Conflict of interest?

Started by PaulaB4 • 6 replies • 1158 views

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PaulaB4 (Louisiana)
Posts: 4

Posted:

Last year, a new property management company was hired by the board. Several months later, the property management company hired one of the board members to be our subdivision's property manager. Some people thought this was a conflict of interest, so she stepped down from the board.

I have a couple of questions. Do property managers usually live in/on the property they manage? Do you find it to be a conflict of interest if they are also on the board?

Also, the replacement board member that was named in her place is...her mother. So, now one of the board members is the mother of the property manager. Any conflict here?

Thanks!

KerryL1 (California)
Posts: 14,550

Posted:

Welcome to the Forum, Paula. A little background, please. How many homes/condos in your HOA? How many directors are there supposed to be?

I haven't heard of any property managers who live on the premises, but I imagine it does happen. Does this new PM have any certification as a property mgr.? Training? What are her duties?

Who appointed her mother as a director? The Board? Or did the Owners elect her?

I think a conflict of interest could happen when the Board votes on matters that affect the Mgmt. Company (MC) or the PM. Examples includes performance evaluations and raises, hours working for your HOA for the PM, and renewing the MC's contract with your HOA. In those cases the mother should not vote and should even leave the room when those topics are discussed by the Board so that they speak freely.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Paula,

Keep in mind that conflict of interests are usually not illegal.

If the Board is aware of the conflict, and it sounds like they are, then that is a good thing.
Perhaps the Board will consider a change in Board members if someone else volunteers to serve in the Mothers place. Will you be willing to serve?

GwenG (Florida)
Posts: 669

Posted:

I would add that there are usually qualifying conditions when conflict of interest is permitted. The board must make this disclosure public at a meeting; they cannot just keep the conflict secret. Also, many laws provide for owners' option vote to vacate a contract entered into when there is a disclosed conflict of interest. This is true in FL and I suspect it is true in many other states.

In this case, it is such a potentially damaging conflict of interest that I cannot imagine owners permitting the aggregation of power and influence in two members of a family. It is asking for trouble that is not necessary to invite.

PaulaB4 (Louisiana)
Posts: 4

Posted:

There are just under 200 homes here. There is a Pres. VP, Sec. Treasurer, and a Member-at-Large. We pay a company for property management. They are the ones who hired one of our board members to be the property manager for our subdivision. As far as I know, she didn't have any PM experience, certification or training prior to taking the job. After taking the job, she remained on the board until someone pointed out to her that it was a conflict of interest and others agreed. She is a liason between the board and the PM company. She answers emails from homeowners. She was driving around looking for violations, but that has since been stopped. I'm not sure what else she does.

Her mother was appointed to the board by the previous board. I'm sure the daughter was involved in that. The owners did not elect her at the time. Earlier this year, four board members decided not to run for reelection, but the mother stayed on the board. Four new board members were elected with the mother being the fifth. I'm not sure the owners at the meeting knew that she was the mother of the PM. In fact, I know that most did not know.

It is very difficult for the board to speak freely because the mother is a straight channel to the daughter.

PaulaB4 (Louisiana)
Posts: 4

Posted:

Tim, I cannot serve on the board. I have a family member on the board already. I do volunteer my time in other ways, though. I serve on a committee.

PaulaB4 (Louisiana)
Posts: 4

Posted:

Gwen, I agree.

Thanks, everyone.

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