Is this self dealing?

Is this a case of a board engaging in self-dealing? Your opinion please? (This is a real situation, from minutes just posted on the internet earlier this morning.)

Also, short of legal action, what can be done about it, if anyting? This is a rogue board.

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(Note: Wyatt, Charles, Ed and Brady are board members.)

1. Storm Damage – tree fell on property along 62nd street. Wyatt and Charles volunteered to remove
it for $100 (cost by outside party would be $200+). Board moved to approve this with motion by
Ed and 2nd by Brady. All voted in favor, abstaining were Wyatt and Charles
2. Overgrowth by bridges, Weeds need to be sprayed and removed at three bridges (Creeks Crossing, twin Creeks lane and Robinsrock lane. Brady volunteered to do it at cost (of weed killer) + $100.

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Unless your documents say otherwise, it is perfectly OK to hire Board members. Of course, bidding processes should have been observed, but looking at these proposals, I'd say the Board got a deal. (Our family is in landscaping)

1. Storm Damage – tree fell on property along 62nd street. Wyatt and Charles volunteered to remove it for $100 (cost by outside party would be $200+). Board moved to approve this with motion by Ed and 2nd by Brady. All voted in favor, abstaining were Wyatt and Charles.

**** Good - Wyatt and Charles abstained from this vote where they have a "pecuniary interest." However, they are acting as "paid volunteers" since they were being paid and the minutes should reflect that.

2. Overgrowth by bridges, Weeds need to be sprayed and removed at three bridges (Creeks Crossing, twin Creeks lane and Robinsrock lane. Brady volunteered to do it at cost (of weed killer) + $100. ***** Again, Brady should abstain from approval vote; he is a "paid volunteer."

Having said all this, there are other issues: Does your board regularily use "paid volunteers" to do work around the association? Check your insurance policies about volunteers covered while doing things in the neighborhood (including cooking hotdogs at the annual picnic.) Since both of these jobs, IMHO, deal with possible injury consequences, the board should seriously look at this decision. If not, the Board needs to adopt a policy of hiring only licensed companies that can show proper insurance.

As for the "legality" of what is written here, unless something else is going on, you'd be hard pressed to show an "illegal" act.

I mostly agree with Susan. Abstentions made; rest of Board approved; good price from generous HOA members.

What I disagree with (not nec. Susan, more with the usual general comments on these matters), is the teeth-grinding about licenses, insurance, the possibility of injuries, etc.

Sometimes, folks in an HOA just want to pitch in, do something "nice" for the neighborhood. Rarely, true. But sometimes they do. Just as many of us volunteer to serve gratis on our various Boards.

Case in point on this side of the screen:

We recently had the anchors for our fountain reset so we (volunteers) could yank the thing this winter and avoid a $700 charge for "experts" to do it. Could one of us slip off the border into the pond and drown while steering it with ropes to the shore? Or get electrocuted disengaging the power wires? Or wrench our backs carrying it to its winter resting place? Sure. But we're big boys and we think it's worth the risks. And if the Board treated us for lunch after our efforts, not a complaint would be raised.

I'd say it's not a good idea. What if they do it wrong and/or cause major damage while doing it? Are they personally responsible, or is the board now responsible? or, who is responsible if one of them cut off one of their own limbs while doing this? Does the HOA want to take on that liability?

Also, were other members of the community allowed to bid on the job too? Were they even made aware the opportunity to make some cash was there?

Susan,

I based my feelings on the fact that the board members took advantage of knowing what the bids would be to contract the work and said they could do it for a lesser amount. I call that "self-dealing" plain and simple. Whether they caused the tree to fall or not is of no issue. You say the board shouldn't give the impression of creating work or finding jobs for themselves. However, that is the exact impression one could get from this. Because board members are in a position of serving their community I don't think it speaks well of any board member to expect to be compensated for doing any type work they are willing to do. This goes from carrying out their duties as outlined in the bylaws or volunteering to do any other job that might warrant paying an outside contractor. I'm not talking about big, huge jobs; but the smaller things that crop up from time to time; such as removing a fallen tree or spraying for weeds

Would this be self dealing ~ A few years ago our HOA wanted to hire a homeowner to be the Mgmt Company for us ~ he took all the necessary on-line courses. At zero hour he could not get certified as he lacked the 6 month (paid) experience to be certified. So they hired a Mgmt Co that was friends of our Attorney (at a large price) with no other bids were requested. In the mean time they hired this homeowner to be our Ombudsman at a salery of 82K a year. We have never had this positin filled before, and again no other bids were requested for Ombudsman service's

What type of problems does you assn have that would warrant hiring a private ombudsman at such a huge salary?

Mary

That's a good question ~ I thought we were a pretty stadard HOA other than view issues(Ocean view community) This person was a grounds volunteer that had just lost his job. He is a friend of the BOD. The board pres had groomed (promised him) him to take over the Mgmt contract, as she wanted to get rid of the existing Mgmt Co. He then took a on-line course (Pepperdine)to become a Mgmt Co/Ombudsman.(with no prior experience in that field) He rented a office etc. to prepair for the position. At zero hour they realized he needed to be certificed, and in order to be cetificed it required 6 month on the job experience, PAID experience. So volunteer work did not count. They then gave the Mgmt contract to our existing Mgmt Co. And he was hired on as our Ombudsman for our HOA Even though it was a position we have never had the need to fill before. He is his own contractor, with a business licence/insurance etc. He had tried to market his services to other HOA's with no avail. He is still our "grounds volunteer" with no pay for that position. He claims he is very busy with the "Ombudsman" part of his job, but no one is keeping a time card. However I have noticed the BOD has a lot more owner disputes to handle (hearings) they usually handle those right before a general meeting. About three a month. When I was on the board we only had three hearings in that whole year. I have the feeling he is creating problems, just to make himself appear necessary. IMHO I feel they created this job for him out of a guilty conscience.

Many of our homeowners resent us hireing a Ombudsman, and say they wished they had a chance to bid on that position at that salary. Most just resent us having a Ombudsman, they don't think we need one.
I question how this would play out in a court of law (If it ever came to that) since he is a homeowner, and sits in on most of the board meetings ~ Friend of the BOD/attorney/mgmt Co ~ How can he be considered neutral??

He has since given up is office space, no need for it. He works out of his home.

NancyM2