HOA President caught trying to pad vendor bill with work for himself - What should we do ?

I'm the treasurer of an HOA board in FL. We just caught our president ordering the landscaper to remove a 10 foot coconut palm tree from the common area because "it was obstructing his view." The tree was just replaced after the last hurricane, at which point we paid $600 for it. It's healthy and well established, and we consider it an asset of the association. Moving or removing it would kill the tree.

The president told the landscaper to add the cost of the removal (several hundred dollars) to the association's bill, at the same time the landscaper was removing another tree that is dead.

What can we do here ? Is this attempted theft ? Can we charge him, or remove him ? He is not in the least embarrassed or apologetic, and we no longer trust him to interact with vendors or approve bills.

Thanks for all input - none of this is covered by our association documents. Not sure if there are any state laws that would apply.

I'm at least hopeful that you managed to stop the transaction before the tree was moved, right?

If so, I would suggest as Glen says, remove him from his office as president.

If not, I would suggest doing as Glen says (remove him from his office as president) AND send him a bill for the cost of the moving of the tree.

OR have the landscaper bill him directly.

Thanks to all of you.

Yes the landscaper came to me before he removed the tree to let me know, and we did stop it. I challenged the President directly, and instead of being embarassed and apolgetic the president continues to argue that he wants the tree removed. He has not offered to pay for it, but we would not agree to having it removed anyway. On top of that now he wants to fire the landscaper, and has started getting bids for a replacement.

We only have three on the board: myself, a Secretary, and this President. I did check the bylaws and I do not see anything in there that covers duties of the board nor removal. I will ask our management company to see if they have anything I don't have on hand.

We have a meeting on May 5th and I will make a motion as you've suggested. Hopefully our secretary will second it, and vote for removal.

Sad that folks can't simply do the right thing, isn't it ?

Please pass on any/all additional advice and again much appreciated !!

Thanks Glen do understand and appreciate the follow up.

Lisa,
1) The President is correct, any Board member can make a motion. It is up to all of the directors to decide by a vote.
2) If a motion is made you have the right to bring up your concerns during the discussion before a vote is taken. If you think the motion is valid conflict of interest then you could call for a "point of order" at the time he mades the motion and state that the motion should not be considered because he has a conflict of interest.

Hi Daniel,

I understand what you say about picking your battles, but as Treasurer I believe it's my duty to call out improper use of funds. In our HOA only Board members can speak to contractors. The President directed the contractor to remove a tree, without discussion nor vote, from the common area for no reason other than it interfered with his view. In FL coconut palms are expensive. This tree is an asset of the association. Besides the value of the tree (we paid $600 five years ago) it would have cost $500 to have it removed.

So we're talking about $1000 expense here that again will injure everyone financially to the benefit of only the President.

This certainly seems like a breach to me, and I was under the impression that I am obligated to call them out when I discover them.

Besides the fact that it's a beautiful tree.

Am I wrong here ?

Despite what you say, the President used improper process, not an improper use of funds. Whether your Common Area is better off with or without a tree is a matter of opinion, not fact. Removing a tree is not an improper use of funds. If you want to keep the tree, vote to keep the tree.

Look: You can make an enemy of the President if you want. Do you know what that means? It means that every time that you propose something, he votes against it, even if it is a good idea. That's just how people are. Since you have a 3-person Board, that means that you hand all the power to that third Director. Unless that third Director shows up and votes for your motion, your HOA can't do anything. If you keep the President open to you (or rebuild the relationship), you'll have a better chance of getting motions through. I'm pointing this out so you don't get boxed in and unable to do anything.

I see what you are saying about a breach but, in the realm of HOAs, this incident is minor stuff. Granted, your President is selfish. All too common. But this is hardly the scandal that you make it out to be.

Not surprisingly, I disagree.

The incident is not minor. And if allowed to go unchecked, can, and mostly like will, escalate into a pattern of abuse of power.

The funds weren't wasted because, so far, the removal of the tree has been stopped.

Even if the board ultimately votes to remove the tree, at least a proper procedure has been established.

That's why I don't think what the president did was "minor."

The president intended to set (or continue?) a precedent that he is above any board votes and/or motions. He apparently believes that what he says, or wants, does not need to be brought before the other 2 members, whose votes and opinions have the exact same weight as his vote or preference does, especially when it comes to any use of HOA funds.

And that horse has already left the barn anyway. This president knows that she is going to hold him accountable. That was evident when she stopped the landscaper from removing the tree (which was the right thing to do, by the way).

In the end he may get his way. But he will know that he cannot go behind the board's back without risking being called out for it.

I also agree with her assessment. I'd rather nothing get done than continue to enable an unethical and potentially dangerous (for the HOA) president unchecked.

Daniel,

I've been on a bunch of boards, albeit not an HOA one. I'm Vice Chair of a large national 501(c)3 and after having been a banker for 20 years now own and operate my own business.

Here's my take. Established organizations tend to run themselves most of the time. They have a budget, contracts, vendors, sometimes staff, and unless there is some large problem or major improvement, boards don't normally do much. They really shouldn't do much other than govern things and supplement the staff's knowledge with what they can add based on their personal experience.

In our case right now, we have no large problems or major improvements. The owners are older, well off, they pay their maintenance, and would be thrilled to trim the budget a bit or improve the service a bit but otherwise they just want to know that no one's stealing or screwing the place up. They've spent alot on repairs since the batch of hurricanes they have and like the way the place looks. They want to keep it looking nice going forward.

So having an activist board isn't a positive thing, at least in our case. Having a President that wants to make noticeable changes when no one is asking for them and without involving the owners, would cause issues. Having a President that manipulates situations based on his own self interest, and spends thousands of dollars or drains the reserve on a whim of his would cause a riot.

And as a business owner, a banker with an accounting background, and a leader of other boards I have to add that no treasurer I've ever encountered knowlingly signed off on an expenditure that was not shown to be in the corporations best interest. That's malpractice, and it's deemed collusion in court if it's shown that the treasurer knew about it and did not act against it. It doesn't matter whether it's $100 or $10000, the treasurer is responsible for the integrity of every transaction. People who are timid about asking questions should simply not be the treasurer !!

I really don't care what kind of interpersonal conflicts my objection to the President's behavior contributes to. If anyone caused a controversy he did. If there are projects that we really need to do, or improvements the owners really want, trust me they will get done. And they will get done properly. As for some dishonest jerk of a president's personal agenda - forget it !!

:+D

Apparently because the other boards I've been on have been established properly and are comprised of honest and polite people with good behavior. You are absolutely right Daniel, this has been an excellent learning experience for me and helped along well by all of your advice. Much appreciated.

Lisa- nice response.

Michele would you like to be on our board ? We have a nice end unit for sale !!! THANKS !