Conflict of Interest and Ethics in Contracting

Started by MikeP6 • 13 replies • 1412 views

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MikeP6 (Maryland)
Posts: 2

Posted:

I have a few questions related to a situation on our BOD...Thanks in advance for your insight and assistance.

-Can a Community Manager who was previously employed by our current Management Company serve on our Board of Directors? She is currently a Community Manager with another Company and manages another local HOA. The issue we are having is that she is constantly critisizing the current Community Manager and their Company and it leads to a lot of unnecessary conflict with the BOD.

-The above Board Member uses her "@xyzcommunitymanagementcompany.com" email address to conduct HOA business for our BOD as a Board Member. I have asked repeatedly that she cease using her professional email address and signature block which identifies her as a Community Manager because she does not serve in that capacity in our community and I belive this is a misrepresentation and causes confusion.

-Is it considered unethical for a Board Member to solicit a contract for services for which the community already has a contract? Specifically, we recently approved a lawn maintenace contract for 2013 and a board member solicited a competing bid from another knowing that we had already contracted these services for 2013?

Thanks!!

FredS7 (Arizona)
Posts: 927

Posted:

-Is it considered unethical for a Board Member to solicit a contract for services for which the community already has a contract? Specifically, we recently approved a lawn maintenace contract for 2013 and a board member solicited a competing bid from another knowing that we had already contracted these services for 2013?

I wouldn't say unethical, I would say dumb. The contract has already been let. It is a waste of time for the other company to write up a bid.

Now if the present service is less than satisfactory...the existence of another bid MIGHT open a conversation and lead to the Board requesting proposals (plural intended) for the next contract. Which, depending upon the wording of your existing contract, might be in 2014.

MikeP6 (Maryland)
Posts: 2

Posted:

@FredS7

I agree. We extended the current contract as a direct result of the Company's performance in 2012. There is no desire to solicit additional bids, we did that a few months ago to ensure our current contract remained equitable. Personally, I just see it as "bad business" to solicit bids which are not in "good faith." Seeing as we already have a landscaping contract in place, there is virtually zero chance of a competing bid being considered.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Mike

I am assuming she is an owner and was/can be elected to the BOD. If so then her past and present professional associations have little to do with it.

Her Email address is of little importance. That said, a case could be made that it might be confusing to some. I know one BOD that set up Email addresses for each BOD member with one of the free Email sites...jtsmithtvcbod@soandso

She seems like a BOD member that will have to "held in check" by other BOD members. Many BOD's have such a PIA member. She is yours. On one of the BOD's I served on the PIA member was an attorney that was afraid to burp without a legal opinion from our association lawyer.

In one townhouse/standalone HOA the BOD wanted to allow certain architectural modifications. One of the owners against the changes was a property manager for a high rise condo association. She kept throwing objections up to the BOD like the mortgage holder would have to approve such. She was costing the BOD time and money. In all cases what she was saying was either applicable to high rises and/or her general understandings were way off. After being shown she was not correct about several issues, she backed off. Years before, she had been cited for expanding her landscaping onto common area.

I do not know how your association decides to solicit bids, but my past experience was the BOD authorized solicitation of such. We had a conflict along these lines one time on a fraternal organization BOD I served on. One BOD member had to be reminded that he did not speak for the BOD and he must make that clear when he did things. He said well are you telling me not to collect information. We said we are not nor cannot stop you from doing so, but you must make it clear you do not speak for the BOD.

Many associations also have a CCO...Chief Complaining Officer.....LOL

Hope this helps.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By MikeP6 on 12/13/2012 5:14 AM

Can a Community Manager who was previously employed by our current Management Company serve on our Board of Directors? She is currently a Community Manager with another Company and manages another local HOA. The issue we are having is that she is constantly critisizing the current Community Manager and their Company and it leads to a lot of unnecessary conflict with the BOD.

The members of your association may elect whomever they wish to the board. If this person was elected, then you are really questioning the wisdom of the same members who may have elected you. On the other hand, if she was appointed to the board by other board members, then I have to ask what were you thinking? It's not wise to appoint someone to the board who holds a grudge. If she was appointed to the board then I would question the wisdom of those who approved her appointment.

Quote:

Posted By MikeP6 on 12/13/2012 5:14 AM

The above Board Member uses her "@xyzcommunitymanagementcompany.com" email address to conduct HOA business for our BOD as a Board Member. I have asked repeatedly that she cease using her professional email address and signature block which identifies her as a Community Manager because she does not serve in that capacity in our community and I belive this is a misrepresentation and causes confusion.

I would agree with you ONLY if your association provides its board members with an email address for conducting official business. If your association does not provide that then this is a foreseeable outcome of that policy. If the board expects its members to use their own personal accounts for board business then this member is not out of line using her professional account.

Quote:

Posted By MikeP6 on 12/13/2012 5:14 AM

Is it considered unethical for a Board Member to solicit a contract for services for which the community already has a contract? Specifically, we recently approved a lawn maintenace contract for 2013 and a board member solicited a competing bid from another knowing that we had already contracted these services for 2013?

That would depend a lot on how the board member presented himself/herself to the vendor. If the board member claimed to have authority to solicit bids on behalf of the association, then it was wrong. If the board member told the prospective vendor that he/she was not satisfied with the current vendor and was seeking bids on his/her own to present to the board then I see nothing wrong with that. Basically, what the board member did was said, "I do not like the current deal and here is an alternative." I find that better than "I don't like the current deal but have nothing better to bring to the table."

AmyA1 (Washington)
Posts: 101

Posted:

Our chairman used to work for the Board of Corrections and is hiring registered sex offenders to do work around our clubhouse, pool and playground. They only have a business license.. not a contractor license.. she doesn't see a problem with that and will continue to hire them even though many homeowners have objected.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I'd rather have a registered sex offender than one that hasn't been caught yet...I don't see the big deal with the business license versus contractor one. A HOA should ONLY hire those with a business license and insured.

My recommendation is don't have sex with the sex offenders and no rules should be broken by either party...

Former HOA President

AmyA1 (Washington)
Posts: 101

Posted:

Washington State requires Contractor Licensing. If they are working on my or someone's property no big deal. But having them work around the kids on the playground or at pool does not sit well with me or many of the homeowners.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Not all sex offenders are pedophiles. You don't even know their convictions. Low level offenders are allowed to work in public places and live in them. NOT defending sex offenders but just don't like it when one uses it as an excuse to not like someone. It's just a diversion from the real issues.

I don't know the difference between contractor or business license. You can get a business license to work as a contractor. Any which way you slice it, it comes down to a tax issue. How one claims the taxes.

Just face it... You don't like this person. If you can do better then do. Otherwise let people do their jobs...

Former HOA President

AmyA1 (Washington)
Posts: 101

Posted:

If you had asked ..I do know what they are convicted of.. and that they are NOT permitted to be around children. In Washington State you have to have contractor's license to do the work they are doing. I'm in the construction industry and know the laws.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By AmyA1 on 12/15/2012 8:10 AM
Our chairman used to work for the Board of Corrections and is hiring registered sex offenders to do work around our clubhouse, pool and playground. They only have a business license.. not a contractor license.. she doesn't see a problem with that and will continue to hire them even though many homeowners have objected.

What is the nature of this "work around our clubhouse," etc? Are they doing construction work? Did your association get building permits for the work these guys are doing? If all they are doing is maintenance, such as cleaning, mowing grass, or pulling weeds they do not need a contractor's license. If they are doing the work at the direction of someone from the association and/or being paid by the hour, they are employees and not contractors.

BTW, there was a news feed story on this site a few week ago about an HOA in Nevada that was in a quandry about whether the person who changed the light bulbs in their common areas needed to be a licensed electrician. I wondered what that board would do if there was a real problem that needed a solution.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Amy,

I agree with your caution regarding sex offenders and your research into the offense in regards to contracted employees on your property. Nice work to discern the level of risk to your residents by learning the offender's crime and conviction.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Typically the BOD decides on who to hire, not just the President/Chair of the BOD. Did the entire BOD decide to hire said person/people?

I would also ask how do you know (not think nor guess) they are convicted sex offenders?

Concentrate on your issue. As an example if former sex offenders and you think that is dangerous then that is the issue, not the license or vis-a-versa.

Also depending on the type work one is doing, a business license is just fine. As an example, a landscaping, cleaning company, etc. business has a business license not a specialized license like an electrician.

Hope this helps.

GlenL (Ohio)
Posts: 5,491

Posted:

Quote:

Then rally your neighbors, find a candidate and vote her out when her term is up. If they are doing work that requires a license and don't have one, call the building dept, they love to fine people. Or write up an amendment to the Covenants that the HOA will only hire licensed, bonded, and insured contractors to work on the property. Get it passed and file it with the county.

BTW Do these "contractors" have workman's comp and insurance for if they damage the property? Oh and how often are these people hired, once a week, a month or every now and then?

Studies show that 5 out of 4 people have problems with fractions

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