Can an HOA hire a board member's own company for work?
Reviewed by the OurHOA team · Updated July 2026
Whether an HOA can pay a director's own business for landscaping, repairs, or management - conflict-of-interest rules, disclosure and recusal, and competitive bidding.
The short answer
It is not automatically illegal, but it is a conflict-of-interest transaction that is only defensible when it is handled with real transparency. A board member who owns a landscaping, painting, or repair company can sometimes do paid work for the association - small self-managed communities often have exactly one neighbor who happens to be a contractor, and using them can genuinely save money. What makes it acceptable is not the good intentions; it is the process. The director's financial interest has to be fully disclosed, the director has to step out of the decision, the price and terms have to be at arm's length, and in most cases the disinterested members of the board (or the membership) have to approve it. Skip those steps and the contract is not just bad optics - it may be legally voidable and a breach of the director's fiduciary duty.
What the law requires for a conflicted contract
Most HOAs are nonprofit corporations, and nonprofit corporate law sets the rules for a transaction in which a director has a financial stake. Under a typical statute such as California Corporations Code section 7233, a contract in which a director is interested is valid only if the material facts are disclosed and it is approved in good faith by the disinterested directors or the members, or if the association can show the deal was fair and reasonable at the time it was made. Davis-Stirling reinforces this for California associations: Civil Code section 5350 requires an interested director to recuse from the board's discussion and vote on specific matters, including a contract with that director. The through-line in nearly every state is the same - disclose the interest, remove the interested director from the decision, and make sure the remaining decision-makers are acting on fair terms. Our broader guide on HOA conflict-of-interest rules covers how recusal and disclosure work across these situations.
Disclosure and recusal are not optional
The interested director's job in that meeting is to say plainly that they or their company stand to be paid, and then to leave the deliberation and the vote on that contract. They should not lobby the other directors behind the scenes, should not be counted as one of the votes approving the deal, and in some states should not be counted toward the quorum on that specific item. The disinterested directors then decide whether to hire the company on the merits. All of this belongs in the minutes, ideally decided in open session rather than a closed one, precisely because the point is to show the community that the board member's connection was on the table and the decision was made without them. A vote where the conflicted director quietly participated is the classic pattern that gets a contract challenged later.
Get competing bids and check your documents
The single best way to prove a director's company was hired for the community's benefit and not the director's is to gather two or three genuine outside bids and show the board took the best value on the merits. Some governing documents and a handful of states require competitive bidding for contracts over a dollar threshold anyway; even where they do not, competing bids convert a suspicious arrangement into a defensible one - our guide on whether an HOA has to get competitive bids for contracts explains when bidding is required versus simply wise. Also read your own CC&Rs and bylaws before going any further: some documents flatly prohibit contracting with a director or an officer, and if yours does, no amount of disclosure cures it. And note the related but distinct situation where a director is also the paid property manager, which our guide on whether a board member can also be the property manager addresses separately.
Weigh whether it is worth the friction even when it is legal
A transaction can clear every legal hurdle and still corrode a board's credibility, because owners are quick to assume self-dealing whenever money flows to an insider. If the board does proceed, the protective habits are consistent: full written disclosure, documented recusal, real competing bids, market-rate terms, a written scope so the work is measurable, and payment only for work actually done and inspected. If the director's price is not clearly competitive, or if the relationship makes it awkward to hold the company to the same standard as an outside vendor, the safer choice is usually to hire someone else. The savings from a friendly rate rarely outweigh the cost of a community that stops trusting its board.
How OurHOA helps
Conflict-of-interest problems usually trace back to a decision that was never documented - no record of the disclosure, the recusal, the competing bids, or the scope of work - which leaves owners free to assume the worst. OurHOA helps small self-managed communities keep vendor decisions, bids, and meeting minutes organized and easy to search, so when a board hires a member's company it can show exactly how the choice was made and on what terms. OurHOA is record-keeping and communication software, not a law firm - for whether a particular contract passes muster under your governing documents and your state's nonprofit law, check with an attorney.
OurHOA is the friendly, affordable way self-managed communities keep dues, records, and reminders in one place. See how it works.
These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.