Board Member is also a CAM

Started by BenR2 • 29 replies • 941 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

BenR2 (Florida)
Posts: 16

Posted:

I live in FL and we have an elected board member that is also the CAM of our association.

We've only owned our house for a couple years and are getting more involved in board meetings.

Wondering if this is allowed by state law. But to me it seems to be a conflict of interest.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I agree about the conflict of interest. The CAM has a financial interest in the outcome of board decisions and at the very least should recuse himself from discussion and voting of these issues. Depending on the extent of the services that the board has delegated to the PM, I can foresee situations in which the CAM would be unable to perform his duties as a board member to an acceptable level.

Florida seems to have more restrictive laws governing the activities of board members and PMs than many other states. Are there any state resources available that could help resolve this situation if homeowners don't understand the issues involved and wouldn't vote to recall the CAM?

SheliaH (Indiana)
Posts: 6,964

Posted:

I agree this is a conflict of interest - and this property manager should know that. It might be interesting to ask the board about this - do this in confidence to start. You're not saying the person isn't qualified (he or she IS a homeowner in your community, after all), but the optics stink, even if this person is ethical (let's assume he/she is). Either serve as a property manager and leave the board or stay on the board - and refrain from any discussion or votes regarding the property manager as long as he/she works for the association's management company.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JohnC46 (South Carolina)
Posts: 14,265

Posted:

I agree it could easily result in a conflict of interest even when abstaining from a vote.

JohnC77 (California)
Posts: 562

Posted:

Is the board member in also the property of your complex or do they merely hold a certificate as a CAM?

BenR2 (Florida)
Posts: 16

Posted:

They own a condo.

They are on the board as a board member and also a Certified CAM.

She has been doing this for many years.

JohnC77 (California)
Posts: 562

Posted:

So you have a person who knows what running a HOA is about and some here say that is a conflict. Why?

TimB4 (Tennessee)
Posts: 21,062

Posted:

We have had individuals who were attorneys, realtors, business owners, etc. on our Board.
We even had a CAI upper management on our board.
What they do for their day job shouldn't matter if they are willing to serve.

There is no conflict unless they are also providing a paid service to the Association.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By TimB4 on 08/25/2020 2:43 PM
We have had individuals who were attorneys, realtors, business owners, etc. on our Board.
We even had a CAI upper management on our board.
What they do for their day job shouldn't matter if they are willing to serve.

There is no conflict unless they are also providing a paid service to the Association.

From the OP: "we have an elected board member that is also the CAM of our association. "

KerryL1 (California)
Posts: 14,550

Posted:

With Cathy: The OP is very clear. I don't think there's any law against it. But, sure, there ar many possibilities for a conflict of interest when the PM shut not vote as a director and even, in some cases, should leave the room when certain matters are discussed.

I guess CAM means she's somehow certified by some organization. Doesn't it have a Code of Ethics that you might read?

BenR2 (Florida)
Posts: 16

Posted:

Thanks for the information.

She is paid for her CAM duties to take care of out association from our COA/HOA budget and gets paid very well.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Then the individual should not vote on anything dealing with her duties as CAM.

I expect everyone knew the individual was the CAM when they voted to place the individual on the board.

BenR2 (Florida)
Posts: 16

Posted:

Its about 200 condos and 40 homes that some people live full time and some live part time and rent the rest.

I think people took her for granite for so many years and now they are seeing the light at the end of the tunnel.
I'm still learning things about the association by laws.
I know there are times when she has sat out of a meeting for votes that pertained to her part of the job.

GenoS (Florida)
Posts: 4,276

Posted:

Florida Statutes Chapter 718 contains an entire paragraph on Conflicts of Interest (FS 718.0832). In addition, FS 617.0832 has more on director conflicts of interest.

Does the CAM also own or have a financial interest in the management company, or is she merely an employee of that company?

Any time an action is contemplated or proposed, the conflict must be noted in the minutes of the meeting. There's more. A lot more. It's not automatically wrong or illegal to have someone with a conflict on the board. But there are extra safeguards in place with the goal of being doubly transparent about the relationship. A contract between the association and an entity that a director (or a director's relative) holds a financial interest in may be voidable if the relationship is not fully disclosed.

Everything may be on the up and up. Maybe having a CAM on your board is beneficial for the assocaiton. But beware. Many opportunities for funny business exist, though. I'd ask for access to the contract with the CAM's management company and read the whole thing. Then I'd keep a watchful eye on the monthly financials. Just to keep everyone honest.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Keep in mind that conflict of interests are not illegal.

They are not good business practices and leads to perception problems from those looking at the situation but they are allowed to exist.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By BenR2 on 08/25/2020 5:47 PM
... snippage ...

I know there are times when she has sat out of a meeting for votes that pertained to her part of the job.

I take that as a positive sign that the board members are all aware of the potential problems and are taking steps to avoid them.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Our Treasurer was also our accountant. They owned a home and was a member. It was kind of understood they would have that position. Why? Why not? They are allowed to vote and share their opinion like any other member or board member. They also knew what was going and had access to the meeting notes to know asking for a check was legit.

I see no comflict. If there was, then who decided to vote them in?

Former HOA President

SheliaH (Indiana)
Posts: 6,964

Posted:

If she sat out of meetings when there were votes concerning her job, then I don't think you have anything to worry about for now. That said, I personally would be more comfortable if there was a different property manager, preferably from another company, because you may still have a conflict if the property manager and this board member work for the same company.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MartyS5 (Georgia)
Posts: 23

Posted:

We have all our Board members (as well as other non-profit organizations) sign a Conflict of Interest Statement. This requires a disclosure of his/her financial interest. Disciplinary action may result for non-disclosure.
_____________________

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By CathyA3 on 08/25/2020 3:23 PM

From the OP: "we have an elected board member that is also the CAM of our association. "

Yes the OP said that form the get go. Some on here should read closer before posting.

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By JohnC46 on 08/26/2020 10:27 AM

Posted By CathyA3 on 08/25/2020 3:23 PM

From the OP: "we have an elected board member that is also the CAM of our association. "

Yes the OP said that form the get go. Some on here should read closer before posting.

I actually read the original response, asked for clarification, got a different response and then got a different response afterwards.

What I find interesting is the OP stated that CAM sat out of meetings that would have affected parts of her job. Why is this even a topic, the CAM clearly understands what needs to be done if there is a perceived conflict of interest.

SamE2 (New Jersey)
Posts: 310

Posted:

Based on Geno's post it looks like it is legal. I would be happy with CAM being on the Board if he owned a property. Who would do a better job watching out for the HOA then a follow owner? It seems like he is already recusing himself of areas there might be conflict but the Board should make sure conflicts don't happen and document how they prevent them to stay transparent. Are you happy with the way the person performs their duties?

GenoS (Florida)
Posts: 4,276

Posted:

Who would be in a better position to steer business toward themselves for their own enrichment above the interests of all the other owners? Yeah, that guy or gal. When there's a potential conflict, then the transaction or contract requires an affirmative vote of two-thirds of all other directors present (other than the director who has the conflict). At the next meeting of the members, a majority vote of the members present may cancel such a contract or agreement (FS 718.3027).

FS 718.3027(4) further states...

"A director or an officer ... who is a party to, or has an interest in, an activity that is a possible conflict of interest ... may attend the meeting at which the activity is considered by the board and is authorized to make a presentation to the board regarding the activity. After the presentation, the director or officer ... must leave the meeting during the discussion ... and vote... A director or an officer who is a party to, or has an interest in, the activity must recuse himself or herself from the vote."

I paraphrased that. It also applies to a close relative of a director or officer.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Obviously every community (and state) has different laws. I get that this situation is legal, but as someone else observed, the optics are bad. In general I think board members should avoid even the appearance of wrongdoing. "Legal but looks dicey" is too low a low standard in my book.

The other issue you'll have is the other board members' unconscious bias. They may make every effort to avoid this bias, but they're going to be influenced - even if it's only slightly - by their interactions with the CAM, good or bad. Even if the CAM is scrupulous about recusing himself from any issue where he has a financial interest, that won't eliminate the bias of the rest of the board. And I don't know of any way to avoid it in this situation. You can't un-know what you know.

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By CathyA3 on 08/26/2020 2:02 PM
Obviously every community (and state) has different laws. I get that this situation is legal, but as someone else observed, the optics are bad. In general I think board members should avoid even the appearance of wrongdoing. "Legal but looks dicey" is too low a low standard in my book.

The other issue you'll have is the other board members' unconscious bias. They may make every effort to avoid this bias, but they're going to be influenced - even if it's only slightly - by their interactions with the CAM, good or bad. Even if the CAM is scrupulous about recusing himself from any issue where he has a financial interest, that won't eliminate the bias of the rest of the board. And I don't know of any way to avoid it in this situation. You can't un-know what you know.

It's a she, for the record.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

I don't think I would like having the property manager/CAM on the Board - whether real or perceived, there is a conflict of interest.

Running and community with volunteers is tough enough - this would be a distraction.

BillH10 (Texas)
Posts: 1,217

Posted:

My wife and I own a management company. We have been asked to bid on the management contract for the Association in which we reside and steadfastly refuse to do so.

First, we do not wish to know that much about the finances of our neighbors. Secondly, we believe managing the association has the very real potential to damage our personal relationships with our neighbors, some of whom are close friends. Finally, we do not wish to receive calls at all hours regarding an issue, real or imagined. We have received enough of those from our time serving on the Board or committees.

Being on the Board while being the CAM? No matter how above board the person is, there is still the perception that a hand must be in the cookie jar, or a friend does not receive a compliance note, or is not assessed late payment charges or whatever. A scenario with the potential for very toxic outcomes all around.

MarshallT (New York)
Posts: 414

Posted:

I don't believe it is illegal, especially if the person was elected, but it does raise some obvious red flags.

As a best practice, the CAM should not also be a part of the board.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here