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Potential conflict of interest for a board officer

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Guest Guest_Alex_H

I'm one of the board of directors of a homeowner's association. There is another board of director who is the president, and he also owns his pool service company. He is currently servicing our association swimming pool and is paid $5,200/year + chemicals and supplies (~ $1,500 / year) with the association funds. There are many homeowners are are very angry and disturbed when I found out of this a few months ago, but we're not sure if their concern is valid or not.

Is there anything in RONR that discusses a potential conflict of interest with the President being paid for doing pool services for the association?

In our by-laws, there is the following clause that I'm not sure would apply to this situation to allow the president to continue the pool service:

"This Association is not organized for profit. No member, member of the Board or Directors or Officer shall receive or shall be lawfully entitled to receive any pecuniary profit from the operations of the Association., and in no event shall any part of the funds or assets of the Association be paid as salary or compensation to, or distributed to, or inure to the benefit of any member, any member of the Board of Directors or Officer, provided, however, always (a) that reasonable compensation may be paid to any member, Director or Officer while acting as an agent or employee of the Association for services rendered in effecting one (1) or more of the purposes of the Association, and (B) that for his actual and reasonable expenses incurred in connection with the administration of the affairs of the Association."

One of the duties of Board of Directors is: "To keep in good order, condition and repair all of the Common Properties." I think that keeping the pool serviced would be part of this duty.

By the way, we were discussing if shifting his position to be vice-president would help reduce the anger of the homeowners, but could there still be a conflict of interest?

Please help bring peace and order back to our HOA.

Thanks.

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I'm one of the board of directors of a homeowner's association. There is another board of director who is the president, and he also owns his pool service company. He is currently servicing our association swimming pool and is paid $5,200/year + chemicals and supplies (~ $1,500 / year) with the association funds. There are many homeowners are are very angry and disturbed when I found out of this a few months ago, but we're not sure if their concern is valid or not.

Is there anything in RONR that discusses a potential conflict of interest with the President being paid for doing pool services for the association?

In our by-laws, there is the following clause that I'm not sure would apply to this situation to allow the president to continue the pool service:

"This Association is not organized for profit. No member, member of the Board or Directors or Officer shall receive or shall be lawfully entitled to receive any pecuniary profit from the operations of the Association., and in no event shall any part of the funds or assets of the Association be paid as salary or compensation to, or distributed to, or inure to the benefit of any member, any member of the Board of Directors or Officer, provided, however, always (a) that reasonable compensation may be paid to any member, Director or Officer while acting as an agent or employee of the Association for services rendered in effecting one (1) or more of the purposes of the Association, and (B) that for his actual and reasonable expenses incurred in connection with the administration of the affairs of the Association."

One of the duties of Board of Directors is: "To keep in good order, condition and repair all of the Common Properties." I think that keeping the pool serviced would be part of this duty.

By the way, we were discussing if shifting his position to be vice-president would help reduce the anger of the homeowners, but could there still be a conflict of interest?

Please help bring peace and order back to our HOA.

Thanks.

RONR says he shouldn't vote on the motion to hire his company (though he can't be forced to refrain from voting), but it doesn't say that there's anything wrong with his company taking the job. See RONR (11th ed.), pp. 407-408.

It will be up to your organization to decide the meaning of its bylaws.

As for peace in the association, free and fair discussion on the issue might be your best bet.

Changing from president to vice-president has no parliamentary significance.

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There's a friendly discussion forum nearby that sometimes takes the bylaws questions that are beyond the scope of this forum. (If Alex H cares to drop in there, I'm committing myslef to going over and taking a look. I don't often do this. It's been that kind of day.)

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Guest Edgar

Where is the friendly discussion forum? I can drop in.

You'll find a link conveniently located at the end of any one of our own Mr. Foulkes' thousands of posts.

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