Question:
Our HOA wants to break year 3 or our mowing contract. To break it they are supposed to send a certified letter saying that they are dissatisfied with their performance. All the Board did was have the Property Manager send an email to say they no longer needed their services and told them it wasn’t because of any poor performance. They want to hire a new company that is a “friend” to one of the Board members. The present company has done a fantastic job with the mowing and doesn’t deserve this.What can be done about this?
– Susan
Answer:
Hi Susan,
Kindly check the termination clause of the current agreement with the mowing contractor. If the termination clause requires a letter of dissatisfaction, then the HOA may incur other fees. You may raise this with the other board members as they have a fiduciary responsibility to act in the association’s best interest.
As for the new contractor being considered, it may depend on whether or not the board member holds a position in the contractor’s company or if they have a financial interest in it. If so, and if the HOA is incorporated as a non-profit, you may refer to the Indiana Nonprofit Corporation Act of 1991 Section 23-17-13-2.5. It indicates that contracts are not void or voidable solely because of the relationship or interest. Subsection c states that it is not void or voidable if one or more of the following applies:
- The material facts of the relationship and contract are disclosed to the board and the directors in good faith authorize the contract by a majority vote of disinterested directors even if the disinterested directors are less than a quorum.
- The material facts of the relationship and contract are disclosed to the members entitled to vote on the contract and the agreement is approved in good faith by a vote of the members.
- The contract is fair to the corporation at the time the contract is authorized, approved, or ratified by the board of directors or the members.
For further guidance, kindly consult a lawyer.
Disclaimer: We are not lawyers. The information provided on this website does not constitute legal advice.
