Q&A: What is a Conflict of Interest?

Q. I have some questions about what would constitute a conflict of interest. One of the managers of our community recently hired his brother-in-law to do work on the property, and I don’t think proper procedures for the hiring and contracting were followed. Is that a conflict to have a board member relation work on the property? Additionally, we have another manager who has a very close relationship with a board member, if you know what I mean, and may even get married to that individual.This makes me very concerned that a potential conflict of interest situation is about to occur. What do you think?

—Out-of-Bounds in Ocean Township

A. “Conflicts of interest are always a concern in any condominium association or homeowners association. It's important that in every case the board take a hard look for any conflicts that might arise and that conflicts be identified and dealt with promptly,” says Stuart Lieberman, a founding shareholder attorney with the law firm of Lieberman & Blecher, P.C., in Princeton. 

“Members of the community should be able to trust their boards to scrupulously  undertake this task and failure to identify conflicts of interest may result in a host of problems ranging from improper self-dealing to unnecessary overpayment for services rendered by providers.

“Board members serve at the pleasure of the members of the community and have a fiduciary obligation to those members. This is a higher duty of care, greater than that of two contracting parties.   As part of that special relationship, they must ensure that their actions are impartial, fair and very  transparent. Actions which may be clouded as a result of conflicts discredit the board and cause harm to the community at large.

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Comments

  • Community is vacation rentals. HOA 'elects' president who owns rental agency. It is 'elects' because the election was railroaded by bank representative who owns 30 out of 130 shares. Owners may register with any rental agency or rent on their own (VRBO). Is the president in an inherent constant conflict of interest?