HOA glossaryBoard & governance

What is a conflict of interest?

A situation where a director's personal interest could influence a decision they are being asked to make for the association.

The usual cases are unremarkable and common: a director whose company bids on the landscaping contract, who is related to a vendor, who is delinquent while the board considers collection policy, or who lives next to the lot under architectural review.

The problem is never the interest itself, it is an undisclosed one. The standard practice is disclosure on the record, then recusal from the discussion and the vote, then a note in the minutes showing both. Several states and many sets of bylaws prescribe a specific procedure.

An undisclosed conflict is what removes a decision from the protection of the business judgment rule, converting a defensible choice into a personal exposure.

Why it matters to a board

Ask for disclosures as a standing agenda item. It normalises the process and puts the record in the minutes automatically.

Where the answer lives

Your recorded declaration and bylaws first, then the act that governs associations in your state. Whichever is stricter is the one that binds you.

Related terms

Fiduciary dutyThe obligation a director owes the association to act loyally, in good faith, and with the care a prudent person would use.Business judgment ruleThe principle that courts will not second-guess an informed, good-faith board decision made without conflict and within authority.Board of directorsThe elected body that governs the association, holding all authority the governing documents grant to it and no more.MinutesThe official record of what a meeting decided — the association's institutional memory and its primary evidence.Vendor RFPA structured request for competing bids on the same defined scope of work, so proposals can be compared honestly.HearingThe owner's opportunity to be heard by the board before a fine or other sanction takes effect.
General information, not legal advice. This entry explains what the term means, not what your association must do about it. Any notice period, cure window, fine cap, vote threshold or deadline comes from your recorded declaration and your state's act — those differ in all fifty states and are amended every session. Updated August 2026. Confirm the current requirements with an attorney licensed in your state before acting.
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