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RachelW (South Carolina)
Posts: 1
Posted:
I live in Dorchester County, South Carolina. Our Nominating committee is putting together a form for "BOD applicants" to complete and submit.
We have a disagreement on whether the application can ask if the applicant was convicted of a felony in the past 5 years. I have tried to research this, and have not found anything definitive. Can anyone help?
SheliaH (Indiana)
Posts: 6,964
Posted:
You can ask, but if the committee then said "well, then, you aren't eligible for Board service," you may run into trouble if your documents don't specifically exclude this (I assume you checked them as part of your research - if not, do that immediately).

If the goal is to ensure convicted felons are excluded from Board membership, it may be best to discuss this with your association attorney to see if the bylaws need to be updated accordingly. You should also discuss the pros and cons of this (e.g. what if the felony was, say 10 years ago, and the person has since turned his/her life around? What happens if someone on the nominating committee broadcasts this information all over the neighborhood?)

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
JohnB26 (South Carolina)
Posts: 1,001
Posted:
most by-laws require fidelity bonding for any director/officer authorized to access corporate funds ~ i.e. sign checks or have access to 'banked' funds

most bonding companies and/or insurance companies will not bond a convicted felon (depending on the nature of the felony)

ergo: certain felonies would disqualify from serving
LarryB13 (Arizona)
Posts: 4,099
Posted:
I am not personally familiar with nominating committees. It always sounds like a way for those in power to ensure that candidates who might rock the boat will be excluded. I prefer self-nominations.

What you can appropriately ask may be found in the Articles of Incorporation, the Bylaws, or the CC&R's.

If your Articles of Incorporation state requirements for serving on the board, then it is appropriate to ask whether a candidate meets those requirements. Likewise, if your CC&R's state requirements for a board candidate, such as being an owner, then asking those questions would be appropriate.

If your both your CC&R's and Articles of Incorporation are silent on the issue then the Bylaws would control. The reason I put Bylaws last is that they are usually the most flexible of the governing documents. If your Bylaws do not prohibit a convicted felon from serving on the board then it is not appropriate to ask. Should you wish to ask the question, it would be best to amend the Bylaws to prohibit convicted felons from serving before accepting nominations and then asking the question.
GlenL (Ohio)
Posts: 5,491
Posted:
Rachel to my lay knowledge the only state that prohibits convicted felons from serving on an HOA Board is Florida. There the question would be appropriate but as other have stated, unless it is a requirement in your CC&R's or state statute, best not to open that can of worms.

Studies show that 5 out of 4 people have problems with fractions
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Convicted felons means they served their time and were let go out of prison after served. So they are now able to be part of society again except for the right to vote or maybe own a gun. Otherwise, they should have the right to be on their HOA board. The process of getting on the board means the other owners VOTE on them into office. People tend not to vote for those who are not paying dues, have a questionable past, or loud mouth bat crazy.

The only restriction should be the person is an owner and up to date on dues to qualify. That is not always the case but the only 2 things I believe is a factor in being a board member.

Former HOA President
JohnB26 (South Carolina)
Posts: 1,001
Posted:
+ the ability to be fidelity bonded
TimB4 (Tennessee)
Posts: 21,059
Posted:
Quote:
Posted By JohnB26 on 10/08/2014 9:46 AM

most bonding companies and/or insurance companies will not bond a convicted felon (depending on the nature of the felony)

Well, having just shopped for crime insurance (which serves as the Associations fidelity bond), I can honestly say that the companies never asked and the policy does not have any language that says they will not pay if money was taken by a convicted felon. Perhaps this is because we are all volunteers (no paid staff).
NpS (Pennsylvania)
Posts: 4,216
Posted:
Quote:
Posted By JohnB26 on 10/08/2014 9:46 AM
most by-laws require fidelity bonding for any director/officer authorized to access corporate funds ~ i.e. sign checks or have access to 'banked' funds

most bonding companies and/or insurance companies will not bond a convicted felon (depending on the nature of the felony)

ergo: certain felonies would disqualify from serving

It should be easy to find out whether your current board members were required to provide criminal history information as part of the HOA's application for fidelity insurance renewal.

Also, if the conviction was for fraud, theft, or a similar offense, then there is likely to be further investigation by the HOA's insurer.

Sikubali jukumu. Read all posts at your own risk.
TimB4 (Tennessee)
Posts: 21,059
Posted:
Quote:
Posted By RachelW on 10/08/2014 8:48 AM

Our Nominating committee is putting together a form for "BOD applicants" to complete and submit.
We have a disagreement on whether the application can ask if the applicant was convicted of a felony in the past 5 years.

In my opinion, if there is no written qualification factors in your governing documents one must meet to serve, then there is no need to ask any other questions then if they are willing to serve.

If there are qualification factors (must be a member, must be in good standing, etc.), then it is proper to ask questions about those qualifications.

Other then the scary factor of having a convicted felon on your Board, what is the reason the committee would want to know?

Keep in mind that there are varying degrees of felonies. For example: per, SC 44-4-530, failure to comply with quarantine rules is a felony.
LarryB13 (Arizona)
Posts: 4,099
Posted:
In my state, a person with a felony conviction, bankruptcy, or one who has previously been a director of an administratively dissolved corporation may serve as a director but is required to disclose those conditions on the annual report to the corporation commission.
NpS (Pennsylvania)
Posts: 4,216
Posted:
Posted By RachelW on 10/08/2014 8:48 AM
We have a disagreement on whether the application can ask if the applicant was convicted of a felony in the past 5 years.

If this exact question is on the insurance questionnaire that every director must complete and sign in order for the HOA to obtain fidelity insurance or to obtain fidelity insurance at a reasonable price, then IMO it is a totally appropriate question to ask of every candidate.

If the question was not asked, and as a result the rates went up or the HOA lost its ability to obtain fidelity insurance, then IMO those who could have but didn't screen for this known issue were derelict in their duties.

Sikubali jukumu. Read all posts at your own risk.
JohnB26 (South Carolina)
Posts: 1,001
Posted:
Quote:
Posted By TimB4 on 10/08/2014 2:51 PM
Posted By JohnB26 on 10/08/2014 9:46 AM

most bonding companies and/or insurance companies will not bond a convicted felon (depending on the nature of the felony)


Well, having just shopped for crime insurance (which serves as the Associations fidelity bond), I can honestly say that the companies never asked and the policy does not have any language that says they will not pay if money was taken by a convicted felon. Perhaps this is because we are all volunteers (no paid staff).

crime insurance is NOT fidelity bond(ing)

crime insurance protects you from the criminal action of OUTSIDERS and is (generally) limited to $50,000 ~ e.g. theft of a cash deposit, forged check, etc.

fidelity bond would protect against embezzlement by an INSIDER for the FULL AMOUNT

ps. if your crime insurance 'acts' as your fidelity bond you may be in for a very rude awakening one day
TimB4 (Tennessee)
Posts: 21,059
Posted:
Quote:
Posted By JohnB26 on 10/09/2014 6:19 AM

crime insurance is NOT fidelity bond(ing)

True. However this is what the Insurance company offers and is what satisfies our statutes.

Quote:
Posted By JohnB26 on 10/09/2014 6:19 AM

crime insurance protects you from the criminal action of OUTSIDERS

Actually, it protects from the criminal activities from anyone serving on the Board or on a committee. There is even an option to insure independent contractors.

Quote:
Posted By JohnB26 on 10/09/2014 6:19 AM

and is (generally) limited to $50,000

Actually, it can be any amount you desire. We are required by statute to have an amount equal to our reserves plus 1/4 of yearly assessments. See: https://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+55-514.2

Quote:
Posted By JohnB26 on 10/09/2014 6:19 AM

fidelity bond would protect against embezzlement by an INSIDER for the FULL AMOUNT

So does our crime insurance.

Quote:
Posted By JohnB26 on 10/09/2014 6:19 AM

s. if your crime insurance 'acts' as your fidelity bond you may be in for a very rude awakening one day

Perhaps. However, that is not the way we are reading or understanding the policy.
JohnB26 (South Carolina)
Posts: 1,001
Posted:
I hope you are correct

but

we went through a very bad process with an insurer's 'agent' who had sold us a 'bill of goods'

please read your actual 100 page policy (not just the declaration page or the 'synopsis')

we discovered:

crime insurance is a 'standard' part of most commercial 'boiler plate' policies

a fidelity bond is an entirely different issue and is issued to cover SPECIFIC persons under specific conditions and requires INDIVIDUAL approval by the issuing company

BEST OF LUCK

CAVEAT EMPTOR
TimB4 (Tennessee)
Posts: 21,059
Posted:
Thanks John. I will take another look at it.
JohnB26 (South Carolina)
Posts: 1,001
Posted:
ps. In my 'neck-o-the-woods' fidelity bonding is $550 per year for 4 officers (who must be individually named and 'vetted') per $250,000.

pps. Your only coverage is outlined in the contract/policy which both you and the insurer signed. All else, even if stated by the 'agent,' is 'puffing' and unenforceable.
AnnH5 (Florida)
Posts: 304
Posted:
If in doubt. confer with your Association's attorney. Yes, it will represent a legal expense. However, if you are in doubt as to whether asking an applicant for the Board if they have been convicted of a felony AND some members desire this question on an application, you can settle it with a legal opinion.

I haven't met any convicted felons who want to serve on our Board. I have met some Board members who have blatantly violated laws (in the course of their actions as Board members and/or in their personal life) but these individuals have unfortunately not had the law catch up to them as of yet.

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