Motivation behind Conflict of Interest

June 2020

Conflict of interest is generally considered to be bad for condo communities.  In practice it is frequently the result of trying to do good for the community and not a concern so long as it is disclosed and properly handled.

The best condo directors have experience, contacts and connections.  They may be able to call in favours to aid their community.  Conflict of interest can occur when a board member is employed by, owns or is affiliated with a company offering a product or service desired by their community.  That director may have a good understanding of what is needed.  They may offer, or facilitate the offering of, a quality product or service at a good price.  The risk is that, if something goes wrong, it can be more difficult to explain the situation than if working with a vendor at arm’s length.  There can also be a presumption by some that something inappropriate has taken place.

A better approach is to handle potential conflicts of interest rather than avoiding them.  A director in a potential conflict of interest can declare this to the board.  They can choose not to participate in decisions relating to any matter involving their business, employer or contact while continuing to participate in discussions.  Remaining directors decide if any offer or proposal is worth considering and implement measures they feel necessary to avoid a conflict of interest.

Attracting effective condo directors requires acceptance of potential conflict of interest.  An effective condo board will appropriately handle matters so that conflict of interest does not occur.