Conflict Of Interest Question

Started by MikeM46 • 6 replies • 524 views

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MikeM46 (Alabama)
Posts: 7

Posted:

We have a long standing Board member who's husband is employed by the Landscape Company contracted by the HOA. It has come to light that we have not bid out this contract in 12 years. Most of the Board members agreed that was too long and when the contract comes back up it should be bid based on a provided scope of work. Obviously this has created tension between said Board member and the requested action once contract expires. Said Board member was recently elected as Treasurer and our monthly reports we have each month now do not show our highest 2 contract payments we have (Landscape and Management Company.)
Am I reading too much into this or should it be a cause of concern?

Thanks
Mike (Sitting President of HOA)

CathyA3 (Ohio)
Posts: 6,299

Posted:

Yes, it is a cause for concern because the board member has a financial interest in the outcome of any vote on a landscaping contract. That's the definition of conflict of interest.

At the very least she should recuse herself from any discussions and voting on the awarding of the contract. I include the discussions as well since she can provide information that would give her husband's company an unfair advantage. And I believe in re-bidding contracts regularly - it helps keep people honest and on their toes.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Forgot to mention, your financials need to include all relevant information, so she needs to be called on the missing info. And if it's not an honest mistake, the board should consider removing her from her officer position.

KerryL1 (California)
Posts: 14,550

Posted:

You do have an "interested" director with respects to the landscaping firm. She may not vote on any aspect of the firm's work. You can even ask her to leave the room when discussing this vendor's contract, performance, etc. so that all directors feel they can speak freely.

This should not create "tension" because it's standard procedure when there's a conflict of interest. If you have access to an HOA attorney fro quick free phone calls, ask her/him to explain this.

If she will not provide monthly expenses for landscaping and management, vote her out of the office of treasurer and appoint someone else.

Your property manage may be able to help with the financials.

AugustinD
Posts: 5,144

Posted:

A former HOA of mine had a director who owned a landscaping business. For several years, the HOA contracted with this director's landscaping business. Enough members got wind of it that they voted the director off the board. Self-dealing like this is outrageous. If the board insists on continuing to contract with this landscaping company, disclosures must be massive. Also it's highly likely that the director is (or will be) sharing with her spouse the bids from other landscapers, in violation of laws nationwise on bidding (generally speaking). I agree with CathyA3 and KerryL'1's advice.

MikeM46 (Alabama)
Posts: 7

Posted:

Thanks all who have replied. This has been helpful.

With regards to removing the dollar amounts paid from the monthly Treasurers report, it is the base monthly fee that was being removed from the report which is posted on the neighborhood websites we post our minutes in. I see all the financials that the Management Company sends over and all matches. The last 7 years have included said amounts for residents to see. Transparency was my thought. It just struck me as odd when this happened last night. Just another flag

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