QUESTION: A board member elected to our treasurer position is a twice convicted felon, one for burglary and one for criminal negligent homicide. The board claims this felon has paid his debt to society and therefore is trustworthy.

ANSWER: There is nothing in the law that prohibits felons from serving on boards. The Corporations Code states that boards may declare vacant the office of any director who has been convicted of a felony. Corp. Code §7221(a). However, the felony conviction must occur after the director has been elected to the board. Remillard Brick Co. V. Remillard-Dandini Co. (1952) 109 CA2d 405, 424. To prevent persons with prior felony convictions from serving on the board, associations must amend their bylaws to include the prohibition.

#1. On the subject of a convicted felon serving on the board, you failed to mention that the association's D&O policy could be canceled (or a claim denied) if the board knowingly allowed a felon to serve. We had this occur at a property we manage (attorney accused of embezzlement in another state, served time, moved to California, wanted to serve on the board). An owner Googled his name and found out he was a convicted felon. The board contacted their insurance broker, who advised that their policy would be canceled if they allowed him to serve. -K.W., Manager

#2. There is a problem on the Crime/Dishonesty policy for any HOA who has a convicted felon serve on their board if they were convicted of any theft. The employee dishonesty bond (which no doubt has been extended to bond the board members too) would not apply if this person stole from the HOA because of a standard bond exclusion that any prior theft would preclude coverage on a claim. The HOA should ask to see if a special endorsement could be granted to cover this person or should not allow them to serve on the board if any defalcation risk exists (and he would be treasurer) as all board members should be bonded which might even be a CC&Rs requirement. -Dorothy McCorkindale, Wells Fargo of California Insurance Services

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