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Conflict of interest

Started by LisaS32 • 14 replies • 976 views

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LisaS32 (Alabama)
Posts: 1
Posted:
I've been on here before and all I have received is flack about what I have posted. Well, now that I have the full story, I will share.
Our board has 3 people on it. We are only a 43 home community. Our fearless leader is a piece of work. He is a scammer and a cheat. He had a shed in his yard which he recently became unhappy about because everybody else on our street has a bigger shed. He called my husband and asked what size ours is. Ok, no big deal. Well, come to find out within that week he convinced his other 2 board members that our community needed a shed. So by 100% approval, he sold his shed to our community and applied that to his new shed.
They (and I mean he and his wife) justify it by saying we have landscaping equipment and decorations to store. Well, we have 0 landscaping equipment as we have paid landscapers come in, and all the deco we have is a few shopping bags of plastic Easter eggs.
I have notified the Management company and they are completely hands off and will not get involved.
So essentially he sold his shed not because we needed one, but because HE needed to buy a new one. Our HOA fees are really being put to good use, don't you think? We are not the only residents who feel this way.

JohnC46 (South Carolina)
Posts: 14,265
Posted:
Lisa

The BOD agreed, you disagreed. So far the count is 3 to 1 in his favor.

If you do not like how the BOD operates, run for election to it.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Well the management company has no reason to be involved. They work for the HOA. This is a HOA issue and a perception one. Mostly your perception. Can you look at this from other angles? If you can't then it's your view that is the issue.

For me, even though we did paid for lawncare, we still had some supplies for storage. Plus if we did any projects we could use the storage. Our clubhouse closet was used for the Christmas Decoration and our records. It's a small closet. So any extra storage would have benefitted.

So the President does sound like they wanted a new shed. What to do? Well let's just sell or give it to the HOA to use. Why not? Is it a totally useless cause or reason? I don't see it as so. If others had agreed to it, then that's just the way the cookie crumbles.

Sorry not being supportive of your view. I also had a scumbag President to deal with. However, in this case not seeing any conflict of interest. Just maybe a way to unload a shed to get a new one.
Former HOA President
AugustinD
Posts: 5,144
Posted:
Lisa, I agree with you that what happened with the shed is poor practice. I cannot say it was illegal though. JohnC is right that the best thing to do is to find a couple of others who feel as you do and run for the board. Though from experience, if most of the members at your HOA just do not care and are happy not to have to do all the volunteer work that serving on a board requires, then you are in a bad situation. The only solace I have to offer is that bad HOA situations are way too common nationwide.
KerryL1 (California)
Posts: 14,550
Posted:
Even though Lisa has left the forum, I agree with her that the president practiced self dealing: APPARENTLY,he acted in a way to benefit himself vs. looking after the best interests of the HOA as a whole. He used his position on the Board to get approval for the HOA to buy his shed.

To avoid a conflict of interest, he needed to inform the community that he would benefit from this transaction and he should have recused himself from the board vote.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Kerry it would be pretty hard to hide this. It's a big shed moved into the HOA common area. We don't even know for sure all the details. Just the perception of what someone believes happened.

I don't see the conflict of interest. It's more along the lines of taking advantage of a situation for personal benefit. Although it's not necessarily all personal benefit. The HOA would benefit as well with the availability of extra storage. Something that could be of benefit many. Always wish we had a shed for our HOA for a variety of reasons.
Former HOA President
KerryL1 (California)
Posts: 14,550
Posted:
"Taking advantage of a situation for personal benefit," a la Melissa, might be the same as the "self dealing" I wrote above. Self dealing is unethical.

Participating in a board vote off of which this prez will make money IS a conflict of interest. There is no problem IF he reveals that he'll make money AND recuses himself from voting on this topic.

What is your definition of conflict of interest, Melissa? C'mon, now!
BenA2 (Texas)
Posts: 1,273
Posted:
If a board member has any part of a decision that directly benefits himself financially, it is, by definition, a conflict of interest. An exception would be if the general membership received the same benefit. The fact that the HOA benefited by getting a good deal does not change anything.

This is the type of case you see used in ethics classes as an example of a flagrant conflict of interest.
SueW6 (Michigan)
Posts: 814
Posted:
"Intention" would have to be proved to determine if this is a conflict of interest.

If the Board decided to have a shed, and a board member simply said that he was going to get rid of his and it was for sale at a reasonable price, there is no conflict of interest.

The board motions would be 1) vote passed to buy and install a shed because the HOA needs one budget set for $X and 2) purchase available shed for $X, which a member happens to have for sale.

The minutes would need to be looked at.

BenA2 (Texas)
Posts: 1,273
Posted:
Quote:
Posted By SueW6 on 04/15/2018 10:52 AM
"Intention" would have to be proved to determine if this is a conflict of interest.

If the Board decided to have a shed, and a board member simply said that he was going to get rid of his and it was for sale at a reasonable price, there is no conflict of interest.

The board motions would be 1) vote passed to buy and install a shed because the HOA needs one budget set for $X and 2) purchase available shed for $X, which a member happens to have for sale.

The minutes would need to be looked at.


I disagree that intent is needed for there to be a conflict of interest. Conflicts of interest will inevitably arise and are not necessarily illegal or an indication that anyone did anything wrong. Where people get in trouble is in not recognizing a potential conflict and not taking appropriate action to minimize it.

In your scenario, there is clearly a conflict but the owner of the shed could simply recuse himself from voting to remedy the situation. He would make money on the deal but he had nothing to do with the decision of the HOA to buy the shed.

In the Op’s scenario, it appears that the president not only voted for but also suggested selling his shed to the HOA when there was no prior discussion that the HOA needed a shed. In that situation, even if he recused himself, he still used his official capacity for financial gain because he initiated and brokered the deal.

Again, the fact that the HOA may benefit from the transaction is irrelevant.
GenoS (Florida)
Posts: 4,276
Posted:
I'm glad my HOA doesn't permit sheds. Seems like they're nothing but a cause of trouble.
SueW6 (Michigan)
Posts: 814
Posted:
"In the Op’s scenario, it appears that the president not only voted for but also suggested selling his shed to the HOA when there was no prior discussion that the HOA needed a shed."

That wasn't completely clear. That's why I said to go to the minutes.

The "order" of the decision is important.

The OP seems to think that this person pushed the idea that a shed was needed on the board first, in order to sell his own shed to the association. She seems to think that the shed is useless. All that would have to be proved.

(I'd be interested to hear how much $$ this all involves)

DouglasM6 (Arizona)
Posts: 724
Posted:
I'm probably missing something, but I see nothing wrong with the shed sale to the HOA. If it was a bad thing the other 2 director's would have voted no.

This may be more of case where people just don't like each other. Nit-picking is a good term for it.
JanetB2 (Colorado)
Posts: 4,219
Posted:
Lisa ... the vote was per your statement 100% of BOD approval. Even if he recused himself it would have passed (2 to 1 with the 3 member BOD). Is it really good standing for him to propose selling his shed to the HOA and to also vote on the issue ... NO. However, what do you propose doing about the situation after the fact???

If you and your members do not like this BOD members tactics and consider them unethical or immoral ... you have the choice of replacing the individual with someone willing to take on the responsibility. OR you and all the other homeowners should have been at the meeting where the vote took place and voiced your negative opinions ahead of the vote. Apathy and not attending meetings is not a reason to later complain about the outcomes.
RyanV2 (New York)
Posts: 5
Posted:
Ouch, you appear to be stuck in a sticky situation plus the odds are not in your favour.

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