Board puts homeowner on the payroll
Question: Our board hired an unemployed homeowner as an ombudsman with a salary of nearly $100,000 a year. In this capacity, he advised the board on laws and legal issues although he had no legal education and is not licensed to practice law. Owner-related problems were directed to him. Eventually, he proved not to be an effective or neutral arbiter. He now oversees the association’s landscape gardening and has been allowed to keep the ombudsman title. His salary is paid under the line-item called groundskeeper. His involvement with association business and elections continues. Could his actions get the board in trouble?
Answer: They could. The dictionary definition of an ombudsman is a public official appointed to investigate citizens’ complaints against government agencies or officials who may be infringing on the rights of individuals; or a person employed by an institution to investigate complaints against it. An ombudsman acts as an intermediary to try to resolve problems, not exacerbate them.
Each board director has an independent duty to investigate employee and vendor actions, including those of the homeowner cum ombudsman cum groundskeeper. Titleholders have a right to protect their assets within the common-interest development and, to that end, rely on the board to act in good faith.
As a general rule, boards should obtain at least three independent bids from outside contractors before deciding whether to hire an owner to perform services for the association.
Checking with the association’s insurance provider is always recommended before hiring an owner. The insurer would probably be able to tell the board whether that owner would be covered under the association’s insurance policies or if it is a risk that might result in higher premiums or outright cancellation.
Advising the board on legal matters amounts to an unauthorized practice of law. Under Business and Professions Code Section 6126(a), any person who practices law without a license is guilty of a misdemeanor. Any homeowner can report this activity to the State Bar. When this type of illegal practice leads to board actions, the possibility of damages is heightened. Aside from the potential rise in insurance rates, a lawsuit could affect sales in the complex or result in higher assessments for all owners.
Merely carrying insurance does not insulate board directors from liability, neither does diverting owner complaints to an ombudsman. Titleholders who allow this to continue without taking action are opening themselves up to a costly future, whether that’s because of the salaries the association pays or the damages it may incur for the decisions it makes.
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Send questions to P.O. Box 11843, Marina del Rey, CA 90295, or e-mail noexit@mindspring.com.
