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Board Member’s Companies Bidding on Community Projects… Legal?

On Behalf of | Jun 15, 2018 | Condo / HOA, Firm News |


Q: One of the members of our HOA Board has various companies that are currently doing work or bidding on future projects in our community. This seems like an obvious conflict of interest. We are not saying that he does incompetent work, but we believe he has access to other bids which allows him to get most of the jobs that he wants. He abstains from voting on these contracts when one of his companies is involved, but I believe this director is putting our community and our manager in a difficult position. What is the legality of this?

A: A statute was adopted in Tallahassee that addresses this specific issue. Section 720.3033 of the Florida Statues now provides that if the HOA enters into a contract with or transacts with a Director or a company that a Director has a financial interest in, then the contract must be approved by 2/3 of the Directors present. The association must also comply the corporate statute regulating HOA’s, meaning that the Director’s relationship or interest should be disclosed to the other board members and the terms of the contract should be fair and in line with market rates.

Thereafter at the next regular or special member meeting, the contract or transaction must be disclosed to the members. The members, by motion approved by a majority of members present, can vote to cancel the contract or transaction. If the members cancel, the HOA is obligated to pay only for services received up to the point of cancellation and is not responsible for any termination fee, liquidated damage or other penalty that might be provided for in the contract.