Realtor/Director. Conflict of interest?

Started by BarbaraD13 • 11 replies • 261 views

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BarbaraD13 (Texas)
Posts: 46

Posted:

If a Realtor is elected to the BOD- (Texas) does that create a conflict of interest for the realtor as a representative for buyers or sellers in the development?
Just a question raised about an excellent candidate for our upcoming elections.

AidylP1 (California)
Posts: 108

Posted:

What if you had an attorney on the board who potentially represents owners in legal matters? Or a plumber of electrician who sits on the board and provides services to homeowners who pay the persons directly with no HOA involvement.

BarbaraD13 (Texas)
Posts: 46

Posted:

Exactly. Now if that lawyer were performing legal work for $$ for the HOA- or the plumber was being paid to unclog a toilet....
I love this forum.

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By BarbaraD13 on 01/04/2024 6:35 PM
If a Realtor is elected to the BOD- (Texas) does that create a conflict of interest for the realtor as a representative for buyers or sellers in the development?
Just a question raised about an excellent candidate for our upcoming elections.

Not unless you want him to sell the common areas.

LetA (Nevada)
Posts: 2,679

Posted:

I feel a realtor poses hardly any conflict of interest serving on an HOA board of directors compared to a lawyer or plumber.
Any professional serving as a board of director on an HOA should do so as long as they do not have a pecuniary interest in serving.

TimB4 (Tennessee)
Posts: 21,059

Posted:

There would be no conflict for the board.

The individual is one vote. Decisions are made by majority vote.

LoriM15 (Florida)
Posts: 1,009

Posted:

The realtor who sells most of the homes in our community was on our board. He was a good board member because he wants to keep the community attractive to new buyers.

However, now he's on our architectural review committee. He's a nightmare - because he promises buyers anything they want and says he can help make it happen, even if it's against the rules.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Realtor is a job like any other job. A HOA is NOT real estate. It is a corporation.

Former HOA President

SheliaH (Indiana)
Posts: 6,964

Posted:

Not necessarily. Our current treasurer is a realtor and former board president. When something came up where there was or could be a conflict of interest, he says so and recuses himself from the discussion and vote.

You should already have a conflict of interest policy - it might not be in the bylaws, but if your board has the authority to enact additional rules that done contradict the documents, put one together and approve it via a board resolution that's approved at an open board meeting.

In the meantime, you can ask this candidate how he or she would respond if an issue would arise when he or she would have a potential or actual conflict of interest. Better yet, ask this of ALL the candidates.

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

CathyA3 (Ohio)
Posts: 6,299

Posted:

A conflict of interest is defined as having a personal, financial stake in the outcome of a decision (beyond what any other board member would have).

I think a realtor does have such a conflict of interest, although it's not as serious or obvious as the case of a director who owns a lawn care company who wants to bid on the association's business.

On the other hand, the latter is more easily dealt with: the owner of the lawn care company recuses himself from all discussions and voting on that topic and doesn't get involved in managing a different vendor if that other vendor is selected. A realtor may have a hard time recusing himself/herself from all association business than can affect their bottom line - at the very least the person won't be carrying their own weight if they're constantly sitting out various discussions and votes. And the board has to reckon with possibilities such as not having a tie breaker if a board member can't vote on something.

You'll have to weigh the advantages to having a realtor on the board (they'll know more than the average board member) against the possibility that they'll be putting their own financial interest ahead of the association's interests. An occasional sale wouldn't concern me much. A realtor who is doing a lot of business in the community would get my attention.

ElleN (Idaho)
Posts: 4,420

Posted:

I think the relevant statute sections for this TPC 209 HOA are

TPC 209.0052 . See https://statutes.capitol.texas.gov/SOTWDocs/PR/htm/PR.209.htm. I think this translates to there not being a problem for this realtor under TPC 209.

BO 22.230 See https://statutes.capitol.texas.gov/Docs/BO/htm/BO.22.htm . In my opinion, this is going to apply when an owner or buyer of a home in the HOA has this realtor representing him/her. Why? Because I think this is going to involve a "transaction" between the HOA and the realtor (who potentially is also a director). Read this section carefully. I think it boils down to such a realtor-director having to disclose her interest and recuse himself/herself from board votes pertaining to the home (being sold) where she is an agent. I expect such votes to be rare. The manager should be put on alert that any conflict that arises during the closing on a home (where the realtor is an agent of the buyer or seller) has to go to the board. In other words, the realtor had better think twice about strong-arming any HOA management staff where a sale is involved.

I am as always open to revising my position here. Though I do not want to do a buzillion hypotheticals. The bottom line is the realtor should run for the board (if she wants) and be seated if she wins the election.

MarkM19 (Texas)
Posts: 1,459

Posted:

I agree with Tim this person is just one vote.

Where it can be a little sticky is the board has access to much more info than any other realtor in the area. They know every home that is delinquent, they are aware of every home going into foreclosure, they have access to the mailing list of owners. I have had a handful of realtors and the results have been varied. I think it all comes down to the individual board members reason for taking the position.

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