Leaders’ Personal Use of Association Vendors Discouraged
I recently found out that one of the board members at our association has hired the association’s landscaper for their personal property.
The community landscaping looks terrible, and I can’t help but to think it is partly because the landscaper knows they won’t get fired because they are maintaining the board member’s yard.
I’m sure they are probably getting their yard done for free, too, which seems like a real conflict of interest to me.
Is it typical for association contractors to do work at a board member’s home? Is it legal? — Nena G.
I have seen board members and committee members — what I refer to collectively as association volunteers — request proposals from association vendors for services at their private residences.
Although a majority of the time association volunteers and vendors have the best intentions when looking to forge personal business relationships, I highly discourage these relationships due to the real or perceived conflict of interest.
Often, association volunteers will seek to employ an association vendor who has a vested interest in the community and with whom they work with and trust, while providing them with additional work. At the same time, the vendor sees it as an opportunity to build a stronger relationship with an influential member of the association.
These scenarios seem like a win-win for all involved, but often this is not the case, and these types of personal business relationships end badly for everyone involved.
In actuality, association volunteers are not doing association vendors any favors by requesting proposals for their personal residential work.
When asked to prepare a proposal for an association volunteer, many vendors feel obligated to present a significantly discounted bid, given the association volunteer’s influence.
Because working on an individual’s home is much more personal and emotional than working on association property, I have witnessed many vendors reluctantly accept association-volunteer work only to learn they are met with unrealistic expectations and standards, ultimately regretting the decision and putting their association contracts in jeopardy.
Association volunteers who look to employ association vendors for personal residential work subject themselves to unnecessary liability, set a bad precedent for future volunteers and send the wrong message to the community.
As fiduciaries of the association, board members must take their professional role seriously to avoid any potential conflicts that may lead to personal liability exposure. Board members taking advantage of their positions for personal gain are breaching their ethical commitments to the associations and their fiduciary obligations to the associations.
Even when the vendor relationships are completely appropriate, a perceived conflict can reflect poorly on the volunteer, but more importantly on the association as a whole. This is something our firm stresses to our clients regularly, and why we are opposed to association vendors doing work for association volunteers. There is an abundance of qualified, competitive vendors throughout the valley without volunteers having to utilize their association’s vendors.
Although an association volunteer hiring an association vendor is not illegal, it is discouraged. If a board member ultimately decides to employ an association vendor, I highly recommend proper and thorough disclosure.
Obtain formal approval from the board of directors. Make sure the approval is disclosed to the community at a general session board meeting and reflected in the meeting minutes. Proper disclosure and transparency will help to mitigate liability exposure to the association volunteers, protect valuable vendor relationships and help to protect the integrity of the community association.