A.R.S. 33-1811 Board of Directors, contracts, conflict
If any contract, decision or other action for compensation taken by or on behalf of the board of directors would benefit any member of the board of directors or any person who is a parent, grandparent, spouse, child or sibling of a member of the board of directors or a parent or spouse of any of those persons, that member of the board of directors shall declare a conflict of interest for that issue. The member shall declare the conflict in an open meeting of the board before the board discusses or takes action on that issue and that member may then vote on that issue. Any contract entered into in violation of this section is void and unenforceable.
The effectiveness of any such Conflict of Interest (COI) law designed to prevent direct or indirect “raiding of community treasuries” is based upon at least three separate factors that become visibly connected when the following questions are asked.
1. According to law, which is given greater authoritative weight… the law as written, or HOA governing documents holding specific references to Conflicts of Interest? If CCRs contain specific language re Conflicts of Interest that differ from the AZ statutes, can BOTH sets of provisions be applied?
2. When did the COI law become effective? COI events attributed to dates prior to the effective date of law would receive a very different kind of treament, very possibly limited to HOA governing documents.
3. ARS 33-1811 does not shed any light on penalties for violation of its provisions. What state agency exists to monitor and enforce each HOA’s compliance with these statutory provisions? What separate state agency exists to monitor and enforce the HOA CCRs? Does an HOA have legal standing to file a COI complaint against a current or former member of their own board of directors? What sunset provisions (time limits for filing complaints) apply to AZ statutes and/or HOA governing docs with regard to COI violations?
These questions are just a few of my favorite things.