Property Manager - Conflict of interest

Started by ChrysB • 19 replies • 529 views

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ChrysB
Posts: 45

Posted:

Our property manager is also a real estate agent. He has sold units in our building.
Is there a conflict of interest by being an HOA's employee?

We do not have access to his contract with HOA; currently a new contract is at the hands of HOA's legal advisor for review.

Thank you!

HenryS7 (Pennsylvania)
Posts: 336

Posted:

Generally, property managers only make decisions at the direction of the board; they do not work on their own.

I see no issue with the property manager also being a real estate agent.

PatJ1 (North Carolina)
Posts: 568

Posted:

ChrysB. Are you on the HOA board?

ChrysB
Posts: 45

Posted:

PatJ1,

I am a member of the Finance Committee.

ChrysB
Posts: 45

Posted:

HenryS7,

I agree with you that property managers work under the direction of the board.

Thank you!

JohnC46 (South Carolina)
Posts: 14,265

Posted:

The Pres of out BOD is also a real estate agent who has sold homes in our HOA. I see no issue.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By ChrysB on 01/11/2022 12:10 PM
Our property manager is also a real estate agent. He has sold units in our building.
Is there a conflict of interest by being an HOA's employee?

If by "property manager" you mean the manager hired to oversee the day-to-day operation of the condominium, then yes, there is a conflict of interests. E.g. as manager he can play favorites with the units where he is one of the agents representing the buyer or seller.

I am not sure there is any statute that addresses this, though.

PatJ1 (North Carolina)
Posts: 568

Posted:

Quote:

Posted By AugustinD on 01/11/2022 12:30 PM

Posted By ChrysB on 01/11/2022 12:10 PM
Our property manager is also a real estate agent. He has sold units in our building.
Is there a conflict of interest by being an HOA's employee?

Is the PM and employee of the Management Company or an employee of the HOA? It may make a difference.

ChrysB
Posts: 45

Posted:

PatJ1,

The property manager is an employee of the Management Company and he manages strictly our HOA.
I hope that helps.

ChrysB
Posts: 45

Posted:

AugustineD,

This is exactly what I thought. Being the Property manager is the one, who first knows if a unit is to be sold.

Thank you!

ChrysB
Posts: 45

Posted:

JohnC46,

Thank you for your input!

CathyA3 (Ohio)
Posts: 6,299

Posted:

I don't think it's a *huge* conflict, since presumably the PM works at the direction of the board and doesn't make independent decisions.

However, there is still the temptation to put his own or his buyer's interests ahead of the HOA's, and if he's able to make independent decisions then this is definitely an issue. Ditto if the PM has access to confidential info. If I had a choice, I'd select a PM that doesn't have potential baggage like this.

By the by, related to your other post, it's a good idea to revisit the PM issue periodically and look for other options your area. Many full service PM companies offer a menu of services, and an association can save a few bucks if they only choose the services they need. It's also possible that different companies charge different amounts for the same services. In general it's a good idea not to let hired contractors become complacent - they have more of an interest in doing good work if they believe that the board is willing to replace them.

ChrysB
Posts: 45

Posted:

CathyA3,

These were my concerns as you stated them! Yes, he does have access to confidential information.

The point you raised with my previous post in regard to the PM review, I have already brought it up to our committee for their consideration to review services rendered by the current company.
One of the red flags was that the Management company has not raised their fees for the property manager over 20 years or so (???).

Thank you for your bringing it to my attention; this reinforces that it is to our best interest to look into PM.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By ChrysB on 01/11/2022 1:30 PM
... snip ...

One of the red flags was that the Management company has not raised their fees for the property manager over 20 years or so (???).

... snip ....

That is a LONG time, and I agree that it needs explaining.

ChrysB
Posts: 45

Posted:

CathyA3,

No doubt! I hope that the CPA's review and the structural engineer's study, will reinforce the needed review of the PM services.

Thank you!

KerryL1 (California)
Posts: 14,550

Posted:

The PM also is the first to know about potential foreclosures

ChrysB
Posts: 45

Posted:

KerryL1,

Thank you!

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I don't see how it is a conflict of interest at all. Why is it? Maybe I am missing the connection that makes it questionable. Real Estate is a job just like anyone else has a job. It's not like they are making money off it except what they do through normal real estate transaction in their job. Property Management is a different job altogether. Plus they most likely are not an HOA member anyways. So how is that a conflict if they aren't a HOA member?

Former HOA President

ND (PA)
Posts: 792

Posted:

Quote:

Posted By MelissaP1 on 01/11/2022 4:20 PM
I don't see how it is a conflict of interest at all. Why is it? Maybe I am missing the connection that makes it questionable. Real Estate is a job just like anyone else has a job. It's not like they are making money off it except what they do through normal real estate transaction in their job. Property Management is a different job altogether. Plus they most likely are not an HOA member anyways. So how is that a conflict if they aren't a HOA member?

There are a numerous definitions of "conflict of interest" that can be googled. Simply put, a conflict of interest occurs when an individual’s personal interests – family, friendships, financial, or social factors – could compromise his or her judgment, decisions, or actions in the workplace.

In regard to the topic/question at hand . . . there is no issue with the Property Manager also being a Real Estate Agent. However an actual, potential, and/or perceived issue arises when the Property Manager/Real Estate Agent is simultaneously performing both jobs' duties within the HOA. Chances are very likely that even some small portions of his judgment, decisions, and/or actions while performing duties as Property Manager could be compromised by his separate, personal financial interests as a Real Estate Agent.

It's pretty simple to see how one's position as Property Manager (with insider-type knowledge/info; leverage on decision-making; and/or or means of executing decisions) could benefit within an HOA where they also bought/sold real estate. Even the most ethical person would have trouble keeping distinct and uncrossable/ed boundaries between the two.

ChrysB
Posts: 45

Posted:

ND,

Thank you for providing this insightful comment!

Indeed, "the Property Manager/Real Estate Agent is simultaneously performing both jobs' duties within the HOA".

For these reasons you stated, as others in this post, I have been concerned of the Property Manager's dual functions and I am seeking the input of this forum who may have had similar situations.

I think it is not as simple as it may look. Though, this is a matter that our Board needs to address.

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