Board Member Conflicts Of Interest And Self-Dealing In HOA And Condo Associations

If you live in an HOA or condominium, your board has real power. They hire vendors, approve contracts, set budgets, and make decisions that hit every owner financially. That is exactly why conflicts of interest and self-dealing matter. Florida law treats association directors and officers as fiduciaries, and it gives homeowners specific tools when a board member’s personal interests start driving association decisions.

Below is the legal framework that usually controls these disputes in Florida, plus the practical ways owners can respond. For more information, contact our Miami, FL real estate litigation lawyer today.

What Counts As A Conflict Vs Self-dealing

A conflict of interest generally means a director or officer has a personal financial interest in a contract, vendor, or transaction being considered by the association. In condos, Florida has a statute that directly governs “conflicts of interest” and sets procedure rules when a board is considering a transaction involving an officer, director, or their relative.

Self-dealing is the more serious fact pattern. It is not just “I know this vendor.” It is “I used my board position to steer association money or benefits to myself, my family, or my business.” Self-dealing is where courts are much more willing to step in, because the normal deference given to volunteer boards starts disappearing once you can show fraud, criminal conduct, or personal enrichment.

The Baseline Rule: Board Members Owe A Fiduciary Duty

Florida’s Condominium Act requires condominium associations to be incorporated in Florida and provides that association officers and directors are fiduciaries.

That matters because your dispute is rarely just “was this deal allowed.” The real question becomes: did the director act in the association’s best interest, in good faith, and with the care the law expects from someone holding fiduciary responsibilities.

Condo Law: Conflict Transactions Have Specific Procedure Rules

Florida Statute 718.3027 is one of the most important “board conflict” statutes for condominium associations. Two parts show up constantly in real fights:

1) Presentation allowed, but discussion and voting require separation.
A director or officer (or their relative) can attend and make a presentation about the transaction. After that, they must leave for the discussion and vote, and the interested director or officer must recuse from voting.

2) A non-disclosed conflicted contract can be terminated by owners with a 20 percent tool.
If a contract with a director, officer, or their relative is not properly disclosed as required, the contract is voidable and terminates when the association receives a written notice terminating the contract that includes consent from at least 20 percent of the voting interests.

That is a big deal in practice. It means owners do not always have to wait for a full recall election or a long lawsuit to unwind a deal that never should have happened in the first place.

HOAs: Compensation And “Financial Benefit” Restrictions Still Bite

HOA conflict issues often show up as directors getting paid directly or indirectly through association business. Florida Statute 720.303(12) prohibits directors, officers, and committee members from receiving a salary or compensation from the association for board duties and from otherwise benefitting financially from board service unless the fee is authorized in the governing documents or approved by an owner vote.

So even if an HOA does not mirror the condo conflict statute word-for-word, Florida law still gives owners a strong hook when board service starts looking like an income stream.

Corporate Conflict Statutes Can Also Apply

Many associations are organized as not-for-profit corporations, which is why Florida’s not-for-profit conflict statute comes up in association disputes. Florida Statute 617.0832 says an “interested director” contract is not automatically void or voidable if one of the protections is met, including disclosure and approval by disinterested directors, approval by members after disclosure, or a showing that the deal was fair and reasonable at the time.

In plain terms: disclose, do not vote, get disinterested approval, and make sure the deal is objectively fair. When boards skip those steps, owners gain leverage fast.

Kickbacks And Gifts: Where “Conflict” Turns Into Serious Exposure

Florida law is not casual about kickbacks. The materials you provided note that F.S. 718.111(1)(a) prohibits officers or directors from accepting or soliciting gifts or “kickbacks” from anyone providing services to the association and ties violations to potential civil penalties under F.S. 718.501(1)(d) and, if applicable, criminal penalties.

If you are dealing with a gift, rebate, free work, or under-the-table “thank you,” that is not just a bad look. That is potentially a statutory violation with regulatory and legal consequences.

Why Boards Often Get Deference Until Self-dealing Shows Up

Florida courts generally do not want to micromanage association boards. Your materials explicitly note that courts will not second-guess board decisions under the business judgment approach as long as the board acts reasonably, citing Hollywood Towers Condominium Ass’n, Inc. v. Hampton and Farrington v. Casa Solana Condominium Ass’n, Inc.

But that deference has limits. The same materials explain that directors are usually shielded from individual liability absent fraud, criminal activity, or self-dealing/unjust enrichment, with cases like Perlow v. Goldberg, Taylor v. Wellington Station Condominium Ass’n, and Sonny Boy, L.L.C. v. Asnani discussed as examples.

So if your claim is basically “I disagree with this choice,” it is weak. If your claim is “they violated disclosure rules, participated in the vote, and personally benefited,” it is the kind of fact pattern courts take seriously.

What Homeowners Can Do When A Deal Feels Conflicted

1) Pull the paper trail.
Conflicts live in minutes, agendas, bids, contracts, invoices, and payment records. Governance failures and missing procedures can be a real opening, especially given how courts treat procedure compliance as important in association disputes.

2) Look for disclosure, recusal, and exit from the room.
For condos, 718.3027 sets a clean checklist: presentation is allowed, but discussion and vote require the interested party to leave and recuse.

3) Use electoral remedies.
Condo recalls are authorized by statute, and under the 2017 amendments cited in your materials, some recalls can become effective immediately once properly approved.

4) Consider statutory claims for injunctive relief or damages when the facts justify it.
Your materials also note that unit owners can bring an action for damages or injunctive relief for failure to comply with the Condominium Act or condo documents, including against a director whose failure is “willful and knowing.”

Key Takeaways For Owners

Conflicts of interest are not always automatically illegal in Florida association life, but hiding them, voting on them, or personally profiting from them without proper authority is where boards get into real trouble. Florida law pushes associations toward transparency, disinterested approval, and fair dealing, and it gives owners practical tools like the 20 percent termination mechanism for undisclosed conflicted contracts in condos.

Exclusively For Condo And HOA Unit Owners

At Perez Mayoral, P.A., we exclusively represent homeowners and condominium unit owners. We never represent associations. This focus allows us to handle owner side disputes throughout Florida.

To schedule a consultation, call 305-928-1077 or email [email protected].