HOAleader.com - Tip of the Week - Dcember 28, 2012
Published: Fri, 12/28/12
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An HOA Director Has Abstained from a Vote--Are They Wise or
Just Cowardly?
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In this week's tip, we discuss the dubious
practice of condo or homeowner association
board members abstaining from votes.
Under what circumstances should a board member
abstain from a vote? First, check whether any
state laws govern the answers to this question.
Take Arizona, for example. "We have two different
statutes we look toward on the issue of when you
should abstain," says Kristen L. Rosenbeck, a partner
at the Mulcahy Law Firm PC in Phoenix, who advises
many associations. "In both the planned communities
and the condo acts, provisions say that board members
should consider abstaining if they have a conflict.
They narrow it to a monetary conflict, like if that
board member or a family member is going to have a
fiscal benefit from a vote. Maybe the board is
considering a new landscape company, and the board
member's brother owns the landscape company. For that
board member to vote, the board member must disclose
the conflict before the board discusses the issue,
and then the board member will have the opportunity
to vote. So the board member can vote."
Arizona HOA board members are also bound by their
fiduciary duties to their association. "You have to
act in the best interest of your association," adds
Rosenbeck. "If you feel you have a conflict, you have
to decide whether you're meeting your fiduciary duties
on a case-by-case basis. In this case, a conflict is
more along the lines of you feeling like a vote might
hurt your own pocketbook, but it benefits the whole
community. Nothing says you have to vote or shouldn't
vote."
Another example of a conflict that might call for a
board member to abstain? "In my opinion, if board
members have some kind of an interest in an issue,"
explains Duane McPherson, the Carrollton, Texas-based
division president at RealManage, an association
management firm that oversees properties in Arizona,
California, Colorado, Florida, Louisiana, Nevada,
and Texas. "Maybe they know someone or have a personal
interest in an issue. A board member's son lives in
the same subdivision and is delinquent in his assessments,
and the board goes into executive session to talk about
how the board will collect and whether it should file
a lien. That board member should abstain because she
has a personal interest. That would be the primary
thing. If you have a personal interest that would
affect your ability to be fair and impartial on that
decision, you should always disclose and abstain."
The tougher question: When is it a cop out to abstain?
Find out in our new article:
http://www.hoaleader.com/members/795.cfm
Best regards,
Matt Humphrey
President
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