Criminal Background Checks Should be Routinely Performed on Potential HOA Directors

Following the turnover of control by their developers, condominium, property owners, and homeowners associations (hereinafter referred to collectively as “Community Associations”) are governed by a board of directors that is composed of members of the association. The members who become directors come from all walks of life and have varying backgrounds that are unknown to the voting members of the association.

In the typical scenario that plays out at an annual meeting of Community Association’s members, directors are elected based solely on the limited information that is provided by a candidate for election to the association’s board. Rarely is the information that the candidate provides independently verified. Thus, every year associations elect people as directors and place them in positions of responsibility where they have access to the association’s funds without knowing the trustworthiness of the person. As a result, the association is exposed to financial risks associated with illegal conduct by those who have been elected as directors of the association.

Required Qualifications for Candidates Necessitates a Criminal Background Check.

To minimize the risk of financial loss resulting from illegal conduct of association directors, state laws and/or association governing documents mandate various qualifications for those who wish to serve as a director of their association. Further, some state statutes disqualify people who have been convicted of certain crimes. The crimes that would disqualify a person are generally described as felonies and/or crimes that would interfere with the association’s ability to obtain fidelity bond insurance coverage for the person. The following are examples of such provisions that are contained in state statutes:

• California Civil Code § 5105(c)(4), which provides:

“An association may disqualify a nominee if that person discloses, or if the association is aware or becomes aware of, a past criminal conviction that would, if the person was elected, either prevent the association from purchasing the fidelity bond coverage required by Section 5806 or terminate the association’s existing fidelity bond coverage.”

• Florida Statute §§ 718.112(2)(d)2 (which applies to condominiums), and 720.306(9)(b) (which applies to homeowners’ associations), both contain the following language:

“A person who has been convicted of any felony in this state or in a United States District or Territorial Court, or who has been convicted of any offense in another jurisdiction which would be considered a felony if committed in this state, is not eligible for board membership unless such felon’s civil rights have been restored for at least 5 years as of the date such person seeks election to the board.”

• Texas Property Code § 209.00591(b), provides:

“If a board is presented with written, documented evidence from a database or other record maintained by a governmental law enforcement authority that a board members was convicted of a felony or crime involving moral turpitude not more than 20 years before the date the board is presented with the evidence, the board member is immediately ineligible to serve on the board of the property owners’ association, automatically considered removed from the board, and prohibited from future service on the board.”

While statutes and/or governing documents specify that people who have been convicted of certain crimes cannot serve as a director, they do not mandate the procurement of a background investigation in order to ascertain whether or not a person has been convicted of such a crime. This puts the burden on the association to adopt policies that are designed to ascertain the information needed in order to confirm a candidate’s background and his / her qualifications to serve the association. This would require requesting certain basic information from the candidate that is needed to conduct a criminal background investigation and conducting the investigation.

Getting Authorization to Run a Criminal Background Check