As leaders of the HOA community, board members must uphold a set of principles and act as examples. But, even seasoned board members stumble and forget. Learn what the Code of Ethics for HOA board members are and what to do when faced with a morally ambiguous dilemma.
In this article:
Understanding the Code of Ethics for HOA Board
In a homeowners association setting, ethical conundrums come up daily. It is up to board members to know how to manage such situations when they arise. That is why it is important for every HOA to implement and abide by a Board of Director Code of Ethics. With such a code in place, board members will find it much easier to navigate the everyday problems that come their way.
Although no two associations are the same, there is a basic framework of ethics that HOA boards must uphold. This includes what board members must and must not do. Keep in mind, though, that the ethical standards for HOA board members are not limited to the ones seen below.
What Board Members Should Do
An HOA board member Code of Ethics must include what board members should do, such as:
- Only act within the limits of their power or authority as determined by the law and the association’s governing documents.
- Always work to serve the association’s best interests no matter their personal interests.
- Execute their duties and responsibilities impartially, with no prejudice or favoritism towards any single or group of members or non-members.
- Communicate any personal or professional ties with any individual or company that is looking to enter into a business relationship with the HOA.
- When making decisions, board members must use sound judgment and take all available information, resources, and situations into account.
- Give residents a chance to make remarks or provide feedback on matters and decisions of the association.
- Support all decisions made by the collective board to show unity, even if the board member voted to take a different course of action than the one unanimously decided on.
- Hold fair and open elections that are well-communicated to owners.
What Board Members Should Not Do
As for what board members should not do, here are the fundamental codes to live by:
- Support or promote any action or activity that violates any law or regulation.
- Use their power or position for personal gain.
- Discriminate against colleagues, residents, owners, employees, or contractors on the basis of protected classes as defined by the Fair Housing Act, Americans with Disabilities Act, and state laws.
- Disclose confidential information provided by association members, employees, or contractors.
- Share confidential information with association members or contractors unless clearly permitted by the board.
- Make unwarranted promises to a bidder or contractor.
- Divulge information — decisions, remarks, or discussions — made at any closed board meeting or executive session to any third party, including residents or owners.
- Use association funds, either temporarily or permanently, without authorization or for their own personal benefit.
- Manipulate or misreport known facts in any situation involving the association.
- Directly or indirectly accept gifts of any kind from community members, suppliers, or contractors.
- Personally attack community members, employees, or colleagues.
- Threaten, harass, bribe, or intimidate any fellow board member, resident, owner, employee, or contractor.
A Litmus Test for Grey Area Decisions
While the HOA board can use the basic framework above, many problems often lack a black and white solution. If you find yourself in such a situation, you must know how to maneuver through the grey area. A good way to do this, according to authors Kenneth Blanchard and Norman Peale, is to ask the following questions:
- Is it legal? Does your proposed action or decision violate any laws at the federal, state, or local level? Additionally, what do your association’s governing documents have to say about the issue?
- Is it balanced? Think about the long- and short-term aftermath of the decision or action. How will it affect the parties involved?
- Is it right? How do you feel about the action or decision? Your own moral compass should tell you a lot about a proposed act. If you feel in any way guilty or hesitant, then it is probably not the best course of action.
Dealing With Unethical HOA Members
An association’s Code of Ethics is useless if members fail to observe it. When faced with members of the community who are behaving unethically, consider the following.
1. Board Members
The Code of Ethics for HOA board members must be followed at all times. But, if one or more board members go astray, it is important to take action.
You must talk to board members who are behaving unethically. Make sure to educate them on the proper and ethical standards, reminding them that they have certain fiduciary duties to fulfill. Peer pressure has known to be very effective, so talking to the offending board member as a group can really help.
If the board member continues to behave unethically or commits an irredeemable action, it is best to remove them from their position. Irredeemable actions can include fraud, embezzlement, and other criminal acts. Check your governing documents for the proper procedure to remove a board member. In some cases, you may need to involve law enforcement.
Although the HOA board code of conduct is primarily aimed towards board members, homeowners are not immune to unethical behavior. When homeowners commit unethical acts, they can put the association in jeopardy. Therefore, it is important to discourage unethical homeowners as well. Examples of such behavior include:
- Consistent violation of the association’s governing documents.
- Defaulting on regular assessment fees.
- Harassing or threatening other homeowners, association employees, vendors, or independent contractors.
- Inflicting damages to the common areas and amenities of the association.
To curb such behavior, your HOA board must strictly enforce the association’s governing documents in a uniform manner. That means implementing any disciplinary actions when necessary.
Following an Ethics Code for HOA Board Members
Everyone needs guidance when performing their duties, association leaders included. This is where the Code of Ethics for HOA board members come in. Without ethical standards, the line between what board members should and should not do tend to become blurred. Still, your moral compass and asking the right questions should help you navigate through ethical dilemmas.
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