Quality Condo Boards Manage Conflict of Interest

May 2016

Avoiding Conflict of Interest Situations Unreasonable

Conflict of interest refers to a situation where an individual is involved in multiple interests which could corrupt their motivation.

More often than not, this motivation is financial. For a condo corporation, any decision where an individual director can financially benefit more than other condo owners is one where a conflict of interest may exist.

When a conflict of interest arises, a board member can and should recuse themselves so as to avoid the conflict of interest. Recusing oneself prevents a director from being involved in decisions where they cannot be impartial. It applies to a specific matter being discussed and should not affect a director’s ability to be involved in other condo business.

Ironically, those most likely to have the potential for conflict of interest are those best suited for condo board participation. Business owners, real estate agents, property managers, engineers, project managers and lawyers all have the potential for conflict of interest. The least likely individuals to be involved in a potential conflict of interest risk are retirees and those not active in the workforce.

Obtaining the services of qualified and capable individuals requires that conflict of interest be managed rather than avoided. Success generally requires working with credible individuals who will declare a conflict of interest when it arises and recuse themselves when appropriate.

Potential conflict of interest on a condo board can only be avoided by excluding the best qualified and best connected individuals. It is desirable that condo boards have directors able to reach out to contacts for advice, information, assistance and resources. Such individuals can render assistance by recommending certain individuals or businesses to the condo corporation.

Obviously, excluding the best individuals for a condo board is not a desirable outcome. Good condo boards require as directors individuals with integrity who recognize a conflict of interest situation and bow out, when appropriate, to avoid the conflict.