Many HOA boards run their own projects which can cause you to feel like you may be missing information and updates. As the face of the owners, the decisions they make are for the community and as a board, they are entrusted with making decisions that will benefit members and owners. There are certain factors that are important when it comes to HOA Boards running the projects.
Can an HOA Board Run its Own Construction Projects?
Conflict of Interests
HOA boards can oversee the construction and maintenance of any project but with owners being used to the management doing this, there can be some conflict. A lack of communication between the board and management will make the situation worse and many conflicts of interest become difficult to clear up. Conflicts of interest can occur when a board member’s decisions are influenced by personal interests and not the interests of the community. Decisions made this way are a direct breach of fiduciary duties. As a result, the director of the board loses protections of the Business Judgement Rule. If the Board were to award a roofing contract to a family member of the director, a conflict occurs and a contract like this can be void. Sometimes board members vote on matters that result in a benefit to them but it is not a conflict if it also benefits the membership. Voting for added security patrols for which the director and the community will both benefit is an example of a decision that would not create a conflict of interest.
There are certain instances where the conflicts between boards and the association do not create personal liability:
- The director makes full disclosure of the conflict.
- The director gets no influence on the vote by leaving the room during the discussion of the topic.
- All transactions are just and fair and reasonable as to the association at the time it is authorized and approved.
Failure to Share Information
In some cases, boards do not share all information to management, leaving them unaware of projects and their progress. This can be problematic when owners call to get information about the changes affecting them and management does not know how to answer their concerns. In this case, both management and owners are left in the dark and fearful of what could be happening.
HOA Boards can run their own projects so long as no conflicts of interest are created and all information is shared with the appropriate parties. Management must be informed and aware of the project details, timelines, and dates. Full disclosure is required whenever any updates and changes occur along the way. Communication is the best way to ensure everyone is in agreement and that all projects are run above the board and with everyone’s interests protected.