| The board of managers has the power to enter into a contract
with a board member or a business entity in which a board member
(or his or her spouse, parents or children) owns a 25% or more
interest. However, in order to do so, the board must send a notice
of intent to enter the contract to the unit owners no later than
20 days after the board decides to enter into the contract.
Within 20 days after the notice is sent, the unit owners have
the right to file a petition, signed by 20% of the unit owners,
for an election to approve or disapprove the contract. The
election must be held by the board within 30 days after the
unit owners file their petition.
Although this provision uses the language "to enter into a contract," many
board members are not aware that the association cannot hire them or
their immediate family members as employees, contractors, or suppliers,
even though there may not be a written contract, unless the board complies
with this procedure.
Although the board is free to hire board members and their
family members under this procedure, the board should consider
that potential conflicts of interest may arise and that a board
member could breach his or her fiduciary duty to the association
when making decisions and operating the affairs of the association.
This section would not preclude liability for any such breach
of duty. |
