December 28, 2012 – 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 Rosenbeck. “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 gain fiscally 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 a board member(s) have 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, HOA Board Votes: What If a Board Member Abstains Just to Avoid Controversy?
Matt Humphrey is president of the Alameda, California-based HOAleader.com, from which this article was adapted.