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HOA President on payroll

Hi,

My HOA recently issued a letter than the HOA president would be put on payroll as an office manager. I’m beyond disturbed this this. Is this even legal? Beyond ability to commit fraud and conflict of interest it’s highly inappropriate.

5 Responses

  1. dennisl

    Rick,

    While clearly a dangerous situation ripe for abuse this is not illegal and often allowed in these community documents. While there are conflict of interest laws in this state they are weak at best. If the affected board member voted for this proposal without stating the direct and obvious conflict of interest prior to that vote, the decision is void and unenforceable.

    Is there no-one else that could act as an office manager. Would the board member be willing to resign from the board to take the office manager position. The opportunities for this individual to abuse the power he has on the board with the duties he will have as an office manager and primary point of contact for the community. The community needs to get outraged and demand that either an new office manager is hired or the board member resign from the board. A recall of that board member may be necessary.

    Dennis

  2. Rick Jewell

    The board hired him prior to the vote and continued the vote to approve our HOA president to be hired on to our payroll. There was no discussion of the conflict of interest. There was no input from the community, no opportunity to allow a more qualified individual to apply, and no word about how it is strictly prohibited in our bylaws. What is the best course of action at this point.

    You mentioned the decision is void and unenforceable how does one act on that.

    Thank you,

    Rick

  3. Rick Jewell

    Than you Dennis. Our bored hired him prior to a vote apparently and the position was not open to any other person to apply. It’s prohibited by our bylaws as well and the conflict was not disclosed. What does one do next?

  4. dennisl

    Rick,

    Unfortunately the only course of action that you can take is to file a petition with the AZ Dept. of Real Estate and take your concern to an Administrative law judge. You bear the burden of proof to establish that a violation of the conflict of interest law and your bylaws took place. you say that no vote took place prior to the hire. How do you know that without a doubt? you state that no declaration of conflict of interest took place prior to the vote, how do you know that if no vote took place. You state that your bylaw prohibit board members from compensation, and most do exact that but only for duties as a board member, for services of any other fashion they can be compensated.
    Clearly you are concerned about the actions and on first blush they are certainly questionable at best, but to win a case against the board and nullify their actions you must be able to provide evidence that the law and the bylaws were violated. This is quite different from presumptions and implications and the appearance of impropriety.

    Another course of action can be to attempt to recall that board member and circulate a petition to homeowners to call for a special meeting of the members to remove that board member. You will need 25% of the homeowners or 100 signatures whichever is smaller if you community is smaller than 1000 homes.

    Dennis

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