Conflict of Interest Transactions in Mississippi HOA Boards

Question:

In Mississippi, If an HOA is funding a private landscaping with all operational business costs (equipment, expendables, etx), and this business is providing all landscaping services to customers (even customers outside the HOA) , and the HOA is billing customers for this landscaping service at a discounted price AND then the HOA is paying the landscaping business at a higher costs than what was charged to the customer…… In other words the HOA is totally funding and paying a private landscaping business owned by the board member . . . What MS legislative code does this apply to? Clearly its an ethical issue but if the buddy board members voted to use this landscaping company, this conflict of interest should be referenced somewhere in MS for HOA nonprofits?

Thank you.

Jynger

Answer:

Hi Jynger,

Conflict of interest is discussed under the Mississippi Nonprofit Corporation Act (Miss. Code § 79-11-269). This section outlines the conditions by which a conflict of interest transaction is not voidable. It also indicates how the association can approve the transaction.

In Mississippi, most homeowners associations are incorporated as a nonprofit corporation. Therefore, the Mississippi Nonprofit Corporation Act also applies to HOAs. You can check your HOA’s corporate status by visting the Mississippi Secretary of State website.

Here is a link to the part of the Nonprofit Corporation Act that discusses conflict of interest transactions:

https://casetext.com/statute/mississippi-code-1972/title-79-corporations-associations-and-partnerships/chapter-11-nonprofit-nonshare-corporations-and-religious-societies/mississippi-nonprofit-corporation-act/section-79-11-269-conflict-of-interest-transaction

Disclaimer: We are not lawyers. The information provided on this website does not constitute legal advice.

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