Conflict of Interest

Started by SusanS9 • 3 replies • 1463 views

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SusanS9 (California)
Posts: 56

Posted:

When public officials are found to have engaged in serious conflict of interest in CA (eg. awarding contracts to family or friends), he/she is guilty of felony conflict of interest, punishable by fines and/or imprisonment. What happens when board members of homeowner associations do the same? What recourse do homeowners have besides recall?

SusanW1 (Michigan)
Posts: 5,202

Posted:

Hang on a minute -
"Conflict of interest" means that the board member would get some kind of monetary gain or advantage over other board members.

Are you talking about "steering" contracts to friends? Bribes? Kickbacks/
THAT would be unethical and cause for removal from the board and probably illegal.

The bidding process MUST be followed. Sealed bids from requested from companies, ALL bidding on the same job.
Bids are opened at a board meeting and one is selected (not necessarily the lowest bidder)

BrianB (California)
Posts: 2,820

Posted:

there is always a personal lawsuit against either the board or the individual board member (who should be covered by insurance up to a point).

Remember, in the good old USA, you can sue a ham sammich if you want to.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Susan,

You may want to check out the CA nonprofit corp statutes for definitions of conflict of interest; I could not find out anything in Davis-Stirling.

As far as punishment of a board member who engages in a conflict of interest. . . If there is no state agency to oversee HOAs then the only avenue is for the member(s) to file a lawsuit. Of course that can be very costly and the expense is born by the member while the board member is protected by the HOA's D&O ins. BTW, if the board awards a contract to a family member or friend that is not necessarily a conflict of interest, which generally means there is a monetary gain to the person with the conflict.

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