Reader Questions - Directors: As Chairs and Landlords and Holding Multiple Offices

Dear Mr. Richardson,

Our HOA directors regularly nominate themselves as chairs of respective committees within the community. Needless to say, pet projects of individual board members get funded, while other committee groups not on the board scrape by.

Some of us within this HOA believe this practice constitutes a conflict of interest, However, we cannot find anything that specifically addresses the situation. So, is this practice illegal or should us “have-nots” just wise up and run for seats on the HOA Board?

S.L, San Juan Capistrano

Dear S.L.,

Committees are a valuable HOA resource. They handle ongoing subjects which require more specific focus than can be given in board meetings, and typically provide the board with reports or recommendations guiding the board within the area of the committee’s charter. Committees are also great training ground for future directors.

I have no problem with directors serving on committees, because it helps as a further point of communication with the board. However, directors are already usually working hard enough on their board responsibilities, so it may be fairer to have a non-director chair a committee.

Sometimes several directors serve on a committee, so that a quorum of the board is actually part of the committee. This is a bad idea for two reasons. First, it triggers the Open Meeting Act, and is a “board meeting” under the Act. Second, if the board is going to do all the committee work, why bother having a committee in the first place?

Best,
Kelly

Dear Sir,

Our association has an absentee homeowner who owns four rentals in our association. This seems to be a conflict of interest. Can this person run for the Board?

Thank you,

S.F., Irvine

Dear S.F.,

Some associations have bylaws which require a director to be a resident owner, but it is rare to have bylaws which ban a multiple unit owner from serving. I often wonder why anyone with more than two memberships would serve on an HOA Board, since under Civil Code 5800(e) they are disqualified from the immunity which Civil Code 5800(a) gives the other directors on the board. The idea of this disqualification is that someone owning three or more homes in the association is not a volunteer but has a business interest. Anyone who serves on their HOA board should be very careful to understand their immunity and how to preserve it.

Thanks for your question,
Kelly

Dear Kelly,

The Association’s bylaws state “Multiple Offices.  No person shall simultaneously hold more than one of any of the other offices.”

The Board voted to have one person hold the positions of Vice President and Secretary simultaneously. While I initially voted for the appointments, I re-read the bylaws and discovered the restriction. What are the consequences of governing in conflict with the Bylaws?

S.B., Lake Forest

Dear S.B.,

The Board is duty bound to follow the Bylaws, unless they are so outdated that the law now overrules them in certain respects. Your board should present this question to its legal counsel, or, better yet, vote to rescind the vote and return to compliance with the bylaws.

If the board is not complying with the governing documents, how can the board insist that the rest of the homeowners comply?

Best regards,
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.