requirements and deadlines apply?
- Budgets and shared costs – how are they set correctly?
- VAT for housing companies – when does it become relevant?
- Clubs and associations – when do accounting, tax and VAT obligations arise?
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