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HOA Homefront: Why hiring an association member is a very bad idea

June 30, 2023

Q: Three of the members of our HOA board are employed directly or through service contracts with the master community company. They hold the top offices including president of the HOA board. It appears to be a conflict of interest to serve both masters. Is this legal or just poor judgment to look improper to the community? — S.F., Mission Viejo.

A: Directors of your HOA who are at the same time being paid for services by the master association are in a no-win position, as they are serving two corporations whose interests are not always identical.

This also creates problems for the master HOA board, as other homeowners wonder why the master HOA is paying some of its members.

Surely in the Mission Viejo area, there are many service providers outside the master HOA membership. It looks bad for both your HOA and the master HOA, which is why I believe HOAs should bend over backward to avoid hiring one of its own.

Q: Our HOA is considering hiring a member to design our remodel. Is this legal or advisable? — R.B., Coronado.

A: Unless your governing documents prohibit hiring members, hiring a member as your HOA’s designer is not illegal. However, it may be very unwise. If the member performs poorly, is the HOA board going to hold that person to the same standard as any other service provider?

If the member’s design services are negligently performed, will the HOA board sue the designer for damages?

If the HOA’s relationship with a service provider is personal as well as professional, it’s not truly an “arm’s length” relationship, and that makes it much harder to keep things strictly professional – potentially harming the HOA’s interests.

No matter how much a member may discount their services, there will always be those HOA members who feel it’s improper to hire homeowners or residents.

There are many designers in the greater San Diego area – can’t your board find someone really good outside of the HOA membership?

Q: We have a small association. The board consists of a president who is the boyfriend of the former president. The new president made the old president “property manager.” No election has been held because they keep election time and ballots secret from everyone else. How does one go about challenging entrenched authority of an HOA? These people have control of the HOA but not by a true vote, many people are fed up and are wanting to know a course of action for this. — J.A., Glendale

A.: For the same reasons as stated above, hiring a homeowner to manage their own community is a bad idea. Good intentions are valueless to the HOA if the manager is not qualified to manage the community.

Even if the homeowner were a credentialled manager, they would still be hopelessly entangled between their conflicting roles as homeowner, manager, and board buddy. Small HOAs usually have an easier time than larger ones in electing boards, so things will change when enough members have had enough of this clubby control of the HOA. When that happens, I hope you can find some good volunteers who will commit to clean governance.

Kelly G. Richardson, Esq. is a Fellow of the College of Community Association Lawyers and Partner of Richardson Ober LLP, a California law firm known for community association advice. Submit column questions to [email protected].

Orange County Register

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HOA Homefront: Why hiring an association member is a very bad idea

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