—Conflicted Board Member
“Concerns about conflict of interest and self-dealing can arise if a trustee is engaged by the association to perform contractual services. Many associations, to avoid even the appearance of personal gain by trustees, or favoritism by the board, adopt a strict policy prohibiting trustees (or any unit owner) from entering contractual relationships with the association. Unit owners can never serve as association accountant, attorney, manager, landscaper or in any other contracted capacity.
“However, there is no legal mandate that associations adopt such a policy and many associations employ unit owners and/or board members in contractual relationships without incident. In the case posed, while the realtor/board member will receive a commission based on the transaction, the association will presumably derive an ongoing monetary benefit from the rental. The lease agreement is actually between the association and the adjacent property owner; the realtor/trustee is a simply a third-party beneficiary of the contract as pertains to the commission. Assuming the board has the right to the lease the property under the terms of the master deed, the fact that the trustee will benefit in his capacity as a realtor does not constitute self-dealing.
“To avoid an actual conflict of interest, the trustee must disclose the situation to the other trustees, excuse himself from any discussion of the subject, and ultimately abstain from voting on the lease issue. The disclosure, withdrawal, and abstention should be noted in the board meeting minutes.”