If HOA board member misconduct takes place, it can put the association at legal and financial risk, especially when directors fail to address it. As a best practice, the remaining board members need to respond through a proper and fair process instead of public opinion and personal biases.
What is HOA Board Member Misconduct?
Misconduct usually refers to any behavior or action by a director that breaches or violates their legal duties. These may also involve actions that violate your HOA’s governing documents and ethics policies.
However, this usually involves a serious allegation. Any disagreement doesn’t mean an act of misconduct actually occurred. Usually, board members have the authority to vote differently or scrutinize any proposal and decisions without committing misconduct. The issue comes if they do this outside of their authority or use their position for personal gain.
Common Types of HOA Board Misconduct
Misconduct can easily affect the community, so it’s important to recognize it when they happen. Here are the usual types of board misconduct that you would encounter.
HOA Board Member Abuse of Power
Abuse of power usually occurs when a board member views their position as a source of personal authority rather than as one shared with the rest of the board. Usually, one director can’t make binding decisions unless the governing documents or the entire board has specifically granted or delegated that power.
Examples of abuse of authority include giving vendors directions without prior approval and promising special treatment. Other examples include using their power to punish personal rivals or misrepresenting their own perso
Examples can include directing vendors without approval, promising special treatment, attempting to punish personal rivals, or interfering with management outside established channels. A director may also misrepresent a personal opinion as an official board decision.
HOA Board Member Breach of Fiduciary Duty
Board members are known to have fiduciary duties to the association. However, the specific board responsibilities vary by state; generally, board members are expected to act in good faith and use reasonable care. They are expected to prioritize the association’s interests.
Misconduct arising from breaches of fiduciary duty may involve self-dealing and the misuse of HOA resources for personal purposes. However, do remember that a poor decision doesn’t automatically mean the HOA breached this duty.
HOA Board Member Violating Bylaws
A more straightforward form of misconduct is violating the bylaws. If they do this, it can create governance problems, with or without involving money.
When citing misconduct, the board should identify which bylaw provision was violated before accusing a member. They should also check applicable state laws that may override or supplement your governing documents.
Conflicts of Interest
Conflicts of interest can easily be overlooked. It usually involves an HOA board member failing to disclose a personal or financial relationship with the parties involved. This is especially concerning if those parties are involved in a decision.
As a best practice, HOA boards should follow any conflict-of-interest stipulations in state law and their governing documents. Additionally, any disclosure should be documented. The HOA can also seek legal counsel to determine whether it would be appropriate for the director in question to abstain or recuse themselves from voting on a decision.
How Should the Board Respond?
When board member misconduct happens, it shouldn’t be ignored. Here’s what the HOA should do if such a scenario arises:
Confirm the Facts
The HOA board should start by gathering evidence rather than relying on assumptions. If you receive complaints, always require them to be properly documented. They should include attachments that serve as hard evidence of the alleged misconduct.
When dealing with misconduct cases, boards should avoid turning the investigation into a public trial. Premature conclusions and accusations can only lead to deeper conflict and additional risks.
Review the Governing Documents and State Law
After gathering the facts, the HOA board needs to review the association’s governing documents and your state’s laws for any applicable procedures and policies.
Knowing this process is crucial in ensuring neutrality and fairness. It is also important for grave allegations, which may result in restricting the board member’s authority or in the HOA wanting to remove that board member.
Protect Association Operations
During the review process, your HOA board would need some safeguards to protect the association’s daily operations. Imposing restrictions must stay within its legal authority.
HOA Board Disciplinary Action
After the investigation and hearing, the HOA board may impose disciplinary action. Keep in mind that these should be on the same level of seriousness as the misconduct proven. It should also be in line with provisions from state law and governing documents.
First-time issues or minor offenses may result in lighter repercussions, such as a warning or ethics training. For more serious misconduct cases, director restrictions, and even removal, might be the best way to proceed.
A board may also adopt a censure resolution when appropriate. Censure records the board’s disapproval but does not automatically remove a director or eliminate rights attached to the position.
HOA Board Member Removal
HOA board member removal is generally the most serious internal governance response. The board should first determine who has the authority to remove a director and what procedures must be followed.
In many associations, homeowners elect directors, so the membership must also vote on removal. Requirements can include notice, a properly called membership meeting, quorum, voting thresholds, and rules for proxies or ballots. State law and the bylaws determine the exact process.
Boards should never assume they can simply vote another elected director off the board. If immediate removal is not available, the board may be able to remove the director from an officer position, change committee assignments, or allow the term to expire.
Responding the Right Way
HOA board misconduct should not be ignored, but the response must be as disciplined as the board expects its directors to be. By verifying the facts, following the governing documents, seeking legal guidance when necessary, and choosing a proportionate remedy, the board can protect the association while preserving a fair governance process.
Creative Management Company provides community management services to HOAs and condo communities in Greater Houston. Call us today at 713-772-4420 or contact us online to learn more!
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