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June 20, 2007
HOA Board Soliciting Business - Is It OKAY?
Here is a conglomeration example of some common questions presented to me: "One of the Board members of our HOA board distributed a letter on her company letterhead (realtor) thanking "neighbors" for their support of the association, announcing the winners of the recent board election, and giving news of the community. Then, the letter went on to tout her experience as a realtor and was clearly soliciting business. This letter was also posted on the community bulletin board. Isn't this a conflict of interest?"
It's fairly common to find realtors serving on boards in their associations. It is probably good when that happens because it gives the realtor a real education on what it is like to be on the "other side" of the buy-sell transaction and demands to "hop to" on the disclosure packages.
However, it is probably as common that a realtor serves to get their name out there, get a neighborhood specialist edge, and a membership list for solicitation purposes.
The letter described above clearly is out of line, I believe. Misusing the membership list for this purpose is not really kosher. But you will not find a specific legal prohibition of it so it becomes a question as to whether there is some basis to complain and ask that it stop.
If you review Corporations Code Sections 8330 and following (www.ca.gov - navigate to California laws), you will see that any member can ask for a membership list. The request must be in writing and the purpose stated. The Board does not have to provide it if it believes the purpose is not valid. Solicitation of busines would not be a valid purpose.
Thus, I believe it fair to say that access to the list of homeowner members by board members still does not make use of the list for soliciation purposes a valid purpose and it should not be done.
Some use local tax records or insurance company records to get the list. In that case, at least, it would not be considered improper if they did the footwork needed.
As for conflict of interest, that is explained in a separate blog. In order to be in conflict of interest, a board member must be receiving or benefiting from some financial gain because of a relationship of some kind AND fail to disclose the relationship or contract or benefit being received. Disclosure does make a difference. It can more or less "legalize" what seems a conflict of interest to the homeowners that are asking the questions.
Posted by Beth Grimm at June 20, 2007 7:56 PM