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Board Member Conflict of Interest

Irvine, CA |

Please clarify whether the following are true:

- it is a Conflict of Interest for any Board member to take part in or vote to pay the expenses of any other organization in which they have a personal or financial interest. Should any matter come before the Board in which a Board member has a personal or financial interest, under state law, they are required to excuse themselves from any participation in decisions benefiting the other party.

- no Board member may order that our association treasury be opened to any outside party

- should the Association decide to spend its money on other independent corporations, the Board is subject to legal action brought on behalf of the Homeowners

- the Board’s Officers and Directors insurance does not cover illegal actions taken by the Board

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Attorney answers 2

Best Answer

Yes, each of the statements you set forth are true under California law.

An HOA board member is suppose to recuse himself or herself from discussion and voting on issues in which they have a direct personal or pecuniary interest not common to other members of the HOA board.

Any such contract in which the HOA enters might be voidable.

The real question, though, is whether transaction is fair and reasonable as to the HOA at the time it is authorized, approved or ratified.

Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.


You do state general principles of law. One would have to see the bylaws of your HOA and perhaps the CC&Rs to know the procedures to follow and applicability to your factual situation which is not fully described above. Often, the bylaws provide that an "interested" director may not vote on such matters, but that other direcotrs may approve after full disclosure. This is analysis not legal advice.

The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.