How to Avoid Association Conflicts of Interest
Condominium Associates provides you with some tips on how to prevent conflicts of interest in your community association.
Condominium Associates provides you with some tips on how to prevent conflicts of interest in your community association.
A real threat to your HOA's integrity and reputation is conflicts of interest. As a community association board member, you must know what this means and how to recognize and avoid them. Condominium Associates provides you with some tips on how to prevent conflicts of interest in your community association.
When do Conflicts of Interest Occur?
A conflict of interest occurs when a personal or outside interest affects you or another individual's ability to make an ethical choice. For example, if an HOA board member owns a maintenance company, hiring that business as a vendor is a conflict of interest since the board member is likely biased. Nepotism is another example of a conflict of interest.
Recognize Conflicts of Interest
It is essential to recognize potential conflicts of interest so that your association's board can make fair, ethical decisions on behalf of your community. Possible and actual conflicts of interest are quite different. Using the example we mentioned above, the fact that the board member owns a maintenance company is an inherent conflict. However, if the association has business with said company, that's an actual conflict of interest.
Always ask yourself if you might be affected by outside or personal influences. Do you have duties to outside interests or entities that could affect your decisions? If you answered yes to this question, you will likely deal with a conflict of interest.
Know Fiduciary Duties
As a Board member, you have legal and fiduciary obligations to your association. You have the duty of care, which requires you to steward your association's resources carefully. You also have the duty of loyalty, which requires you to be true to your association and its members.
In addition, you have the duty of good faith, which requires you to act in the best interest of your association and community members. To fulfill these fiduciary duties, you must avoid all conflicts of interest.
Maintain an Impartial Budget
When making your association's next yearly budget, ensure that the board members keep personal interests out of the decision-making. For example, some board members dislike the high community assessments. Because of this view, they choose to drastically cut the budget to a negligent level to lower monthly fees. This type of biased decision-making is an apparent conflict of interest because these board members favored their concerns to the detriment of the community. During the budget-making process, make sure to be aware of your personal biases so that you can avoid any conflicts of interest.
Never Exploit Privileged Information for Personal Gain
In certain situations, boards can access privileged and confidential information, often related to community members. Exploiting that information for personal or financial gain represents a conflict of interest. Remember your duty of good faith and never use privileged information for personal gain.
Be Transparent
If you have a potential conflict of interest, you must be transparent. Reveal all possible disputes and remove yourself from situations that may force you to make poor choices. If there are conflicting interests on the board, abstaining from the voting process is a good practice.
How Condominium Associates Can Help You Manage Your HOA
Condominium Associates has you covered if you need professional management services for your community association! Our team of professionals can suggest the best options for your community association.