Get 1 year of free community web site hosting from Community123.com!
Wednesday, August 05, 2020











HOATalk is a free service of Community123.com:

Easy to use website tools to help your board
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: Board Members Bidding on Jobs
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
PatriciaB18
(Michigan)

Posts:1


12/03/2019 8:31 AM  
One of the Board Members has been bidding on jobs around the condo. Is this legal or a conflict of interest? He believes he is saving the condo association money yet I am concerned that he is taking advantage of his position on the board.
AugustinD


Posts:3647


12/03/2019 8:55 AM  
It is common and unfortunate that many board members are so ignorant that they think serving on the board is a chance to help their personally-owned business. He /is/ taking advantage of his position on the board. Ignore anything he says about how he is billing only for his costs and makes no profit (as one board member I know insisted for a few years as his landscaping company provided expensive services). This is baloney. He would not be providing the service if he was not personally benefiting.

I could check Michigan's HOA and corporate statutes, but knowing a little about Michigan's statutes, I bet they are silent on the point. Of all the legal authorities, your covenants are most likely to say something about how 'directors are not to be compensate for their service to the HOA/condo.' If your covenants have such a clause, then your director will likely waffle and say he is not being compensated for his service to the HOA/Condo. To this I would say, "Nonsense."

My former HOA with the board member whose company provided landscaping was booted largely because of the conflict of interest and his being a jerk about it. He was very angry. But the HOA members were very angry with him. He felt he was entitled. I say he was clueless.
SheliaH
(Indiana)

Posts:3343


12/03/2019 9:21 AM  
You'll have to ask your association attorney about the legalities of this, although.....there are times you can skip the "is this legal" pondering and just listen to your common sense. If you need someone to tell you, here goes - your instincts are correct in that this IS a conflict of interest! You didn't say if you were on the board, but if you are, you should speak up (loudly) about this. If you didn't, why not? And where are the rest of your board colleagues????

Whenever there's a potential or actual conflict of interest, whether selecting contractors or owner discipline for a CCR violation, the board member(s) involved should (1) disclose to the board what the conflict is (2) resolve it before participating in any discussion or vote on the matter or (3) refrain from any involvement if the conflict can't be resolved. It doesn't mean you're a bad person, but you're being responsible and fair.

Next move is yours - speak up and say something and if the rest of the board doesn't fix this, perhaps it's time someone consider running against that board member (you?) Maybe other board members should be replaced as well, if they don't address this (that may require you to rally together your neighbors).

In the meantime, suggest the board consider adopting a resolution addressing conflicts of interest and how they are to be handled. There are all sorts of information floating around on this website or the Internet on what the policy could entail.
ND
(PA)

Posts:471


12/03/2019 9:59 AM  
You say he's bidding on jobs. Has he actually been paid for jobs or hired/contracted for jobs? What is your level of factual knowledge in regard to what's occurring?

Regardless, what he's doing is probably legal (you'd have to look deeper into that if legality really matters to you); however, there could very well be an actual, potential, or perceived conflict of interest (see below for definitions).

In reality, he may very well be saving the HOA money and is honest and upfront about the whole process, or he may be intentionally manipulating things for his own personal benefit. We don't know enough here about what's going on . . . and perhaps you don't either . . . yet. If in your position, I wouldn't crucify the gentleman just yet, but it would be a good idea to start asking some questions about what's going on.

- - - -

A good definition that I googled . . . What is a conflict of interest?

A conflict of interest is a situation where one's personal or private interests could, or be seen to, improperly influence the performance of official duties/responsibilities. A conflict of interest can be actual, perceived, or potential:
-- An actual conflict of interest involves a direct conflict between one's official duties/responsibilities and a competing interest or obligation, whether personal or involving a third-party.
-- A potential conflict of interest arises where one has an interest or obligation, whether personal or involving a third-party, that could conflict with one's official duties/responsibilities in the future.
-- A perceived conflict of interest occurs where it could reasonably be perceived, or give the appearance, that a competing interest could improperly influence the performance of official duties/responsibilities.
MarkM19
(Texas)

Posts:619


12/03/2019 10:14 AM  
Board Members are also Fiduciaries. Look that up and it is clear that this would be considered Self Dealing. I am sure he knows what the other Contractors Don't when he gives his Quotes. All he has to do is undercut them and he can say he is saving the HOA money. He should be called out at the next board meeting.

I went through this same thing with an Long Time Board President in Ca. 10 years ago and it took a lot of work but ultimately we got him and a few cronies voted off the Board.
SueW6
(Michigan)

Posts:714


12/03/2019 10:37 AM  
Patricia, If course your Board is going thru blind bidding from at least three other companies, and this person would recuse himself from voting on the bids, right?

If a board member has a particular skill, qualification or license, he/ she should be considered for the job. We had a board member who was licensed by the State for water quality issues and our board hired her to monitor our well water testing. Why wouldn’t we?

Companies providing landscaping services are not unique, but should have recommendations from other customers, along with a reasonable price bid. That person should provide all that.
JohnC46
(South Carolina)

Posts:9660


12/03/2019 12:45 PM  
I say BOD Members can be hired as long as other bids were solicited and the BOD Member recused himself from bid discussions and voting on awarding the bids.
MarkW18


Posts:1289


12/03/2019 1:33 PM  
I don't see any issue with this.
MarkM19
(Texas)

Posts:619


12/03/2019 1:48 PM  
MarkW,
I can tell you that Greed and Corruption run rampant in many HOAs. If it is not in yours you are lucky. If every board member had their eyes wide open all the time it is easy to spot. The problem is most don't have the time, energy or knowledge to see bad things when they happen.

The only way to keep boards and HOAs safe is to eliminate all chances of this by not allowing any opportunity for it to take root and grow.
MarkW18


Posts:1289


12/03/2019 2:02 PM  
Posted By MarkM19 on 12/03/2019 1:48 PM
MarkW,
I can tell you that Greed and Corruption run rampant in many HOAs. If it is not in yours you are lucky. If every board member had their eyes wide open all the time it is easy to spot. The problem is most don't have the time, energy or knowledge to see bad things when they happen.

The only way to keep boards and HOAs safe is to eliminate all chances of this by not allowing any opportunity for it to take root and grow.



Sorry, the guy in the White House doesn't feel it's a problem, so why should a simple Board member feel any difference. Sorry, but the norms have changed.

That's my opinion and I WILL stick with it!
JohnT38
(South Carolina)

Posts:350


12/03/2019 2:27 PM  
Ahh, the old "everyone else does it so why shouldn't I?" Logic at it's best....
MarkW18


Posts:1289


12/03/2019 2:31 PM  
Posted By JohnT38 on 12/03/2019 2:27 PM
Ahh, the old "everyone else does it so why shouldn't I?" Logic at it's best....



Sorry, this isn't "everyone else doing it" and you know it!
SamE2
(New Jersey)

Posts:267


12/04/2019 4:55 AM  
What is the problem if the work is bid on and the Board selects the best bid? I think someone that lives in the community and sees his customers on a regular basis would be more concerned about making sure his customers were satisfied. I always prefer to give work to people I know and trust.
EdC5
(Florida)

Posts:116


12/04/2019 7:26 AM  
Posted By MarkW18 on 12/03/2019 2:02 PM
Posted By MarkM19 on 12/03/2019 1:48 PM
MarkW,
I can tell you that Greed and Corruption run rampant in many HOAs. If it is not in yours you are lucky. If every board member had their eyes wide open all the time it is easy to spot. The problem is most don't have the time, energy or knowledge to see bad things when they happen.

The only way to keep boards and HOAs safe is to eliminate all chances of this by not allowing any opportunity for it to take root and grow.



Sorry, the guy in the White House doesn't feel it's a problem, so why should a simple Board member feel any difference. Sorry, but the norms have changed.

That's my opinion and I WILL stick with it!




You are obviously not a CAM in Florida. Florida statute addresses this directly:

720.3033(2):If the association enters into a contract or other transaction with any of its directors or a corporation, firm, association that is not an affiliated homeowners’ association, or other entity in which an association director is also a director or officer or is financially interested, the board must:

(a) Comply with the requirements of s. 617.0832.
(b) Enter the disclosures required by s. 617.0832 into the written minutes of the meeting.
(c) Approve the contract or other transaction by an affirmative vote of two-thirds of the directors present.
(d) At the next regular or special meeting of the members, disclose the existence of the contract or other transaction to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. If the members cancel the contract, the association is only liable for the reasonable value of goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages, or other penalty for such cancellation.

Edward J Cooke, CMCA, LCAM
MarkW18


Posts:1289


12/04/2019 7:58 AM  
And I am sure that is followed to the letter of the law by ALL CAMS in Florida.
SheliaH
(Indiana)

Posts:3343


12/04/2019 11:46 AM  
I would hope ethical property managers, certified or not, would tell the board about the rule (along with the association attorney), but remember, they work at the board's direction, so if you have an issue, the BOARD are the folks you start and end with. If they cannot or refuse to do the right thing, it's on the homeowners to hold them accountable or replace them. Some folks don't give a hoot about doing the right thing - hence the "but everyone's doing it" response. That doesn't work (usually) with your children, so why let grown-ass people get away with it?

MarkW18


Posts:1289


12/04/2019 12:46 PM  
Posted By SheliaH on 12/04/2019 11:46 AM
I would hope ethical property managers, certified or not, would tell the board about the rule (along with the association attorney), but remember, they work at the board's direction, so if you have an issue, the BOARD are the folks you start and end with. If they cannot or refuse to do the right thing, it's on the homeowners to hold them accountable or replace them. Some folks don't give a hoot about doing the right thing - hence the "but everyone's doing it" response. That doesn't work (usually) with your children, so why let grown-ass people get away with it?




And how do homeowners really find out about what goes on?
JohnC46
(South Carolina)

Posts:9660


12/04/2019 2:39 PM  
Posted By MarkW18 on 12/04/2019 12:46 PM
Posted By SheliaH on 12/04/2019 11:46 AM
I would hope ethical property managers, certified or not, would tell the board about the rule (along with the association attorney), but remember, they work at the board's direction, so if you have an issue, the BOARD are the folks you start and end with. If they cannot or refuse to do the right thing, it's on the homeowners to hold them accountable or replace them. Some folks don't give a hoot about doing the right thing - hence the "but everyone's doing it" response. That doesn't work (usually) with your children, so why let grown-ass people get away with it?




And how do homeowners really find out about what goes on?





Most do not care until it hits them in the pocketbook or they are told they cannot do something.
MarkW18


Posts:1289


12/04/2019 4:07 PM  
Posted By EdC5 on 12/04/2019 7:26 AM
Posted By MarkW18 on 12/03/2019 2:02 PM
Posted By MarkM19 on 12/03/2019 1:48 PM
MarkW,
I can tell you that Greed and Corruption run rampant in many HOAs. If it is not in yours you are lucky. If every board member had their eyes wide open all the time it is easy to spot. The problem is most don't have the time, energy or knowledge to see bad things when they happen.

The only way to keep boards and HOAs safe is to eliminate all chances of this by not allowing any opportunity for it to take root and grow.



Sorry, the guy in the White House doesn't feel it's a problem, so why should a simple Board member feel any difference. Sorry, but the norms have changed.

That's my opinion and I WILL stick with it!




You are obviously not a CAM in Florida. Florida statute addresses this directly:

720.3033(2):If the association enters into a contract or other transaction with any of its directors or a corporation, firm, association that is not an affiliated homeowners’ association, or other entity in which an association director is also a director or officer or is financially interested, the board must:

(a) Comply with the requirements of s. 617.0832.
(b) Enter the disclosures required by s. 617.0832 into the written minutes of the meeting.
(c) Approve the contract or other transaction by an affirmative vote of two-thirds of the directors present.
(d) At the next regular or special meeting of the members, disclose the existence of the contract or other transaction to the members. Upon motion of any member, the contract or transaction shall be brought up for a vote and may be canceled by a majority vote of the members present. If the members cancel the contract, the association is only liable for the reasonable value of goods and services provided up to the time of cancellation and is not liable for any termination fee, liquidated damages, or other penalty for such cancellation.




You got me! I am not a CAM in Florida, I just have certifications as a CMCA, AMS and PCAM. Sorry.
JenniferD8
(Michigan)

Posts:54


12/06/2019 12:52 AM  
The OP didn't state what type of work the board member is doing. We have a board member's husband who will work around the condos fixing small items such as siding or soffit that have come loose. The board member that oversees the buildings will just contact this individual when small jobs come up. Why? Because it's so difficult getting another contractor to come out to make such small repairs. I see it as a win-win.
MelissaP1
(Alabama)

Posts:9444


12/06/2019 4:52 AM  
I think it comes down to the "culture" of the HOA. Some HOA's this would be forbidden and others it is status quo. It's what people are comfortable with. Our ex-President quit so he could get jobs with members in the HOA. That is mostly because he was a con-man and liar... I wouldn't pay him a dime of HOA money till he got licensed/insured and put in a bid with other contractors. We had a 3 bid rule. So he was treated just like any other bidder. Unfortunately he was so engrained into our HOA culture that he would win jobs...

For me, I don't have a problem with a board member or any HOA member bidding on a job or even suggesting a contractor. If they meet the requirements of being licensed/insured and BID with others, then I am okay with it. The problem comes up when HOA hires an unlicensed "good neighbor". That can get it into trouble for insurance reasons and how do you measure quality of it?

I like to say it's like living on an island with 2 Barbers. 1 barber cut hair great. The other cuts hair crooked. Which barber do you pick to cut your hair? The one with crooked hair or the one with great hair? You choose the one with crooked hair. There's ONLY 2 barbers so the other one has to cut each others hair... If that barber is on the board of the island... Who do you hire?

Former HOA President
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > Board Members Bidding on Jobs



Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement