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Tag Archives: Home Owner Association

With Great Responsibility Should Come Great Oversight

I’ve been reading about The FBI investigating corruption at the Home Owner Association level in the US, and about laws being proposed to help remedy the situation.

The investigation stems from the board using it’s authority to award contracts to which they have a conflict of interest. The argument outlined proposes that developers and lawyers have been purchasing a single condo in an association, then getting on the board to drive work to their (or associates).

It’s really not a terrible risk – the developer can buy a unit, and rent it (and later sell it) without the likelihood of any financial risk there, while generating millions in work (especially given the growth in building deficiencies).  It’s less of a risk because it’s very hard to find and stop conflict of interest.

Even without a plan to exploit the association or corporation, board members can pay themselves for work that could be done by volunteers, or over the years continually prefer one vendor over another because of perks – gifts, dinners, tickets – all things handed out in the name of marketing. Some – if you had the information – are easier to spot, the same contractor name popping up when they are the highest bidder of solicited quotes.

The problem is spotting these issues, which can be extremely difficult if the board has the same people on for a decade or more (not unheard of). Even the president of the United States has a term limit. No such thing with associations and corporations.

With today’s tools to communicate there should be higher transparency, more access to decisions, and better follow-through. It should almost be a legislative requirement that Twitter like feeds must be used by boards to communicate with their owners’ ongoing issues and solutions with their condo.

It is very clear that many boards act as a sort of Star Chamber and that will only lead to issues later on. I’m all for one on prosecuting these individuals and boards legally for infractions of by-laws and government legislation. With so many thousands of these quasi-legislative (and judicial) organizations, movement needs to be made now on opening communication.