Keep it Above Board Avoiding Common Conflicts of Interest

 When you serve on a board, sometimes you get a feeling of empowerment. After  all, you bear a great deal of responsibility for how well (or how poorly) your  building or HOA fares during your tenure. However, it’s important not to let that power go to your head and create a situation where  you are setting yourself up for a conflict of interest dispute. Nothing  undermines a community’s faith in their leadership faster than things like impropriety and self-dealing  amongst the board/management team, or even the implication that these things  might be going on.  

 Conflicts come in many forms, say the pros. “Some examples of conflicts that occur in condo and co-ops include if a board  member is a realtor and is using the association financial information to  assist in their outside endeavors,” says Regan Marock, executive director of business development for KW Property  Management & Consulting in Miami. “Or when a board member has a personal relationship and provides kickbacks to a  vendor, or when a board member or management company has an undisclosed  financial interest with a vendor.”  

 “Sometimes the manager is put in the middle,” says Lisa A. Magill, an attorney with Becker & Poliakoff in Fort Lauderdale. “A board member or officer wants something to satisfy his or her personal agenda—and if the manager protests too much, their job may be in jeopardy. The key to  any conflicts issue is disclosure. Everyone needs to disclose what relationship  they have with a potential vendor and the vendor should likewise disclose any  relationships.”  

 Avoiding Problems

 “Common sources of conflicts of interest are directors who directly or indirectly  are connected to companies that the association may currently use or consider  hiring,” says Donna DiMaggio Berger, a founding partner with the law firm of Katzman  Garfinkel & Berger in Fort Lauderdale. “This can be a director who owns a management company (or is a licensed manager  whom the board wishes to hire), owns a landscape company or other service  provider.”  

 In these cases, the director with the direct or indirect pecuniary interest in  the company being discussed has a conflict of interest, must disclose it to his  or her fellow board members and should not vote on matters on which he or she  is conflicted.  

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5 Comments

  • one of our board director and tressure, he is also licenced florida general contractor, few contractors, engineering firm did some work in our condo, all these companies work with with our directorsbor they were working with him other project , is this a conflict of interest. he is as a consultant to other condo association bringing contractors, he brings the same contractor to do concrete restoration
  • Does a board member have a conflict of interest if his home is currently for sale? He has the ability effect the HOA fees and a new management company.
  • Can a Board member vote on a change in rules that will directly benefits him/her. Ex. The board member is an investor with more than 10 units and needs more parking spaces for tennants, therefore he/she moves to vote to change the rule allowing more spaces and placing him/her in an advantageous position to other residents.
  • Paid manager of HOA has close friendship with Board Members... Board Members hired manager... Is this a conflict of interest
  • Is the following a conflict of interest. The president of a condominium board of directors uses the associations attorney for preparing and filing assignment of unit garages to other units the president owns within the same condominium association