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Tag Archives: conflict

Beware Conflicts When You Hire Board Members’ Companies–Part 2

When you recruit people to serve on your HOA board, experts recommend that you look for people–like lawyers and insurance brokers–with expertise that can help you make good decisions.

Can you take that concept a step further and hire those board members or their companies when your association needs help? For example, if one of your board members is an association attorney, can you hire that board member’s firm to represent your association in a legal matter? What about hiring a board member who’s a CPA to file your association’s tax returns?

In this two-article series, we provide a rundown. In Part 1, we discussed the hoops you must go through to hire board members and their companies. Here in Part 2, we discuss whether those hoops are worth the effort.Should You Hire Board Members?

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Neighbor thinks HOA president has a conflict

Q. The president of our HOA is also a property manager and rental agent in his “day job,” as well as a mortgage broker. He manages many rental properties in our community. A group of owners in our subdivision have asked for a cap on the allowed percentage of rental homes in our community, which is now nearly 40 percent. In response to this request, the president of our HOA formed a committee of possibly two other people, and is now saying that the committee does not agree with a rental cap. In my opinion, all decisions by the board are influenced by the president’s other businesses, including stretching rules for his tenants. I and others believe that his other businesses constitute a conflict of interest, and that he should resign as a board member. I presented a written complaint to the board recently, and I am scheduled to appear before the board this week. Do you agree that he has a conflict of interest and should step down? He also voted himself onto the board by canvassing door to door and collecting the majority of proxies prior to our annual meeting. In our estimation, his control of our neighborhood is decreasing property values due to the high number of rentals.If your HOA is a nonprofit corporation (as most are), your HOA and your board of directors are governed by the N.C. Non-Profit Corporations Act. This act holds directors to the following standards: “A director shall discharge his duties as a director, including his duties as a member of a committee: (1) In good faith; (2) With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and (3) In a manner the director reasonably believes to be in the best interests of the corporation.” The section of the act that addresses director conflicts of interest pertains primarily to “transactions” with the corporation in which a director has a direct or indirect interest.

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