California HOA Escrow Services
Board Members and Close Relatives Performing Work for HOA
Sometimes a board member will offer to perform repairs and/or maintenance at the property on which he or she serves as a board member. This is legally permissible, but all board members must be aware of the following:
- When voting to permit a board member to do work, the member intending to do the work must recuse himself or herself from voting. The vote must pass by a majority of the board, not including the excluded board member.
- The decision to hire a board member should be memorialized in the minutes of a noticed board meeting. The minutes should reflect that a quorum was present, the one board member recused himself or herself, and how each member voted.
- The board member should have both worker’s compensation insurance and general liability insurance and the association should be named as additional insured. Obtaining a certificate of insurance is not adequate to protect the association.
- The board should obtain competing written bids in order to ensure that it is not violating its fiduciary duty to the members of the association.
- The board should determine whether paying a board member to do work will void its directors and officers’ liability policy. It is prudent to obtain a written opinion from the association’s insurance broker or agent.
- The board member intending to do the work should obtain a written legal opinion addressing whether he or she will lose the statutory protections provided to board members who are volunteers. The loss of such protection should be addressed with an attorney who has expertise in this area.
The vast majority of homeowner associations choose not to hire board members due to the extra burden it places on them to protect the association. As stated earlier, boards may lawfully hire board members but must always place the interest of the association first when making the decision to do so.
In situations where a board member’s close relative is being considered to do work, the same guidelines should be applied in order to protect the association and all board members.
Coast Management of California