Conflict of Interest

Started by AmandaW3 • 4 replies • 1088 views

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AmandaW3 (Texas)
Posts: 1

Posted:

If a homeowner owns the HOA's management company AND he sits on the board, is this a violation of any HOA laws in Texas? I have been looking but so far, I can't seem to find any straight answers. Thank you!

FrankN (Texas)
Posts: 15

Posted:

I don’t think that this is a violation of any Texas statutes, but I’m not for sure. From a practical standpoint I fail to see a problem, the rest of the BOD has a duty to make sure his mgt company doesn’t receive more favorable contract terms. Why do you ask? It appears you’re trying to find a stink where there’s no manure

MaryA1 (Arizona)
Posts: 7,043

Posted:

Amanda,

I looked through the TX HOA statutes and those for nonprofit corps and could not find any statute applying to conflict of interest. Generally a conflict of interest occurs if the person with the conflict has a monetary benefit in the transaction. I'm sure all the board members are aware that this board member owns the mgmt co; therefore there should be no need to disclose this. The board member should not vote on the mgmt co contract or express any opinions on the contract and, in fact, should excuse himself from the meeting at which the contract is discussed.

KirkW1 (Texas)
Posts: 1,665

Posted:

While I don't think there is a legal issue, I don't think this is proper. In my opinion he should step down from the Board. For that matter, I would not vote for him and would actively gather proxies to remove him.

GloriaM (North Carolina)
Posts: 829

Posted:

Legally perhaps not in your state; but ethically this is awful, a board member and owner of the MC running your community. He/she needs to choose one or the other manage and get off the board; or stay on the board and stop managing.

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