HOA director self dealing

RobertT5 (Michigan)
Posts: 1

Posted:

If a realtor also serves as a HOA president and also represents home sales in the neighborhood, is this a conflict of interest?
If this realtor promotes a non-renting bylaw while representing a property in the neighborhood, is this also a conflict of interest? Are there any grounds for a lawsuit against the HOA or relator on behalf of the represented homeowner?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Robert,

Welcome to HOATalk.

As Boardsource.org states on it's website, Conflict of interest is difficult to define but typically arises whenever the personal or professional interests of a board member are potentially at odds with the best interests of the nonprofit. Therefore, you need to ask if the actions of the Board and/or a member of the Board are not in the best interest of the Association. The fact that a member of the Board is also a Realtor does not, in itself, create a conflict of interest. It depends on those actions.

Many Associations are considering rental limitations. There are several reasons why this is being done but the most often reason I've heard has been the changes in FHA/HUD funding requirements. When the housing bubble burst, the Federal government enacted several laws. One of them resulted in the FHA tightening their loan requirements and started looking at the financial health of the Homeowner/Condominium Associations. Since the FHA is the main purchaser of mortgage notes, most banks have adopted the same policies. These new rules limit the number of rentals allowed in the development. Although non-condominiums are typically exempt from the new rules, banks are still asking for this information.

This may be why the individual is promoting a non-renting bylaw. What reasons are provided to support the proposed amendment?

Here is a link to the FHA/HUD regulations:

The Actual regulation

FAQ about the regulations

Links to threads on this site about rental restrictions

Many have said that with the way the courts and laws are, an individual could sue a ham sandwich. To determine what legal options are available, you will need to take all of your information to a local attorney and ask them. Personally, in my layman's opinion, you haven't given enough information to show how any of the individuals actions damaged you to the point that legal action is needed to make you whole.

If you believe that any of your Board members are not making decisions in the best interest of the Association, members typically may:

1) Elect someone else at the next election (perhaps you will volunteer to serve)
2) Solicit signature for a special meeting to recall the individual/s (procedure should be within your governing documents).

You may want to start attending board meetings and review past minutes of board meetings to understand why things are being done the way they are. Perhaps, by attending, you will be able to provide a solution others have not thought about.

Hope this helps,

Tim

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By RobertT5 on 06/21/2012 4:59 PM
If a realtor also serves as a HOA president and also represents home sales in the neighborhood, is this a conflict of interest?
If this realtor promotes a non-renting bylaw while representing a property in the neighborhood, is this also a conflict of interest? Are there any grounds for a lawsuit against the HOA or relator on behalf of the represented homeowner?

If the homeowner represented by the realtor is a Republican, is the realtor prevented from voting for Democrats?

If the realtor also represents another homeowner who favors the non-renting rule, would it be a conflict-of-interest for the realtor to refrain from promoting the non-renting bylaw? Which client gets to dictate what the realtor may do when he is not acting as a realtor?

If you feel that this realtor is not working in your best interests why not just hire another realtor instead of trying to control his extra-curicular activities?

BTW, in most parts of the country there are so many foreclosed properties on the market for a fraction of their former selling prices that few investors seeking to purchase a rental property will go through a traditional realtor.