How do we write an HOA conflict of interest policy and annual disclosure form?

By OurHOA · General information · Revised November 5, 2026

How to write an HOA conflict of interest policy: who it covers, a yearly disclosure form, the recusal vote, gift limits, and the TX, FL and CO rules it must match.

Part of the HOA board handbook: running the board.

What the policy has to do

A conflict of interest policy answers three questions before anyone is under suspicion. What counts as a conflict. How a director discloses one, and to whom. What happens to the vote. Write it now, while nobody on the board has a contract on the table, because a policy drafted in the middle of an argument over the treasurer's brother-in-law's paving bid will read like it was aimed at him. Keep it to two pages. Add a one-page disclosure form that every director signs each year and again whenever something changes. Adopt both by board resolution at a noticed meeting and put them in the owner document library. The statutes below set a floor, and your declaration or bylaws may be stricter. Some documents ban contracts with directors outright, and no policy can override that. This guide is general education, not legal advice. For a contract that is large or already disputed, have the association's attorney review it before the vote.

The state rules your policy has to fit

Colorado is the only one of the three that requires a written policy. C.R.S. 38-33.3-209.5(1)(b)(II) lists conflicts of interest among the subjects every association must cover by policy, and 209.5(4) says that policy must at least define when a conflict exists, set out how and to whom it is disclosed, say whether the director must recuse from discussion or the vote, and provide for periodic review of the policy. Section 38-33.3-310.5 applies the nonprofit rule in 7-128-501 to the executive board. It also defines 'officer' to include anyone the board delegates work to, naming the managing agent, attorney and accountant, so a Colorado policy should cover them too. Section 7-128-501(2) bars loans from the association to directors or officers. Florida has the strictest procedure. Under Fla. Stat. 720.3033(2), when an HOA contracts with a director, or with a company where a director is a director, officer or has a financial interest, the board must follow 617.0832, enter the disclosures in the written minutes, and approve the deal by two-thirds of the directors present. At the next members' meeting the board must disclose the contract, and any member can move to put it to a vote. A majority of members present can cancel it, and the association then owes only the reasonable value of work done, with no termination fee or penalty. Texas Property Code chapter 209 has no director conflict section. Most Texas HOAs are nonprofit corporations, so Business Organizations Code 22.230 applies. A contract with an interested director is not void or voidable if the material facts were disclosed and a majority of the disinterested directors approved it in good faith, even if they are fewer than a quorum, or if the deal was fair to the association. Section 22.230(d) lets the interested director stay in the room and even vote. Your policy can be stricter, and it should be.

Who and what the policy covers

Name the people: every director and officer, every committee member who recommends spending, and the manager, bookkeeper or anyone else who approves invoices. Then name the relatives. Borrow the state definition so you are not guessing. Florida's 617.0832(1)(c) counts the director's spouse and the child, stepchild, parent, stepparent, grandparent, sibling, step sibling or half sibling of the director or the spouse. Colorado's 7-128-501(5) covers a spouse, descendants, ancestors, siblings and their spouses and descendants, plus trusts and companies those people have an interest in. Texas boards can use either list. Then describe the situations. A conflict exists when a covered person, a relative, or a business they own, manage or work for would gain or lose money from a board decision, apart from the effect it has on every owner. Give examples a volunteer will recognize: a director's company bidding on landscaping, a spouse who works for the insurance agency quoting the renewal, a director asking for an architectural variance on their own lot, a vote on fines against a director's tenant. A dues increase or a new pool rule that hits every owner the same way is not a conflict.

The annual disclosure form

The form does the work the policy cannot. It puts each director's outside ties on paper before a bid arrives. Hand it out at the first board meeting after the election and collect it before the next one. Keep the signed forms with the association's records. Wording you can copy: 'Director and officer disclosure statement for [year]. 1. List any business you or a family member own, manage, work for or hold more than [5] percent of that does or may seek business with the association. 2. List any contract, payment or loan between the association and you or a family member in the past 12 months. 3. List any pending dispute between you or a family member and the association, including violations, fines, collection or architectural requests. 4. List any gift or favor over $25 you received this year from a vendor or bidder. I have read the association's conflict of interest policy. I will update this statement in writing within [14] days if anything changes, and before any vote on a matter listed above. Signed, dated.' A blank answer should say 'None.' Do not accept a form with empty lines, since an empty line can mean 'none' or 'did not read it.'

Running the vote when a conflict comes up

Write the steps into the policy so the chair does not improvise. The director states the interest at the start of the agenda item, before discussion. The minutes record what was disclosed. The director answers factual questions if asked, then leaves the discussion and does not vote. The remaining directors vote. The minutes record the vote by name. For a contract with a director's company, add two steps. Get at least two outside bids for the same scope, and record why the board picked the one it did. In Florida, use the two-thirds of directors present threshold from 720.3033(2)(c) and put the contract on the agenda of the next members' meeting. Elsewhere, require a majority of the disinterested directors, which matches both Colorado 7-128-501(3)(a) and Texas 22.230(b)(1)(A). A motion that holds up later: 'Director Lopez disclosed that her husband owns Lopez Concrete, which submitted one of three bids for the sidewalk repairs, and left the meeting for this item. Motion to award the sidewalk repair contract to Lopez Concrete for $14,200, the lowest of three bids for the same scope, with Director Lopez not voting. Approved 4-0.' Keep the same steps for small items. A $300 repair from a director's handyman business gets the same disclosure as a $30,000 roof, and the habit is what owners will remember.

Gifts, perks and kickbacks

Florida sets a hard line. Section 720.3033(3) bars an officer, director or manager from soliciting, offering to accept or accepting a kickback, defined as anything of value from a vendor for which no consideration was given. Knowingly doing it is a third-degree felony, and if the board finds a director did it, the board must remove that director immediately. The exceptions are food eaten at a business meeting worth under $25 per person and items received at trade fairs or education programs. Use the Florida limit as your policy everywhere. No gifts from vendors or bidders beyond a meal under $25 at a business meeting. No discounted personal work from a contractor the association uses, unless the same discount is offered to every owner in writing. Holiday gift baskets go to a common area or get returned.

A first-year timeline

Month 1: the president or a two-director committee drafts the policy and form, starting from the state rules above. Month 2: circulate the draft to directors and send it to the association's attorney for a short review if the budget allows. Month 3: adopt both by resolution at a noticed board meeting and post them for owners. Within 30 days of adoption: every director and officer signs the form. Each year after the election: new forms from every director, and a five-minute review of the policy on the agenda, which also meets Colorado's periodic review requirement. Any time a disclosure changes: an updated form before the next vote it could affect. Our guide on HOA written policies every board should have covers the other policies Colorado requires, and our guide on whether an HOA can hire a board member's own company walks through that specific case.

Mistakes boards make

Adopting a policy and never collecting forms. A policy nobody signed proves nothing when an owner asks who knew about the paving company. Treating abstention as the whole fix. In Florida a director's contract still needs the minutes entry, the two-thirds vote and disclosure to members. Abstaining covers one of those four steps. Letting the interested director chair the item. The president with a conflict hands the gavel to the vice president for that agenda item. Skipping the manager. In Colorado the statute reaches the managing agent, and everywhere the person who approves invoices is the one best placed to steer money. Put them on the form. Disclosing in executive session only. Contract approvals belong in the open meeting minutes so owners can see the disclosure and the vote.

Sources

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.

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