Ultra vires
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ULTRA VIRES ACT

An "ultra vires" act is one performed without legal authority; something done which is beyond the scope of a corporation's authority.

Board Actions
. Associations that act outside their authority may have their actions reversed by the courts.

Where the association exceeds it scope of authority, any rule or decision resulting from such an ultra vires act is invalid whether or not it is a "reasonable" response to a particular circumstance. Where a circumstance arises which is not adequately covered by the CC&Rs, the remedy is to amend the CC&Rs. (Major v. Miraverde HOA.)

Ultra vires conduct is conduct that is beyond the power of the corporation, not an individual director. (See McDermott v. Bear Film Co. (1963) 219 Cal.App.2d 607, 610-611 [“In its true sense the phrase ultra vires describes action which is beyond the purpose or power of the corporation.”]; Sammis v. Stafford (1996) 48 Cal.App.4th 1935, 1942 [“If, however, the director’s act was within the corporate powers, but was performed without authority or in an unauthorized manner, the act is not ultra vires.”].)(Palm Springs Villas v. Parth.)

Director Liability. Individual directors who act without authority may become personally liable for those actions. For example, when the board decides against hiring a particular landscape company and the board president signs the contract anyway, the president may be lose the protections of the Business Judgment Rule and be personally liable for his acts. Although the contract may be voidable by the association, the president may be personally liable for any damages suffered by the association.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

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