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Deals between Board Members

Started by JasonB13 • 12 replies • 999 views

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JasonB13 (Florida)
Posts: 37
Posted:
Would a board member giving another board member a discount be considered conflict of interest or even self-dealing?

Scenario A:

Board member A is selling his unit within the condo. Board member B is a Realtor. Board Member A lists his unit with Board member B's realty company. Board Member B doesn't charge Board Member A his commission, or provides a substantial discount.

I don't see anything specific in the law, but board members *could* provide services in exchange for votes; and it could also be looked upon as gaining a financial benefit from his position on the board. They claim they're "friends", but they are friends because they've been on the board together for 12 years.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Well considering Board member A selling their unity means they will no longer be a member or board member, what is the problem? Plus this isn't be done in the vain of any HOA business. There is also something called a "Buyer's agent" which works differently. The Realtor basically splits the 6% commission with the seller's realtor. Which can be one and the same.

So don't see the problem here with this arrangement. No money going to or from the HOA. It's like asking a board member who is a plumber to fix a toilet for you. Is that a problem?
Former HOA President
TimB4 (Tennessee)
Posts: 21,062
Posted:
If they weren't members of the Board would it be an issue for you?

I don't see this as a conflict of interest because nothing you described has to do with the duties of Board members.
KerryL1 (California)
Posts: 14,550
Posted:
I agree with Tim.
GenoS (Florida)
Posts: 4,276
Posted:
B gifts A a no-commission sale. What is A giving in return? If there's a quid-pro-quo involving his vote at a board meeting (prior to selling his house) on something A wants to happen, then that would be a serious breach of fiduciary duty. But if there's nothing being give n in return that has to do with association business, then there's not really a conflict.
KellyM3 (North Carolina)
Posts: 2,239
Posted:
I'd love to see the issue in question that is so valuable that a Realtor would sacrifice an entire commission on a home sale to secure a vote.
JasonB13 (Florida)
Posts: 37
Posted:
Naivety galore!

Many boards won't even let a board member take a listing in the building, much less helping another board member to flip units.

JasonB13 (Florida)
Posts: 37
Posted:
Quote:
Posted By KellyM3 on 02/05/2018 10:25 AM
I'd love to see the issue in question that is so valuable that a Realtor would sacrifice an entire commission on a home sale to secure a vote.

How about looking the other way while he runs a RE business out of the management office? Would that be big enough?
JasonB13 (Florida)
Posts: 37
Posted:
You're not allowed to benefit financially from your position on the board. So discount given to a director that isn't available to a non director doesnt require a "quid-pro quo". Directors aren't allowed to accept gift; A broker making millions in commissions in the building who greases board members so they don't tell him to knock it off (or stop him from taking listings) is self-dealing.

KerryL1 (California)
Posts: 14,550
Posted:
For those who haven't "met" Jason yet, he finds plots, schemes and underhanded dealings with every activity his board engages in. Check his older posts if you're interested.

It's not self dealing to give a listening to a fellow board member. How could the listee possibly benefit as a board member? Re-read Tim's reply.

Many HOAs, on the other hand, do let realtors on board take listing in their HOA, including ours.

Then, Jason (typically) asks another hypothetical: "How about looking the other way while he runs a RE business out of the management office?" Would that be big enough?" Is this real, jason? if so, Aren't ALL directors ignoring a director running a business out of the management office??

Next he is rude to those who reply.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
I am still trying to figure out what the issue is. The board member sells their unit, they are no longer in the HOA. The Realtor has a HOA member as a client doesn't make it wrong. Them running their business out of the MC's office isn't that crazy. The MC is NOT the HOA. MC's do manage property outside a HOA. Some people use them to manage their own rental property. Having a licensed realtor in the office would make sense.

If you want to make a problem out of this, then Atleast identify the real issue you have a problem with. Otherwise, it's just someone doing business.
Former HOA President
TimB4 (Tennessee)
Posts: 21,062
Posted:
Quote:
Posted By JasonB13 on 02/05/2018 1:55 PM

So discount given to a director that isn't available to a non director doesnt require a "quid-pro quo".

I know of a few sales where the Realtor drastically reduced their fees or, as a friend, waived them.
Lets call it the friends discount.

If you aren't offered the same deal, you can shop for another Realtor or, try and become a better friend.
DouglasM6 (Arizona)
Posts: 724
Posted:
Pretty thin, if you ask me. And, in a way, you did.

Just because they are board members doesn't mean they can't be friends. I see nothing wrong with it, and I also do not see anyway you could make it stick.

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