Following the turnover of control by their developers, condominium, property owners, and homeowners associations (hereinafter referred to collectively as Community Associations) are governed by a board of directors that is composed of members of the association. The members who become directors come from all walks of life and have varying backgrounds that are unknown to the voting members of the association. So to ensure our safety we must routinely give HOA directors background check.

In the typical scenario that plays out at an annual meeting of Community Associations members, directors are elected based solely on the limited information that is provided by a candidate for election to the associations board. Rarely is the information that the candidate provides independently verified. Thus, every year associations elect people as directors and place them in positions of responsibility where they have access to the associations funds without knowing the trustworthiness of the person. As a result, the association is exposed to financial risks associated with illegal conduct by those who have been elected as directors of the association.

Required Qualifications for Candidates Necessitates a Criminal Background Check.

To minimize the risk of financial loss resulting from illegal conduct of association directors, state laws and/or association governing documents mandate various qualifications for those who wish to serve as a director of their association. Further, some state statutes disqualify people who have been convicted of certain crimes. The crimes that would disqualify a person are generally described as felonies and/or crimes that would interfere with the associations ability to obtain fidelity bond insurance coverage for the person. The following are examples of such provisions that are contained in state statutes:

  • California Civil Code 5105(c)(4), which provides:

An association may disqualify a nominee if that person discloses, or if the association is aware or becomes aware of, a past criminal conviction that would, if the person was elected, either prevent the association from purchasing the fidelity bond coverage required by Section 5806 or terminate the associations existing fidelity bond coverage.

  • Florida Statute 718.112(2)(d)2 (which applies to condominiums), and 720.306(9)(b) (which applies to homeowners associations), both contain the following language:

A person who has been convicted of any felony in this state or in a United States District or Territorial Court, or who has been convicted of any offense in another jurisdiction which would be considered a felony if committed in this state, is not eligible for board membership unless such felons civil rights have been restored for at least 5 years as of the date such person seeks election to the board.

  • Texas Property Code 209.00591(b), provides:

If a board is presented with written, documented evidence from a database or other record maintained by a governmental law enforcement authority that a board members was convicted of a felony or crime involving moral turpitude not more than 20 years before the date the board is presented with the evidence, the board member is immediately ineligible to serve on the board of the property owners association, automatically considered removed from the board, and prohibited from future service on the board.

While statutes and/or governing documents specify that people who have been convicted of certain crimes cannot serve as a director, they do not mandate the procurement of a background investigation in order to ascertain whether or not a person has been convicted of such a crime. This puts the burden on the association to adopt policies that are designed to ascertain the information needed in order to confirm a candidates background and his / her qualifications to serve the association. This would require requesting certain basic information from the candidate that is needed to conduct a criminal background investigation and conducting the investigation.

Getting Authorization to Run a Criminal Background Check

Since obtaining information about a persons criminal background is an intrusion into the persons privacy, there are federal and state statutes that require obtaining a persons consent and providing the person with required disclosures before obtaining the background report. Such requirements typically apply to background reports that are obtained in the context of an employer-employee or a professional relationship, as opposed to a personal relationship (i.e. obtaining a report on an individual before stating a personal relationship, or on a neighbor who you are suspicious of). While there are no specified requirements relative to obtaining a criminal background report on a prospective volunteer director of a Community Association, the suggested better practice would be to inform the person of the requirement for a criminal background report and obtain his / her consent. Obtaining a persons consent minimizes the risk of later claims about violating a persons right to privacy and weeds out candidates who decline to give their consent because they have a history of criminal convictions that they do not want to disclose.

People who live in common interest developments that are governed by a Community Association are contractually bound by the associations governing documents and policies that have been adopted to enforce the provisions contained in the governing documents. Those provisions should include the requirement for conducting criminal background checks on candidates for election as directors, key officers, and management personnel to comply with state laws and association qualification standards. While having such provisions in the governing documents that are accepted by association members may constitute implied consent to conducting criminal background checks for specified purposes, it is a good practice to obtain consent at the time that the criminal background report is to be obtained.

Obtaining Information Needed to Conduct a Criminal Background Check

To ensure that information obtained in a criminal background report is accurate and pertains to the person being investigated, it is critical to have appropriate information about the person in question at the time of the inquiry. Such information is generally provided by the person as part of the consent process, and includes the persons full name, date of birth, social security number, and complete residence addresses for the 5 to 10 year period preceding the investigation. The information should be obtained from the candidate as part of the authorization form that the candidate must complete, date, and sign. The authorization form should then be retained with association records with sensitive information such as the persons social security number redacted to protect the persons privacy.

Use of the Information Contained in a Criminal Background Report

The completed criminal background report should be thoroughly reviewed to see if the person must be disqualified as a candidate based on past criminal convictions. Making this determination necessitates an understanding of the qualification requirements that are contained in the applicable state statutes and the associations governing documents (i.e. bylaws). It may also be necessary to obtain input from association legal counsel, law enforcement personnel, and insurance representatives on whether past
convictions that are reported constitute a felony, a crime of moral turpitude, or would prevent fidelity insurance coverage. The candidate should also be provided with a copy of the report and provided with an opportunity to review and question it, before a final determination is made on the candidates qualifications.

If the criminal background report discloses information that disqualifies a person from becoming a candidate for election to an associations board, or from continuing as a board member, the associations board of directors must take appropriate action to disqualify such a person from running for election, or remove the person from any existing position held that would be prohibited by the state statutes and/or the associations governing documents.

How to Obtain a Criminal Background Report

Community associations should have policies and procedures in place that call for obtaining criminal background checks on all individuals who desire to serve the association as a director. The associations board, through appropriately authorized individuals, should obtain required authorizations and the necessary information that is needed to conduct the background check and be vigilant about conducting the checks to ensure that board members comply with mandated qualification requirements. Conducting the investigation of a persons criminal history through a professional third-party service is the safest, most cost effective, and thorough way to conduct a criminal background search. Such a company will provide information about relevant laws that must be complied with and will package and transmit the information that is desired within a short period of time so timely decisions can be made.

For further information and to view a sample of a criminal background report see: HOA Background Check Sample Report