HOAleader.com - Tip of the Week - August 16, 2019
Published: Fri, 08/16/19
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Pop Quiz: Is This a Real or Perceived Condo/HOA Board Member Conflict of Interest?
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We address common confusion over what constitutes a conflict for board members in this week's tip.
At a recent HOAleader.com webinar on board members' fiduciary duties, a listener assumed it was a conflict of interest for the board president to be a real estate agent who sells homes in the community.
That got us thinking: Is the listener right? And are there other situations that people assume are conflicts but may actually not be?
Let's start with the listener's comment that triggered this discussion with our experts. Is it a conflict for a board president to also be in the business of selling homes in the neighborhood?
"It's not a conflict," asserts Molly Peacock, counsel at Rees Broome in Tysons Corner, Va., who's represented condos and HOAs for nearly 15 years. "The board president's role as a fiduciary of the organization and to act in the best interest of the community in keeping with the documents and governing law isn't opposed to that person's job as a real estate agent. I can't think of how those positions would be opposed or adversarial to one another.
"A real estate agent might be tempted to bend the rules for the sake of a sale, but I don't think that means you can't serve both roles," she adds. "You have to put your job as a fiduciary above your normal day job. If you don't, your personal assets could be exposed, and no insurance or legal provision will protect you from that."
That's also how David Firmin, managing partner at Altitude Community Law PC in Lakewood, Colo., with satellite offices in Loveland and Colorado Springs, evaluates the issue.
"It's not a conflict," he states. "Colorado uses the Uniform Common Interest Ownership Act, and that addresses a conflicting interest transaction. That's a transaction between the association and a company in which the board member's immediately family has a stake. Let's say I own a painting company, and the association hires the painting company. That would be a direct conflict."
Firmin offers another real-life example. "My daughter bought into a condo association that my law firm represents," he notes. "If she were to get on the board, she'd have to disclose that her father owns the law firm that represents the association. That disclosure doesn't invalidate that agreement; it's just that the disclosure that has to be made."
It's also not a conflict according to Joe Wloszek, a member at Hirzel Law in Farmington, Mich., which represents more than 100 community associations; he lived in a condo for seven years and now lives in an HOA.
But this could evolve into a conflict. Find out more, along with other funny looking situations that aren't conflicts and how to handle them, in our new article:
https://www.hoaleader.com/public/3968.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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The Curious Case of the HOA Mailbox Responsibility
An HOAleader.com writes, "I find that attorneys give varying answers to statute interpretation. Our Florida home is in an HOA with each home having their own mailbox by the curb. Some call this common ground, but a mailbox purpose is for owner's use. Who's responsible to repair and replace mailboxes? If there's no indication in our documents related to this, then who's responsible?"
Click here to read full article:
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Surely, your members have demanded transparency. And you've heard experts say it's a wise practice, too. Your response is probably: We're transparent! How much more transparent could we be, for crying out loud?
Click here to read full article:
https://www.hoaleader.com/members/What-It-Means-for-CondoHOA-Board-Be-Transparent.cfm
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Can You Use Condo/HOA Special Assessment Money for Reasons Other Than Those You Stated?
An HOAleader.com reader writes, "My association agreed on a special assessment to start repairs on our shared well. After collecting the first $14,000 toward repairs of the well system, our treasurer says he used $7,000 of that money to pay old bills. Is that legal? We also had approximately $20,000 in reserves at the time he did this."
Click here to read full article:
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Why Not Just Grant This HOA Owner's Request for Speed Humps?
An HOAleader.com reader asks: We're a very small Virginia gated-community HOA, 9 houses on an .8-of-a-mile road. Yes, .8 of a mile. For the past 10 years, we've discussed speeding at our members' meetings and requested homeowners respect the posted speed limit, which was lowered from 25 mph to 15 mph a few years ago, which was agreed to by our members.
Click here to read full article:
https://www.hoaleader.com/members/Why-Not-Just-Grant-This-HOA-Owners-Request-for-Speed-Humps.cfm
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When the Condo Board Should Intervene: Is This the Right Situation?
We often hear from our experts that boards shouldn't get involved in disputes between neighbors. An Orlando dispute is an excellent case study against which to test that general advice.
Click here to read full article:
https://www.hoaleader.com/members/When-Condo-Board-Should-Intervene-This-Right-Situation.cfm
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