Q&A: Can a Vendor Be a Board Member?

Q. A person plans to run for the board of our HOA. He owns a landscape business and does work for residents and the board in our community. If elected, can he continue working here, or would there now be a conflict? 

—Worried About Ethical Issues

A. “Generally speaking,” says Swarna Ramakrishnan, an attorney with Griffin Alexander, P.C., based in Randolph, “the governing documents do not directly state that a member who has a contract with the association and/or does work for the association can or cannot run for a position on the board. The new Radburn legislation, in fact, encourages open and fair executive elections, including rules that make it easier for members to run for a position on the board and vote.

“Specifically, NJSA 45:22A-45.2(c) provides that:

“…(4) An association, subject to the exceptions under subsection f. of this section, shall not prohibit an association member in good standing from nominating himself or herself, or any other association member in good standing as a candidate for any membership position on the executive board, so long as the nomination is made prior to the mailing of ballots or proxies to the association members, which mailing shall occur no earlier than: (a) the day following the expiration of the time period within which candidates must be nominated, or (b) where no expiration date is set forth for nomination of candidates, then the business day prior to the mailing of the notice of the election, required pursuant to paragraph (5) of this subsection. The period for submitting nominations shall not be less than 14 days from the mailing of the request for nominations.”

“Thus, the association will not be able to prevent him from running for the board, even if he is doing landscaping work for the association. However, should the member be elected, there may be an appearance of impropriety. Additionally, as a board member, he is privy to information concerning landscaping in the community. If there are any decisions to be made regarding this, he will have to abstain from voting, and should not be permitted to vote on any issues concerning landscaping, as that may be considered a breach of his fiduciary duties. For example, the member would be aware of other bids that are coming in and can lower the price of his own bid in order to obtain the contract with the association.”

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