The landscaping contract goes to the president’s brother-in-law. The management company is owned by a director’s spouse. A board member’s company gets paid to do repairs. Self-dealing is one of the most damaging — and most common — HOA complaints. Arizona doesn’t ban a board from ever doing business with an insider, but A.R.S. § 33-1811 imposes a strict disclosure rule, and the penalty for ignoring it is severe.
The rule: declare the conflict, in the open, before acting
The statute is short enough to read in full:
“If any contract, decision or other action for compensation taken by or on behalf of the board of directors would benefit any member of the board of directors or any person who is a parent, grandparent, spouse, child or sibling of a member of the board of directors or a parent or spouse of any of those persons, that member of the board of directors shall declare a conflict of interest for that issue. The member shall declare the conflict in an open meeting of the board before the board discusses or takes action on that issue and that member may then vote on that issue. Any contract entered into in violation of this section is void and unenforceable.” — § 33-1811
Who counts as a conflicted insider
The statute reaches well beyond the director personally. A conflict must be declared if the paid contract, decision, or action would benefit the director or any of these relatives:
- A parent or grandparent;
- A spouse;
- A child or sibling; and
- A parent or spouse of any of those people (for example, an in-law).
It applies to any “contract, decision or other action for compensation” — so it’s about money flowing to an insider, whether that’s a vendor contract, a management agreement, or a paid role.
What the director must do — and what they may still do
Three requirements, in order:
- The conflict must be declared in an open meeting — not a closed executive session, not a hallway conversation. (See our explainer on open meetings under § 33-1804.)
- The declaration must come before the board discusses or takes action on the issue — not after the vote.
- Having declared, the member may then vote. Arizona’s statute does not force recusal; it forces transparency.
How homeowners can use this
- Check the minutes. The disclosure must appear in an open meeting, so it should be reflected in the minutes. Request them under § 33-1805 and look for a recorded declaration before the vote on the contract.
- Map the relationships. The rule covers a broad family circle, including in-laws. A vendor sharing a director’s last name or address is worth a closer look.
- Ask, in writing, whether a conflict was declared for any insider contract — and when, and at which meeting.
- Know the remedy. A contract approved in violation of § 33-1811 is void and unenforceable, and an undisclosed insider deal can be raised in an ADRE petition as a statutory violation.