Self-Dealing by HOA Board Members
Question: We are homeowners in a community in Scottsdale that is governed by a Homeowners Association (“HOA”). My wife and I are very upset with the incompetent landscaping services being provided on behalf of our HOA. The common areas are not properly maintained. When we complained about these services to a neighbor last weekend, we learned that one of the members who serves on the Board of Directors owns the landscaping company that services our HOA, and that our HOA pays an inflated fee to the landscaping company each month. Is self-dealing by an HOA board member legal?
Answer: Probably not. Under Arizona law, as a homeowner you have the legal right to i) inspect the HOA’s records, including all meeting minutes, contracts, and other relevant documents of the HOA, ii) ascertain when the landscaping company was hired by the HOA, iii) review the terms of the HOA’s agreement with the landscaping company, and iv) determine whether the Board acted properly in hiring the landscaping company in light of the above-stated conflict of interest. If the records reveal that the Board has not acted in the best interests of the HOA, it is recommended that you consult with an attorney to discuss your legal options.